Mission Grey Daily Brief - November 18, 2024
Summary of the Global Situation for Businesses and Investors
The G20 summit in Brazil is overshadowed by two major wars and Donald Trump's recent election victory. Heightened global tensions and uncertainty about an incoming Trump administration have tempered any expectations for a strongly worded statement addressing the conflicts in the Middle East and between Russia and Ukraine. Experts instead anticipate a final document focused on social issues like the eradication of hunger — one of Brazil's priorities — even if it aims to include at least a mention of the ongoing wars.
Typhoons in the Philippines have caused tidal surges and displaced massive numbers of people.
Geopolitical tensions simmer as Cop29 heads into its second week in Baku, Azerbaijan. Climate advocates are urging world leaders to commit to a strong finance deal.
Japan and Ukraine have signed a security info-sharing pact to boost cooperation.
Russia-Ukraine War
The Russia-Ukraine war has dragged past its thousandth day, with hundreds of missiles and drones streaking across Kyiv's skies, killing at least two people, leaving a dozen more injured, and damaging the country's already beleaguered energy grid. Russia's relentless aerial bombardment has destroyed half of Ukraine's energy production capacity, according to President Volodymyr Zelensky.
With the harsh Ukrainian winter fast approaching, the country is already suffering from major energy shortfalls, while its outmanned and outgunned forces have been steadily ceding ground to the Kremlin's troops for weeks. Kyiv has implored its Western allies for help to rebuild its energy grid — a hugely expensive undertaking — and to supply its outgunned forces with more aerial defence weapons.
Many in Ukraine fear that Western help will not be as freely given following the imminent return of Trump to the White House in January. The Republican president-elect has frequently questioned the United States' backing for Ukraine, and campaigned with the promise of cutting a quick deal to end the war.
Joe Biden has authorised Ukraine’s use of long-range missiles to strike hundreds of miles inside Russia for the first time, according to reports. The decision marks a major policy shift and comes after Russia warned that Moscow would see the move to allow the use of US-made missiles as an “escalation.” With Biden leaving office in two months, president-elect Donald Trump has indicated he will limit American support for Ukraine and pledged to end the war quickly once he takes office in January.
Ukrainian President Volodymyr Zelensky has campaigned for months to allow Ukraine’s military to use US weapons to hit Russian military targets far from its border, and retains important allies in both parties in Congress. He said Sunday evening that the strikes, if carried out, would "speak for themselves." But he did not confirm the authorization directly.
The Kremlin has said that if the United States allowed Ukraine to use US-made weapons to strike far into Russia, it would lead to a rise in tension and deepen the involvement of the United States in the conflict.
North Korea's Involvement in the Russia-Ukraine War
North Korea may end up sending Putin 100,000 troops for his war, according to people familiar with assessments made by some Group of 20 nations. The analysis is one of several on the evolving partnership between Russian President Vladimir Putin and North Korean leader Kim Jong Un, said the people, speaking on condition of anonymity to talk about private discussions. They stressed that such a move wasn’t imminent and that military support at that scale — if it occurred — would likely happen in batches with troops rotating over time rather than in a single deployment.
Ukraine’s ambassador to South Korea made a similar assessment earlier this month. Dmytro Ponomarenko said in an interview with VOA that Kyiv expected up to 15,000 North Korean troops deployed to fight in Russia’s Kursk region – and possibly in occupied areas of eastern Ukraine – to rotate every few months.
Kim’s decision to send North Korean troops to join Russia’s fight against Ukraine has alarmed Kyiv’s allies, who’ve warned that it risks exacerbating what is already Europe’s largest conflict since World War II. They believe the deepening cooperation between Putin and Kim could also impact the security balance in the Indo-Pacific region, where there’s mounting rivalry between China and the US.
The issue will be raised by several allies at the G-20 Summit in Brazil this week including by German Chancellor Olaf Scholz when he meets Chinese President Xi Jinping, Bloomberg previously reported. Scholz told Putin Friday in a rare phone call that the deployment of North Korean troops was a “grave escalation” of the war against Ukraine.
