Balance of Power
Political chaos in Thailand couldn’t come at a worse time, with the economy on the edge of recession and bracing for fallout from US President Donald Trump’s tariff onslaught.
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The dysfunction of Thai politics — responsible for roughly a dozen coups since 1932 — is again on full display, with the government at risk of losing control over parliament less than a year after taking power.

Paetongtarn Shinawatra, Thailand’s youngest prime minister and the third member of her family to lead the country, lost her coalition’s second-largest party this week, leaving her with a razor-thin majority.

After weeks of infighting over cabinet posts, Bhumjaithai pulled the plug, citing a leaked phone call in which the 38-year-old criticized the role of Thailand’s military in a border dispute with Cambodia.

The fact that the call was with Cambodia’s former leader, Hun Sen, fueled the controversy, sparking opposition calls for Paetongtarn to resign and sending hundreds of activists onto the streets.

What was once a formidable coalition has been whittled down to an alliance on the brink.

Paetongtarn’s bloc now controls about 255 seats in the 495-member House of Representatives and can’t afford further defections. Yet the conservative United Thai Nation Party could walk if she refuses to step down, according to local media reports.

The political chaos couldn’t come at a worse time. The economy is on the edge of a technical recession and bracing for fallout from US President Donald Trump’s tariff onslaught.

Even if Paetongtarn survives, analysts warn the damage could linger — stalling key legislation, undercutting trade talks with Washington and shaking investor confidence in already-weak Thai assets.

Then there’s the armed forces. Thailand’s most-recent military coups, in 2006 and 2014, toppled governments led by Paetongtarn’s father, Thaksin, and her aunt, Yingluck.

Despite assurances from the army chief about safeguarding democracy, fears of another intervention are rising.

For now, Paetongtarn appears stuck — with few good options and even fewer allies. Philip Heijmans

Paetongtarn at an army base near the border with Cambodia today. Source: Thailand Government Spokesman Office/AP Photo

Global Must Reads

Trump will decide within two weeks whether to strike Iran, his spokeswoman said, as Israel hit more Iranian nuclear sites and warned its attacks may bring down the leadership in Tehran. While China was quick to condemn Israel’s assault, President Xi Jinping has shown no sign of rushing to provide weapons and other support that would help the Islamic Republic.

Podcast: On the latest episode of Trumponomics, we look at how Israel’s surprise attack on Iran isn’t yet having the expected impact on energy markets. Listen on Apple, Spotify, or wherever you get your podcasts.

Domestic problems piling up for Spanish Prime Minister Pedro Sánchez are threatening to spill into next week’s NATO summit after he emerged as the only leader from the alliance refusing to sign up to a new target for military spending of 5% of output. As many governments embark on an unprecedented expansion of defense outlays, Europe’s arms manufacturers are duking it out with American rivals to win their slice of the pie.

China sent the most warplanes toward Taiwan since October, a move that follows US lawmakers visiting a top military figure in Taipei and both the UK and Japan sailing warships through the strait separating the island from the Chinese mainland. Beijing defended the flights, with Foreign Ministry spokesman Guo Jiakun saying that “the Taiwan question concerns China’s sovereignty and territorial integrity.”

The EU is continuing intensive trade talks with the US ahead of a July 9 tariff deadline and is “making progress,” according to the bloc’s economy commissioner, Valdis Dombrovskis. Meanwhile, a source says the EU plans to restrict access for Chinese medical-device manufacturers to public-procurement contracts worth more than €5 million ($5.7 million), threatening to add another irritant to already testy relations.

Trump can continue to send National Guard troops to respond to protests in Los Angeles as a legal challenge over his use of the military proceeds, a federal appeals court ruled, in a win for the White House. It doesn’t change the situation on the ground in the city, where the federal government has been deploying troops for more than a week.

Members of the California National Guard in Los Angeles on Tuesday. Photographer: Frederic J. Brown/AFP/Getty Images

Brazilian President Luiz Inácio Lula da Silva insisted that he will run for reelection next year provided he remains healthy, pledging to block the far right from regaining power in Latin America’s largest nation.

The UK’s House of Commons will hold a final vote later today on whether to allow assisted dying, a move that could usher in a significant cultural shift over how to manage terminal illness.

A Turkish court arrested a lawyer for jailed Istanbul Mayor — and potential presidential candidate — Ekrem İmamoğlu, intensifying a widespread crackdown on the opposition.

Denmark’s annual democracy festival typically reflects what’s top of mind in Danish politics: this year, as our dispatch shows, the war in Ukraine and fears of Russian aggression loomed over the event on the island of Bornholm.

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Chart of the Day

Just three years after its founding, a Chinese government-run trader has become the single biggest force in the country’s $130 billion market for iron-ore imports. The rise of China Mineral Resources Group has allowed it to tame one of the world’s wildest commodities markets — sending volatility to a record low. Its clout is such that its stockpiles have become akin to a national reserve.

And Finally

The Los Angeles garment district is emptied out and Texas dairy farmers say workers aren’t showing up to milk cows. As Trump seeks to fulfill a campaign pledge to undertake the largest deportation operation in history, the US labor landscape is suffering the consequences and economic fallout looms. High-profile workplace raids by immigration agents in military gear terrify workers who lack permission to be in the country and leave employers wondering how they’ll manage without them.

People gather after several employees were taken into custody by federal agents in the Fashion District in downtown Los Angeles this month. Photographer: Genaro Molina/Los Angeles Times/Getty Images

Pop quiz (no cheating!). Which country has appointed a woman as the head of its foreign-intelligence service for the the first time? Send your answers to balancepower@bloomberg.net

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