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Mission Grey Daily Brief - September 08, 2024

Summary of the Global Situation for Businesses and Investors

Algeria's presidential election, Libya's oil exports standstill, political tensions in France, and the possibility of Belarus' involvement in the Russia-Ukraine war are the key issues impacting the global situation today. In Algeria, the incumbent president is expected to win a second term despite concerns over deteriorating human rights and low voter turnout. Libya's oil exports are at a near standstill due to political tensions over the control of the nation's central bank, which manages oil revenues. Protests in France against the appointment of Michel Barnier as Prime Minister reflect political divisions in the country, as a left-wing coalition won the most seats in the lower house of parliament in the July elections. Meanwhile, Belarus' proximity to Ukraine and its relationship with Russia raise concerns about its potential involvement in the war.

Algeria's Presidential Election

Algeria held a presidential election on Saturday, with preliminary data showing a voter turnout of around 48%. The incumbent president, Abdelmadjid Tebboune, is expected to win a second five-year term despite concerns over deteriorating human rights and a history of embarrassing statements. Human rights groups and opposition figures have criticized the government for dissolving political parties, civil society organizations, and independent media outlets, as well as a spike in arbitrary arrests. The election took place against a backdrop of economic challenges, with the government failing to contain soaring inflation and meet export growth targets. Algeria's largest opposition party, the Rally for Culture and Democracy (RCD), has been a particular target of government crackdowns, with 60 of its activists arrested in August. The country has also never had a peaceful transition of power, and the military's influence remains strong. The election results are expected today.

Libya's Oil Exports Standstill

Libya's oil exports are at a near standstill due to political tensions over the control of the nation's central bank, which manages oil revenues. Forces aligned with eastern leader Khalifa Haftar halted production at major oil fields on August 26, slashing output by half. This disruption has sent ripples through global energy markets, causing a brief rise in world oil prices above $80 per barrel. While a recent agreement between rival governments has raised hopes for a resolution, industry analysts warn that the situation remains unsettled. Libya's oil production is critical to its economy, accounting for 98% of government income and 65% of its GDP. The National Oil Corporation has declared force majeure, seeking release from its contractual obligations. The situation has also impacted OPEC members' views on China's oil demand, which may be weaker than anticipated due to a transition to electric vehicles.

Political Tensions in France

Tens of thousands of demonstrators took to the streets of Paris and other French cities to protest the appointment of Michel Barnier as Prime Minister by President Emmanuel Macron. The protests reflect political divisions in the country, as a left-wing coalition won the most seats in the lower house of parliament in the July elections. Macron's decision to appoint a veteran conservative has been denounced as a "power grab" that undermines democracy. Surveys suggest that a majority of French voters believe Macron has "disregarded" and "stolen" the election results. The protests come just days before Denmark's vote in the European Union election, and in the context of an increasingly polarized political climate across Europe, as seen in the recent assassination attempt on Slovakia's Prime Minister.

Belarus and the Russia-Ukraine War

As the Russia-Ukraine war continues, attention turns to the situation along Ukraine's border with Belarus. Belarus has played a key supporting role in the war, with Russian troops and equipment positioned in Belarus before the invasion. Tensions have escalated in recent months, with Belarus positioning thousands of troops near the Ukrainian border. While backchannel negotiations led to their repositioning, there remains a concern that Belarus may come under pressure from Russia to become directly involved in the war. Ukraine has been fortifying its border with Belarus and does not seek a confrontation but cannot rule out the possibility. A potential Belarusian military intervention could involve a joint attack on Kyiv, forcing Ukraine to redeploy troops from frontline positions.

Recommendations for Businesses and Investors

  • Algeria: Businesses and investors should closely monitor the situation in Algeria, particularly regarding the protection of human rights and the potential for economic reforms. While political stability may be appealing, the country's history of arbitrary arrests and lack of respect for civil society organizations could pose risks.
  • Libya: The uncertainty surrounding Libya's oil exports underlines the risks of investing in countries with political instability and a heavy reliance on a single industry. Businesses and investors should be cautious about entering or expanding operations in Libya until the situation stabilizes.
  • France: Political tensions in France highlight the risks of investing in a country with a polarized political climate. Businesses and investors should monitor the situation and be prepared for potential policy changes if the left-wing coalition gains more influence.
  • Belarus: The potential involvement of Belarus in the Russia-Ukraine war underscores the dangers of doing business in or with countries that support or enable authoritarian regimes. Businesses and investors should avoid any involvement with Belarus to prevent reputational and ethical risks, as well as potential economic disruptions.

Further Reading:

Algeria: Presidential elections, voter turnout below 50 percent - Agenzia Nova

Bank feud stalls Libyan oil exports, unsettling markets - VOA Asia

Belarus would be wise to stay out of Putin’s war - Arab News

British Newspaper: Algeria’s presidential election takes place amid deteriorating human rights - The North Africa Post

Denmark’s Prime Minister Attacked In Copenhagen Days Prior To E.U. Election - The Organization for World Peace

France: Thousands rally against Barnier's appointment as PM - DW (English)

Themes around the World:

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Sanctions expansion and enforcement risk

U.S. sanctions and enforcement are intensifying on Iran-linked networks, including “shadow fleet” logistics and digital-asset channels, increasing secondary-risk exposure for shippers, traders, insurers, and banks. Compliance costs rise, with higher disruption risk for Middle East supply routes.

