The battle for Israel’s soul

Israel’s Supreme Court starts debate on a controversial judicial reform [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. After months of protests against Prime Minister Benjamin Netanyahu’s plan to curb the power of the judiciary, Israel’s focus switched today to the elegant semi-circular [bench of the Supreme Court]( where, on live TV, 15 justices debated whether to overturn the first step. The law, which bars the judges from voiding executive decisions that they deem “unreasonable,” is one in a series of populist judicial changes promised by Netanyahu’s religious, right-wing coalition when it came to office in late December. Opposed by secular Israelis who argue that it will weaken a fragile system of checks and balances, the plan has driven hundreds of thousands of protesters onto the streets for more than eight months, caused friction with US President Joe Biden’s administration and battered markets and the shekel. It’s a remarkable battle over the future of a country that, over the past quarter century, has become a wealthy investor darling and high-tech haven while at the same time growing more nationalistic and Orthodox Jewish in its politics. Beneath the debate in the Jerusalem courtroom lie questions about the nature of a state that defines itself as a Jewish democracy while its military rules over Palestinians in the West Bank. The court’s ruling, not expected for weeks, could cause a crisis if the government declines to accept it. It’s just one of several challenges facing Netanyahu as he seeks to satisfy his base while expanding Israel’s might through possible normalization with Saudi Arabia. Israel is also participating in a rail-and-maritime corridor from Asia to Europe that was announced at the Group of 20 summit in India. A deal whereby Saudi Arabia gains US security guarantees in exchange for relations with Israel is under negotiation. The Palestinian leadership is seeking concessions from Israel and Saudi Arabia to preserve some chance of achieving an independent state. Netanyahu is headed to the US Sunday to meet Silicon Valley executives and Biden and address the United Nations. He has made clear he wants to compromise on the judicial changes and pursue his geopolitical goals. The opposition remains skeptical. — [Ethan Bronner]( Israeli security forces use a water cannon to disperse demonstrators blocking the entrance of parliament on July 24. Photographer: Ronaldo Schemidt/AFP/Getty Images Global Must Reads The luxury train carrying North Korean leader Kim Jong Un has crossed into Russia for his summit with President Vladimir Putin. The meeting offers a chance for [Putin to obtain weapons]( to fuel his war in Ukraine and Kim an opportunity to win assistance for his beleaguered economy, as well as expand the ability to deliver a nuclear strike. Mexico has become the biggest supplier of goods to the US as Washington seeks to reduce its dependence on China. Yet as Maya Averbuch and Leda Alvim write, there are plenty of obstacles that could [cut the current boom short](, such as President Andrés Manuel López Obrador’s penchant for clashing with business as well as fierce competition for the US market from other nations, such as Vietnam. Thierry Breton is the European Union official tasked with enforcing the bloc’s attempts to regulate the world’s biggest tech companies — Meta, Amazon.com, Apple, Alphabet’s Google and Microsoft. As Jillian Deutsch writes in this deeply reported [profile](, years of American efforts to rein them in have largely failed, and Breton is about to find out just how seriously they take the EU’s landmark content moderation and competition rules. Senator Elizabeth Warren wants the US Congress to [investigate Elon Musk’s SpaceX]( after he acknowledged blocking Ukraine from extending the private Starlink satellite network for an attack on Russian warships near the Crimean coast. Musk posted on X, his social media network formerly known as Twitter, that had he agreed to the request, he would have been “explicitly complicit in a major act of war and conflict escalation.” A Starlink antenna covered with a camouflage net in the Donetsk region. Photographer: Maxym Marusenko/NurPhoto/Getty Images The US cleared the way for $6 billion in oil proceeds to be returned to Iran and agreed to free five Iranians as part of a deal that will allow the same number of American citizens [detained in Iran to return home](. Secretary of State Antony Blinken notified Congress that the funds would be held in restricted accounts in Qatar, where they will be “available only for humanitarian trade.” Taiwan warned that China will [ratchet up the military pressure]( after Beijing sailed a record number of warships near the island. Poland will extend its ban on [imports of grain from Ukraine]( after the current EU restrictions expire on Friday, raising tensions with its war-torn eastern neighbor and Brussels. Search efforts intensified for thousands of [people feared dead]( after a storm ravaged Libya’s eastern region, killing around 2,000 in one city and leaving many more missing. Washington Dispatch The US House returns today to confront festering disagreements that threaten to provoke a government shutdown and jeopardize funding for disasters as well as further assistance for Ukraine as it pursues a counteroffensive against Russian forces. The disputes and the animosity they generated within the Republican majority have intensified over the long summer recess. Members of the right-wing House Freedom Caucus are demanding deep spending cuts and other concessions before they’ll consider any legislation to keep the government running past Sept. 30. That ultimatum carries no weight in the Democratic-controlled Senate. Every option available to House Speaker Kevin McCarthy carries heavy risks, including the possibility of his own ouster. A shutdown would cut off pay to federal workers, halt many government services and heighten the sense of political dysfunction in Washington as an election year approaches. The House has just 11 days in session before the deadline. One thing to watch: The US Census Bureau will release its annual income and poverty estimates from the Current Population Survey. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 5pm ET weekdays on Bloomberg Television. Chart of the Day The population boom in rural America that started during the Covid-19 pandemic is boosting local economies but is also [putting a strain on everything]( from schools to housing and roads. The trend is sparking resentment as house prices in the 10 rural counties that have seen the biggest population increases have surged more than 40% over the past three years. And Finally The defense team for Google in the biggest tech monopolization case of the modern era includes veterans of a [similarly historic US antitrust dispute](. Some of Google’s lawyers worked for the Justice Department decades ago, during the last major US monopolies case against Microsoft. It marks the start of a series of battles over the future of the internet, as antitrust suits against Meta Platforms, Amazon.com and Apple wait in the wings. Alphabet CEO Sundar Pichai. Photographer: Kyle Grillot/Bloomberg More from Bloomberg - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Next Africa](, a twice-weekly newsletter on where the continent stands now — and where it’s headed - [Green Daily]( for the latest in climate news, zero-emission tech and green finance Explore more newsletters at [Bloomberg.com](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. 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