Scholz will press the Chinese leader at their meeting in Rio on Tuesday to use his influence over Russia and North Korea to avoid further escalation in the war, according to German officials.
The North Korean deployment shows the war is becoming globalized and Scholz and Xi will need to discuss this new dimension of the conflict, the officials said.
Worries were also raised by allies at the APEC gathering in Lima, Peru, this past week, another person said.
Xi has been the biggest benefactor to Putin and Kim in recent years, and sees both leaders as partners in pushing against the US-led world order. But his government has remained silent publicly on the dispatch of North Korean troops to Russia — a sign the Chinese president may be unhappy with the arrangement.
The Kim-Putin partnership risks adding economic pressure on China, just as Xi is bracing for potential disruption from tariffs threatened by US President-elect Donald Trump when he returns to the White House. It also undermines Beijing’s argument that the US shouldn’t have military alliances in the Indo-Pacific region.
China doesn’t “allow conflict and turmoil to happen on the Korean Peninsula” and it won’t “sit idly by when its strategic security and core interests are under threat,” Xi told US President Joe Biden at talks Saturday on the sidelines of the Asia-Pacific Economic Cooperation summit in Lima.
North Korea has so far sent more than 10,000 troops to fight alongside Putin’s army in Russia’s Kursk region, where Ukrainian forces have occupied part of the border territory since a surprise incursion in August. In return, Russia is providing money and helping North Korea increase its capabilities.
South Korea has said there’s a “high chance” that North Korea will seek cutting-edge technology transfers from Russia — including technology related to tactical nuclear weapons, intercontinental ballistic missiles, reconnaissance satellites and ballistic missile submarines.
As well as manpower, North Korea has also sent millions of rounds of artillery ammunition and other weapons to Russia. The Financial Times reported this week, citing Ukrainian intelligence, that Pyongyang has supplied long-range rocket and artillery systems to Russia.
US-China Relations
China’s leader Xi Jinping met for the last time with President Biden on Saturday, but was already looking ahead to President-elect Donald Trump and his "America first" policies, saying Beijing "is ready to work with a new U.S. administration."
During their talks on the sidelines of the annual Asia-Pacific Economic Cooperation summit in Peru, Xi cautioned that a stable China-U.S. relationship was critical not only to the two nations but to the "future and destiny of humanity."
Without mentioning Trump’s name, Xi appeared to signal his concern that the incoming president’s protectionist rhetoric on the campaign trail could send the U.S.-China relationship into another valley.
"China is ready to work with a new U.S. administration to maintain communication, expand cooperation and manage differences so as to strive for a steady transition of the China-U.S. relationship for the benefit of the two peoples," Xi said through an interpreter.
Xi, who is firmly entrenched atop China’s political hierarchy, spoke forcefully in his brief remarks before reporters. Biden, who is winding down more than 50 years of public service, talked in broader brushstrokes about where the relationship between the two countries has gone.
He reflected not just on the past four years but on the decades the two have known each other.
"We haven’t always agreed, but our conversations have always been candid and always been frank. We’ve never kidded one another," Biden said. "These conversations prevent miscalculations, and they ensure the competition between our two countries will not veer into conflict."
Biden urged Xi to dissuade North Korea from further deepening its support for Russia’s war on Ukraine. The leaders, with top aides surrounding them, gathered around a long rectangle of tables in an expansive conference room at a Lima hotel.
They had much to discuss, including China’s indirect support for Russia, human rights issues, technology and Taiwan, the self-ruled democracy that Beijing claims as its own. On artificial intelligence, the two agreed on the need to maintain human control over the decision to use nuclear weapons and more broadly improve safety and international cooperation of the rapidly expanding technology.
There’s much uncertainty about what lies ahead in the U.S.-China relationship under Trump, who campaigned promising to levy 60% tariffs on Chinese imports.
