Mission Grey Daily Brief - August 21, 2024

Summary of the Global Situation for Businesses and Investors

The Ukrainian military has launched a surprise incursion into Russia, seizing territory and engaging in fierce fighting with Russian forces. Belarus has deployed troops and aircraft to its border with Ukraine, raising concerns about potential concrete actions. In Azerbaijan, President Ilham Aliyev has formally applied for BRICS membership, endorsed by China. Costa Rica is attracting foreign investment and developing its tech sector, while Hong Kong's press freedom has reached a record low due to sweeping national security laws.

Ukraine-Russia Conflict

The Ukraine-Russia conflict has witnessed a significant development, with Ukrainian forces mounting a surprise incursion into Russian territory, seizing control of over 1,250 sq km of "enemy territory" in and around the Russian border town of Sudzha. This marks the first major attack on Russian soil since World War II, and Ukrainian President Volodymyr Zelenskiy has acknowledged that he kept the incursion secret from allies. While this boosts Ukrainian morale and changes the narrative, it has not significantly impacted Russia's broader campaign, and Ukraine cannot afford heavy casualties. Meanwhile, Belarus has deployed aviation and air defense forces to its border with Ukraine, with experts suggesting that Vladimir Putin may push Belarus to take more concrete actions.

Azerbaijan's BRICS Membership Bid

Azerbaijan has formally applied to join the BRICS group (Brazil, Russia, India, China, and South Africa), with endorsement from China. This follows a Joint Declaration on Strategic Partnership signed between Azerbaijan and China during the Shanghai Cooperation Organization summit in July. Azerbaijan's bid for BRICS membership and its closer ties with China could have geopolitical implications and shift the balance of power in the region.

Costa Rica's Tech Sector Development

Costa Rica is attracting foreign investment and establishing itself as a tech hub, particularly in the microchip manufacturing industry. Intel, a major tech company, has invested in the country, and Costa Rica ranked first in the Inward FDI Performance Index in 2022. The country offers a skilled workforce, capital inflows, and a stable democratic environment. These factors make Costa Rica an attractive investment destination and a viable alternative to the South Asian market for microchips.

Hong Kong's Press Freedom

Hong Kong's press freedom has reached a record low, according to the annual Press Freedom Index survey by the Hong Kong Journalists Association (HKJA). Journalists cited concerns over national security laws and the prosecution of media figures as reasons for the decline. The Chinese Ministry of Foreign Affairs defended the laws, stating that they target a small number of individuals who endanger national security. However, the firing of HKJA's newly elected chairperson, Selina Cheng, by the Wall Street Journal, raises further concerns about press freedom in Hong Kong.

Risks and Opportunities

• Risk: The Ukraine-Russia conflict continues to be a significant source of geopolitical risk, with the potential for escalation or expansion into new territories. Businesses and investors should monitor the situation closely and be prepared for potential disruptions.
• Opportunity: Costa Rica's focus on developing its tech sector and attracting foreign investment presents opportunities for companies in the technology industry to expand their operations and benefit from the country's skilled workforce.
• Risk: The decline in Hong Kong's press freedom could impact businesses and investors operating in the region, particularly in industries that rely on free and open information flows. It is crucial to closely monitor the situation and be aware of potential restrictions or challenges to operations.
• Opportunity: Azerbaijan's bid for BRICS membership and its closer ties with China could present economic opportunities for businesses and investors, especially in sectors such as trade, finance, and technology. However, it is important to carefully assess the risks associated with doing business in a country that has close ties with authoritarian regimes like Russia and China.