Middle East Tensions Take an Ominous Turn

Benjamin Harvey

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The specter of conflict in the Middle East is back.

The U.S. has ordered non-emergency staff out of Iraq, just a week after Secretary of State Michael Pompeo traveled there to discuss escalating regional tensions with Iran.

It follows the U.S. closure of its consulate in the southern city of Basra in September where it also cited threats from Iran, which supports powerful Shiite Muslim militias in its neighbor.

Fractures have widened in the past month over President Donald Trump's withdrawal from the 2015 Iran nuclear deal, with Tehran threatening to also pull out of the agreement designed to stop it enriching uranium for potential nuclear weapons.

There have been attacks on Saudi tankers in the Strait of Hormuz, a key global oil-trading route. Trump has put Iran's oil-dependent economy under further pressure, withdrawing waivers that let Tehran trade some of its oil.

Trump has repeatedly stated his desire to keep the U.S. out of fresh wars, and spoken of the heavy cost the U.S. has borne in the past from having soldiers on the ground in Iraq and Afghanistan. Yesterday he denied a New York Times report that the U.S. had updated its military planning on Iran. But he added if hostilities were to break out he'd send “a hell of a lot more” troops than the 120,000 mentioned.

Global Headlines

Fed pressure | Trump wants the Federal Reserve to assist in his trade war with China, calling on it to “match” what he said Beijing would do to offset the economic hardship caused by tariffs. The suggestion builds on Trump’s repeated efforts to pressure the Fed for stimulus and may be a bid to deflect blame if the trade spat hits the U.S. economy as he seeks re-election in 2020.

Inching forward | U.K. Prime Minister Theresa May set a date for what looks to be the final Brexit showdown, promising to put her exit agreement to another vote in Parliament at the start of June. After seven weeks of fruitless talks with Labour leader Jeremy Corbyn, it's doubtful either the opposition or May’s own party will back the deal, leaving the European divorce in limbo.

Red zone | In 1992, Trump lived in a New York luxury apartment, traveled by limousine and had personal bodyguards – while reporting a negative $750 million adjusted gross income to the IRS. For the future president to live so large while reporting such losses, his businesses must have bled money for years, Joe Light reports. Trump says they were paper losses from real-estate activities.

Competing forces | Centrist Joe Biden’s lead in the race to become the Democratic candidate for president is challenging the vocal progressive wing that’s sought to drag the party to the left for the past four years. Sahil Kapur reports from the campaign trail in New Hampshire with the former vice president and explores how Biden has solidified his front-runner status.

Italian challenge | Deputy Premier Matteo Salvini is back to bashing Brussels before this month's European Parliament elections. Wrong-footed by a graft scandal and defeats in mayoral races, Salvini wants to outgun his coalition partner, Luigi Di Maio of the Five Star Movement, and make his nationalist party the biggest in Europe. But it comes at a cost: His latest salvo — a challenge to EU fiscal rules — triggered a selloff in Italian bonds.

Platinum jitters | A $4 billion plan to build Zimbabwe’s biggest platinum mine is foundering on investor concern over a stakeholder in the project: a military company that once faced U.S. sanctions. Signed deals to develop the mine were exchanged in January between Russian President Vladimir Putin and Zimbabwe's Emmerson Mnangagwa, who needs investment to rebuild an economy devastated by the 37-year rule of Robert Mugabe.What to Watch

Trump plans to soon sign an executive order prohibiting American firms from using gear made by foreign telecoms companies that pose a threat, as U.S. security concerns mount about China's Huawei.

EU leaders raised the possibility of making World Bank Chief Executive Officer Kristalina Georgieva from Bulgaria the next EU Commission president, Ian Wishart and Viktoria Dendrinou report.

And finally...Home to more than half the world’s population, cities are stepping up efforts to slash pollution, often wresting the fight against climate change away from national governments. Authorities from London to Sydney and Boston are among a group of 14 setting out the plans to achieve carbon or climate neutrality by 2050, according to CDP, a non-profit group that pushes institutions to detail greenhouse-gas emissions. Five cities have already set 100% renewable energy targets and Reykjavik, Iceland says all the power it now uses is renewable.

 

--With assistance from Karl Maier, Kathleen Hunter, Tim Ross and John Follain.

To contact the author of this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Michael Winfrey

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