Already, many American companies, including Nike and eyewear retailer Warby Parker, have been diversifying their sourcing away from China. Shoe brand Steve Madden says it plans to cut imports from China by as much as 45% next year.
In a congratulatory message to Trump after his victory over Vice President Kamala Harris, Xi called for the U.S. and China to manage their differences and get along in a new era. In front of cameras Saturday, Xi spoke to Biden — but it was unmistakable that his message was directed at Trump.
"In a major flourishing sci-tech revolution, neither decoupling nor supply chain disruption is a solution," Xi said. "Only mutual, beneficial cooperation can lead to common development. ‘Small yard, high fence’ is not what a major country should pursue."
Biden administration officials have said they would advise the Trump team that managing the intense competition with Beijing will likely be the most significant foreign policy challenge they will face.
On Saturday, White House national security adviser Jake Sullivan said Biden had reinforced to Xi "that these next two months are a time of transition" and that the president would like to pass off the U.S.-China relationship "in stable terms" to the new administration.
Biden has viewed his relationship with Xi as among the most consequential on the international stage and put much effort into cultivating it.
Trump's "America First" Policy
Trump's "America First" policy could shift the Horn of Africa policy and shake up Mideast diplomacy on Iran.
Trump's recent election victory and the imminent return of an America First doctrine may also hamper the diplomatic spirit needed for broad agreement on divisive issues at the G20 summit in Brazil.<co: 11>G20 summit in Brazil.</
Further Reading:
BREAKING NEWS: Japan, Ukraine sign security info-sharing pact to boost cooperation - Kyodo News Plus
Biden approves Ukraine’s use of long-range missiles inside Russia for first time - The Independent
FirstFT: Biden authorises Ukraine to strike Russia with long-range US missiles - Financial Times
Geopolitical tensions simmer as Cop29 heads into second week - The National
North Korea may end up sending Putin 100,000 troops for his war - Fortune
North Korea ‘supplying Russia’ with long-range rocket and artillery systems - Financial Times
Russia launches massive drone, missile attack targeting Ukraine’s power grid - FRANCE 24 English
Trump already shaking up Mideast diplomacy on Iran - Al-Monitor
Themes around the World:
Defence City Industrial Incentives
Defence City has expanded to 63 resident firms, reporting nearly UAH111.3 billion in qualifying revenues. Tax and customs incentives, relocation support, and facility protection create a structured entry route for defense suppliers and international industrial partners.
Trade Pacts And Diversification
Thailand is seeking to conclude EU free-trade talks by year-end, with signing targeted for 2027, while accelerating the EFTA agreement. Officials frame deals as diversification against rising protectionism and a weaker multilateral trading system, potentially improving market access and certainty.
Energy Exports Shift Eastward
Russia has redirected crude sales from Europe toward China and India, which together absorb most exports, but longer routes, intermediary costs and buyer leverage compress netbacks. Energy revenue weakness raises exposure to market concentration and trade-policy shocks.
China-Japan Export Controls Escalate
Broader controls on rare-earth compounds have disrupted Japanese magnet makers: shipments of controlled categories reportedly fell 51% in the first half of 2026, while firms secure about two-thirds of required inputs. Export access now carries geopolitical and continuity risk.
Temporary US-China Trade Truce
The US-China tariff truce runs to January 10, 2027, with reciprocal reductions on selected $30 billion goods lists, but semiconductors, batteries and EVs remain outside the framework. Treat it as temporary stability, not durable settlement, for sourcing and sales planning.
Currency Collapse and Inflation Pressure
The rial's record depreciation and September inflation near 90% are eroding purchasing power; reported food and transport prices rose more than 115%. Businesses reliant on imported inputs face volatile replacement costs, weaker demand, and difficult pricing and working-capital decisions.
Investor Confidence Faces Pressure
The flagship Future Investment Initiative, which generated agreements exceeding $50 billion last year, has been postponed until 2027 amid security concerns. The disruption weakens investor engagement and may raise perceived risk premiums for Vision 2030 projects.