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Limited Public Support and Social Acceptance

The Shelter Act lacks robust government support programs or tax incentives, leading to public debate over cost allocation. This could influence market sentiment, consumer demand, and the political sustainability of the shelter construction mandate.

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Rules-Based Order Fragments Globally

Canadian leadership now openly acknowledges the collapse of the traditional rules-based international order. This fragmentation increases uncertainty for multinational firms, as trade, finance, and supply chains become tools of geopolitical leverage rather than predictable frameworks.

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Energy Security and Infrastructure Deals

A new 15-year gas agreement with Azerbaijan and major investments in natural gas and renewables are central to Turkey’s drive for energy security and reduced import dependency. These moves enhance industrial competitiveness and supply chain resilience.

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Digital tax reporting expands to SMEs

HMRC’s Making Tax Digital for Income Tax begins April 2026 for self‑employed/landlords over £50k, moving to quarterly submissions via paid software; thresholds fall to £30k (2027) and £20k (2028). This increases compliance cost, process change and advisory demand.

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Supply Chain Stability Improves, Risks Remain

Only 7.5% of German firms report supply chain difficulties, a significant improvement from previous years. The auto sector especially benefits, but ongoing geopolitical tensions and critical dependencies—such as on semiconductors—require continued vigilance and risk management for international businesses.

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Election-driven fiscal and policy volatility

The Feb 8 election and “populism war” amplify risks of debt-funded stimulus, policy reversals, and slower permitting. Bond-curve steepening on fiscal worries signals higher funding costs and potential ratings pressure, affecting PPPs, SOEs, and investor confidence.

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Critical Minerals and Resource Security

The US government’s $2.5 billion push for domestic critical mineral production is reshaping investment in mining and advanced manufacturing. New contracts and legislation aim to reduce import dependency, enhance national security, and support resilient supply chains.

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US Tariff Escalation and Trade Wars

Recent US tariff threats against China, the EU, and South Korea have intensified global trade tensions, disrupting supply chains and raising costs. Tariffs averaging 18%—the highest since 1934—are largely borne by US consumers and businesses, impacting inflation and investment strategies.

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PIF strategy reset and PPPs

The Public Investment Fund is revising its 2026–2030 strategy and Saudi launched a privatization push targeting 220+ PPP contracts by 2030 and ~$64bn capex. Creates bankable infrastructure deals, but raises tender competitiveness, localization requirements, and governance diligence needs.

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Defense procurement surge and controls

Large US-approved arms packages and sustained defense demand support Israel’s defense-industrial base but heighten regulatory sensitivity. Companies in dual-use, electronics, aviation, and logistics face tighter export-control, end-use, and supply-chain traceability requirements, plus potential delays from licensing and oversight.

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Nearshoring Momentum and Supply Chain Shifts

Mexico’s role as a nearshoring hub is accelerating, driven by US-China tensions and global supply chain recalibration. Firms are relocating manufacturing to Mexico for resilience, but face challenges including labor shortages, infrastructure gaps, and regulatory complexity.

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Escalating Western Sanctions Enforcement

Western powers have intensified enforcement of sanctions on Russian oil exports, including direct maritime interdictions and seizures of shadow fleet tankers. This escalation increases legal, operational, and reputational risks for businesses involved in Russian energy logistics or trade, and heightens global supply chain volatility.

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Tech export controls tighten supply

Expanded controls on AI chips, advanced semiconductors, and tooling constrain sales into China and other sensitive markets, while raising compliance burdens worldwide. Firms must redesign products, segment customer access, and harden end‑use diligence to avoid penalties and sudden shipment stoppages.

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Energy Transition and Power Security

Eskom’s reforms and renewable energy expansion have reduced load shedding, but high electricity costs and grid vulnerabilities persist. Recent tariff relief for energy-intensive industries aims to prevent deindustrialization, yet long-term competitiveness depends on sustainable pricing and infrastructure modernization.

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Quality FDI and semiconductors

Registered FDI reached US$38.42bn in 2025 and realised FDI about US$27.62bn (highest 2021–25). Early-2026 approvals topped US$1bn in Bac Ninh and Thai Nguyen, with policy focus on semiconductors, AI, and higher value-added supply chains.

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Tourism recovery with demand mix risks

Tourism is near recovery: Phuket passengers rebounded to 96.4% of 2019 and arrivals Jan 1–25 reached 2.63m (≈THB129.9bn). However, China remains volatile and room-rate power is limited, affecting retail, hospitality capex, labor demand, and services supply chains.

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Competitive Dynamics and Asian Market Pressure

French and European battery firms face increasing competition from Asian manufacturers, especially Chinese players with aggressive expansion and lower costs. This dynamic is reshaping supply chains, pricing, and strategic alliances in the second-life battery sector.

