Risky face-off in Middle East

The Middle East is on edge after Israel-Hezbollah face-off [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. “This isn’t the end of the story,” vowed Israeli Prime Minister Benjamin Netanyahu after sending 100 warplanes swooping over southern Lebanon to take out thousands of Hezbollah rocket launchers minutes before they were due to fire. “Hezbollah retains the right to respond further,” asserted Hassan Nasrallah, the group’s secretary general, hours later after firing 200 rockets and drones at Israel in retaliation. And so after the [most dangerous confrontation]( between Israel and Hezbollah in the 10 months since they renewed active combat, the Middle East is back to where it was the day before — [on edge over missteps]( but embracing a kind of choreographed containment that avoids all-out war. Now the focus [returns to the Gaza cease-fire talks]( under way in Cairo, which weren’t interrupted by yesterday’s flareup. Iran, sponsor of Hamas and Hezbollah — both viewed as terror organizations by the US — says it’s examining its options before hitting back at Israel for the killing of a Hamas leader in Tehran last month. Its regional allies, including Yemen’s Houthis, could of course carry out an attack that would cause events to spin out of control.  But the way the day unfolded indicated the new/old reality of contained combat is holding. Shortly after the intense back-and-forth, the Tel Aviv stock exchange opened higher, the country’s main airport ended a two-hour shutdown and emergency orders against public gatherings were loosened. Streets were full. Officials in Israel and the US said that, despite public rhetoric, messages were passed between Israel and Hezbollah seeking de-escalation.  Israel said it was acting on precise intelligence when it pre-emptively struck Hezbollah launch sites early yesterday. They were mostly aimed at northern Israel but some were focused on Israel’s intelligence headquarters near Tel Aviv. If they’d been fired and hit their target, Israel would almost certainly have responded with exceptional severity. They didn’t. Things are back to “normal.” — [Ethan Bronner]( Men carry the coffin of a Hezbollah fighter killed in an Israeli drone strike in southern Lebanon on Friday. Photographer: Chris McGrath/Getty Images Global Must Reads Ukraine said Russia launched drone and missile barrages targeting energy infrastructure, [causing blackouts in cities]( across the country, including the capital of Kyiv and the western Lviv region near the border with Poland. The attacks came as Ukraine continues its incursion in the Kursk region, the first foreign military offensive inside Russia since World War II. When US National Security Adviser Jake Sullivan visits China this week he’s expected to hear complaints about Washington’s support for Taiwan, which Beijing claims as part of its territory, as well [American measures to block]( the world’s second-biggest economy from obtaining cutting-edge technology, including semiconductors. His trip comes before the US presidential election in November in which both candidates, Kamala Harris and Donald Trump, have said they’ll get tougher on Beijing. North Korea unveiled new suicide attack drones, with leader Kim Jong Un calling for an increase in the use of technology to carry out strikes and [incorporating artificial intelligence]( into the weapons program. Photos released by North Korea’s state media showed a drone being launched into the air and flying into the top of a tank, which is then seen ablaze. Kim has made the development of drones a top priority. A drone destroys a tank during a demonstration on Saturday. Source: Korean Central News Agency/Korea News Service/AP Photo Mexican President Andres Manuel Lopez Obrador seems determined to push through a controversial plan that would [require federal judges to be directly elected]( despite nationwide strikes, warnings from the US that democracy is at risk and a backlash from investors. Leaders of his Morena party kicked off their push to approve the reform before he leaves office at the end of September, unveiling legislation that calls for the start of judicial elections in 2025. Things in the UK may get worse before they improve, Prime Minister Keir Starmer will warn in a speech tomorrow that will criticize his party’s inheritance from the Conservatives. He will use the first major set-piece address of his seven-week tenure to highlight what he calls the “[rot deep in the heart]( of a structure.” The remarks are intended to set the tone for Starmer’s leadership after the Labour Party was elected in a landslide victory on July 4. South Korea expects to work with whoever wins the US presidential election to confront [the nuclear threat from North Korea]( Vice Unification Minister Kim Soo Kyung said in an interview. At least 60 people died after a dam collapsed amid torrential rains in eastern Sudan, local media reported, [the latest tragedy]( in the North African nation that’s being pushed into famine by a more-than-yearlong civil war. France yesterday extended by 24 hours the detention of Telegram Chief Executive Officer Pavel Durov [on suspicion of failing]( to take steps to prevent criminal use of the messaging app. Telegram said it abides by European laws. Ghanaian Vice President Mahamudu Bawumia said he will enact a bill that calls for three years’ imprisonment for people who [identify as LGBTQ]( if he wins the presidential election in December. Washington Dispatch As Democrats and Republicans await polls taken since the Democratic National Convention, Vice President Harris’ campaign announced that $82 million [had been raised]( during the four-day gathering in Chicago last week. Those contributions, both to the campaign and its affiliates, elevated the total haul to $540 million since President Joe Biden left the race last month. The amounts, detailed in a memo released yesterday by campaign Chair Jen O’Malley Dillon, underscore the tailwind behind Harris that has reshaped the race against former President Trump. O’Malley Dillon added that “the convention marked our biggest week of organizing since the start of the campaign, with volunteers signing up for nearly 200,000 shifts since Monday.” The Trump campaign, in a “confidential memo” from pollsters Tony Fabrizio and Travis Tunis, said “we will likely see another small (albeit temporary) bounce for Harris in the public polls.” One person to watch today: Trump plans to address the National Guard Association of the United States’ conference in Detroit. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television. Chart of the Day Cases of mpox are ripping through central Africa, killing hundreds and infecting thousands. So worried is the rest of the world that countries are intensely monitoring their borders for the fast-spreading virus that’s been assigned the World Health Organization’s highest level of alert. But just four years after the emergence of the Covid-19 pandemic, it’s a [global health emergency]( that could have been avoided if vaccination and widespread testing and surveillance had been implemented. And Finally A gray behemoth blotted the skyline near Hamburg’s Reeperbahn party boulevard for decades, but this year a new five-storey leisure palace was tacked on top, replacing anti-aircraft cannons from the Nazi era with restaurants, sports facilities and a hotel. Renamed the Green Bunker, a so-called mountain path weaves around the exterior of the edifice, providing public access to a leafy garden at the new summit and [integrating the relic of Germany’s past]( into the trendy St. Pauli district. The bunker building in the center of Hamburg. Photographer: Morris Mac Matzen/AFP/Getty Images Thanks to the 34 people who answered the Friday quiz and congratulations to James Wickenden, who was the first to name Dior as the brand of the bag that was given to First Lady Kim Keon Hee and caused a political scandal in South Korea. More from Bloomberg - Check out our [Bloomberg Investigates]( film series about untold stories and unraveled mysteries - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more - [Next Africa]( a twice-weekly newsletter on where the continent stands now — and where it’s headed - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Green Daily]( for the latest in climate news, zero-emission tech and green finance - Explore more newsletters at [Bloomberg.com](. 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