Moira Jeffrey: the Venice Biennale is a strange mix of the serious and the sense of a circus come to town

This is Gloria, the American contribution to the 54th Venice Biennale. Outside the American pavilion, in the grounds of the park known as the Giardini, the artist duo Allora and Calzadilla have placed an upturned tank. Welded to its top (its bottom, in fact) is an ordinary gym treadmill.

At set times each day US Olympians from the track and field and gymnastic teams, including a gold medallist, work out, their energy powering the rolling tank tracks. The tank goes nowhere but its noisy rhythm reminds you that nation states have always used areas like sport and culture for political ends. It is also a reminder, if one were needed, that not all American foreign policy consists of such "soft diplomacy". By chance it's a British tank, a Centurion. Not for political reasons, simply because it's easier to get hold of one. At some level everything at the Biennale is about trade, and Venice, perched between East and West, has always been about the flow of goods.

At the British pavilion Mike Nelson has pulled off a show on this theme that is both an extraordinary technical achievement and a poetic tour de force. Working in the building for three months Nelson has transformed the neoclassical pavilion into a gloomy warren, itself a reconstruction of a show he made in 2003, evoking an abandoned Istanbul atelier in the caravanserei where silk route traders would camp out while doing business in the city.

Winding your way around the sequence of rooms, including an abandoned dark room strung with the black and white photographs the artists used in his original research, you stumble out into the sunlight of an Istanbul courtyard. The walls are covered in rough screed, the windows patched and awkward. It's at this point you realise that he has actually taken the roof right off the building. Nelson's show is a hymn to difference, but it is also an ambiguous or empty zone. Are you on the outside or at the heart of things?

Difference, at its most dramatic, lies at the heart of this year's show from Poland. For the first time the Polish pavilion is showing a non Polish artist: the Israeli Yael Bartana, ably aided by curators Galit Eilat and bright young star Sebastian Cichocki. Entitled …and Europe will be stunned, this is a project of jaw-dropping audacity. Bartana's film trilogy suggests the creation of a new political movement, the Jewish Renaissance Movement in Poland, which calls on 3.3 million Jews to return to build a new society now that the old one finds it cannot survive as a monoculture.

There's a logo, a political poster to collect. You don't sign in as a member of the press but join up. The conceit of the show is that the films are not works of art so much as almost hallucinatory propaganda. In the first film, Nightmare, an earnest young demagogue stands in an empty stadium, with trees growing up through the seating, and implores Jews to return. In the central film, young people build a kibbutz in a park and learn the Polish language, in echoes of the stirring films that accompanied the Zionist movement. But when the building is constructed the question of whether it is now a socialist kibbutz, the Warsaw ghetto, a camp or a West Bank settlement is left horribly hanging.

The trilogy uses some of the key sites of modern Poland, including the oppressive Stalinist showpiece Palace of Culture, smack in the middle of Warsaw. In the final film, the movement's leader is assassinated, given a martyr's funeral there, with customary trimmings and a book of condolences is signed: "Never Again."

How do you talk about this kind of explosive stuff? Bartana's work is an examination of mass movements, propaganda campaigns and nationalism in general. Never mind the painful questions it asks about European anti-Semitism, the Holocaust, the establishment of the state of Israel, the settlement movement and the Palestinian right of return, they will please no established political interests.

There is a weird incongruity between the aspects of the Biennale, like Bartana's, that are utterly serious, and the sense during the opening days that the most extreme of circuses has come to town. Roman Abramovich's yacht, if that is what you call such a monster, is parked outside the Giardini, blocking out the light. What does it mean when high seriousness and ostentatious capital share the same space? The fact is that you and he are on different planets. You try to console yourself with the thought that, for example, although he happens to own Chelsea, liking football does not mean you become, by osmosis, an oligarch.

Across at the other end of the Giardini the Swiss artist Thomas Hirschhorn attempts to bludgeon his audience into a revolutionary rage with a terrifying show, Crystal of Resistance, jammed with mobile phones, tinfoil and dozens of internet-sourced images of the victims of modern warfare. The question is whether such horrors can be understood free of context, and presented without obvious resolution, or are they just a kind of horror porn? The dilemma is always naggingly present in the artist's work.

Not all the work at Venice is in such an urgent tone. Illuminations, the curated exhibition in the Giardini and in historic naval dockyard the Arsenale, meanders gently and at times a little too quietly, but it starts with the stormy phantasmal light of a suite of works by the 16th-century painter Tintoretto. At the Dockyard there could be only one candidate for the opening salvo in a show about light: the Scot Martin Creed's lights are going on and off.

Also at the Arsenale is an appearance by that other Scottish trick of the light, The Loch Ness monster, woven into a fantastic new work, Case Study: Loch Ness by the Irish artist Gerard Byrne. It combines elements of the nessie mythology with evocations of some key moments in art from the 1960s in a fable of how we might construct or reconstruct meaning. If there's a single spectacular moment in this venue it's Urs Fischer's reconstruction of a vast 16th-century statue, the Rape of the Sabine Women by Giovanni Bologna. It's actually a wax candle and, along with a similar model of the artist's own studio chair, it is gradually melting.

It is light too that serves as a guiding metaphor for one of the artists at the Iraqi pavilion. Until this year, Iraq's first and last appearance at the Biennale was back in 1976. Adel Abidin's brilliantly sly video The Consumption of War shows two Western businessmen whose discomfort at having to share an office develops into a playful Star Wars duel, using the office's fluorescent light bulbs as light sabres.

At least it starts playful: by the time the last tube is smashed and, with resources exhausted, the office is plunged into total darkness, this elegant little modern parable has made its point.