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Widespread Civil Unrest and Political Instability

Nationwide protests over economic collapse and political repression have resulted in hundreds of deaths and thousands of arrests. The instability has led to internet shutdowns and business disruptions, significantly raising operational and security risks for foreign firms.

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Labor Market Reforms and Corporate Impact

South Korea is enacting sweeping labor reforms to extend protections to up to 8.6 million freelancers and platform workers. While aiming to reduce inequality, these measures could increase compliance costs, heighten labor market rigidity, and accelerate automation in business operations.

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Currency Volatility and Inflation Pressures

The Egyptian pound has experienced depreciation against the US dollar, though foreign reserves reached record highs. Inflation, while declining to 12.3%, remains a concern. Monetary easing is expected in 2026, with interest rates projected to fall, impacting investment and import costs.

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US-China Tech and Trade Tensions

The US has imposed a 25% tariff on advanced AI chips sold to China, targeting Nvidia and AMD products. This move, citing national security, disrupts global chip supply chains and intensifies US-China trade and technology competition, impacting multinational investment strategies.

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Shifting Global Trade Alliances

US unpredictability has accelerated trade realignments, with the EU and India finalizing deals and Germany increasing investment in China. Major economies are hedging against US volatility by building alternative trade frameworks, reducing reliance on American markets and supply chains.

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Labor Reform and Compliance Pressures

Sweeping labor reforms—including a reduced 40-hour workweek, higher minimum wages, and stricter inspections—are reshaping Mexico’s labor market. These changes increase compliance costs and operational complexity, particularly for manufacturing, logistics, and digital platform employers, with direct implications for competitiveness and labor relations.

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Energy Sector Reform and Pemex Strategy

Mexico is investing $323 billion in energy and infrastructure through 2030, with Pemex targeting 1.8 million barrels daily and expanding natural gas. Reforms focus on debt reduction, domestic refining, and attracting private capital, but Pemex’s financial health remains a concern.

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Tighter sanctions enforcement playbook

Expanded U.S. sanctions targeting Iranian officials and digital-asset channels signal heightened enforcement, including against evasion networks. Firms in finance, shipping, commodities, and tech face greater due-diligence burdens, heightened penalties risk, and potential disruptions to cross-border payments and insurance.

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Erosion of US Economic Safe-Haven Status

Erratic trade and monetary policies have triggered market volatility, with global investors questioning the reliability of US assets. A ‘Sell America’ trend could weaken the dollar, raise borrowing costs, and undermine the US’s traditional role as a global financial anchor.

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Critical Minerals and Re-shoring Push

The U.S. is strengthening industrial policy around strategic inputs, including initiatives to secure critical minerals and expand domestic capacity. This supports investment in upstream and processing projects but raises permitting, local-content, and ESG scrutiny that can delay timelines and alter supplier selection.

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Energy Sector Expansion and Regional Integration

Israel’s approval of $2.4 billion in new investment for the Leviathan gas field and a $30 billion export deal with Egypt position it as a regional energy hub. These developments enhance energy security and competitiveness, but require ongoing infrastructure modernization and geopolitical risk management.

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Tourism demand mix and margin squeeze

Hotels forecast ~33m foreign arrivals in 2026 versus a 36.7m target; China demand is expected to soften while long-haul grows. Limited room-rate increases and higher labor/social-security costs pressure margins, impacting hospitality, aviation, retail, and real estate revenues.

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Shadow fleet interdiction and shipping risk

Western enforcement is shifting from monitoring to interdiction: boardings, seizures, and “stateless vessel” designations target Russia-linked tankers using false flags and AIS gaps. This increases marine insurance premiums, port due‑diligence burdens, and disruption risk for Black Sea, Baltic, and Mediterranean routes.

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Electricity grid reform uncertainty

Eskom’s revised unbundling keeps transmission assets inside Eskom, limiting the new TSO’s ability to raise capital for urgent grid expansion. Business warns this policy “U-turn” could prolong grid constraints, delay renewables connections, and revive supply insecurity for operations.

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USMCA, nearshoring, and critical minerals

Nearshoring to Mexico/Canada is accelerating, reinforced by U.S. critical-mineral initiatives and stricter origin enforcement. This benefits firms that regionalize supply chains, but raises audit burdens for rules-of-origin, labor content, and ESG traceability—especially in autos and batteries.

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AI regulation and compliance burden

China is expanding AI governance via draft laws and sector rules, emphasizing safety, content controls, and data governance. Foreign firms deploying AI or integrating Chinese models face product localization, auditability demands, and higher legal exposure around censorship and algorithm accountability.

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Tax enforcement, digitisation, disputes

IMF-mandated tax reforms expand enforcement, digital payments and FBR capability, while high taxes are cited in multinational exits. Contractual tax disputes (e.g., “super tax” in petroleum) add legal uncertainty, affecting project finance, arbitration risk, and long-term investment appetite.

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China-Japan Economic Tensions Escalate

China has imposed new export restrictions on rare earths and dual-use goods to Japan, weaponizing resource dependency amid Taiwan-related tensions. Japanese industries face supply chain disruptions, prompting urgent diversification of critical mineral sources and G7 cooperation.