China Expands Technology Export Controls
Beijing proposed controls covering 40 AI, biomedicine and photovoltaic technologies, with 14 proposed bans and 26 licensing restrictions; interim pre-export registration already applies to relevant transfers. This could complicate licensing, partnerships and cross-border access to Chinese-developed technology.
Energy Import Exposure Drives Diversification
The Middle East supplied 94% of Japan's crude in 2025, with 93% transiting the Strait of Hormuz. Government plans emphasize diversified sourcing, GX and stable power for data centers, shaping energy procurement, infrastructure investment and operational resilience.
VEFTA Opens New Market Access
Vietnam’s October 18 VEFTA signing establishes a framework covering goods, services, investment, procurement and intellectual property. Once effective, it can widen market access and diversify sourcing; bilateral trade with EFTA is reported at nearly US$2 billion annually.
Fuel Supply Vulnerability and Costs
Geopolitical disruption has sharply raised diesel prices, with reported import prices up about 130% since January. Australia held 33 days of diesel and depends on imported refined fuel, exposing transport, farming and supply chains to price spikes or shipping interruptions.
European Content Tied to Subsidies
The Franco-German proposal links public support to European sourcing, with a reported target of at least 70% of components meeting European criteria in automotive production. If adopted, it could redirect supplier contracts and investment while complicating global sourcing strategies.
Overland Diversions Strain Trade Logistics
As maritime routes are constrained, Iran is pushing trade overland through Turkey and neighbors; one report says imports at Gürbulak surged 250%. Trucks cannot match seaborne volumes, so congestion, border delays and higher logistics costs threaten continuity.
EU Trade And Investment Anchor
The EU is South Africa’s largest foreign investor, with cumulative investment of about €40.4 billion by 2024; the EU-SADC agreement covers duty-free access for roughly 97% of South African exports, supporting trade and investment diversification.
EU Russian LNG Exposure
EU ports received more than 12 million tonnes of Russian Arctic LNG from January through September, up 9.5% year on year, despite plans to phase out imports. Buyers face transition, contract and policy risks as dependence unwinds.
Gümrük Birliği güncellemesi
Türkiye, 30 yıllık Gümrük Birliği’nin hizmetler, e-ticaret, kamu alımları ve tarımı içerecek şekilde güncellenmesini istiyor; AB yetkisi verilmediği için müzakereler başlamadı. Güncelleme gecikmesi, firmaların dijital ticaret ve yeni pazar erişiminde mevcut çerçeveye bağlı kalması demek olabilir.
Chinese EV Tariffs Create Uncertainty
Britain’s tariff stance is unsettled as Brussels presses for coordination against Chinese electric vehicles, while London weighs export-sector exposure and possible Chinese retaliation. EU duties reach 45%; Beijing has warned of countermeasures if UK restrictions are imposed.
Digital Trade Facilitation Rollout
The planned nationwide digital one-stop portal and Pakistan Single Window integration aim to streamline federal and provincial business procedures; phase one is due in December 2026. Delays or fragmented adoption would limit customs efficiency and make cross-border planning less predictable.
Investment Pledges Face Execution Tests
The Berlin summit cited roughly €230 billion in planned projects, but many were previously announced and most funding was domestic. EY counted 548 foreign investment projects in 2025, down 10%; execution depends on reforms, energy costs and faster approvals.
Emerging Gulf Transit Corridor
The proposed 1,200-kilometre Development Road would link Europe through Turkey and Iraq to the Gulf, with estimated costs of $17–20 billion. Qatar and UAE are discussed as potential financiers, but Baghdad–Kurdish regional tensions could delay delivery.
Stricter Customs Enforcement And Compliance
CBP is expanding analytics-led CF-28 inquiries, while DOJ elevates tariff evasion, import fraud and forced-labor misconduct. Proposed low-value-entry changes add electronic filing, bonds and broker requirements; companies should strengthen classification, origin, valuation and supplier controls.
EU Transit Policy Frictions
Policy friction with neighboring states complicates rerouting: Poland and Romania resisted higher transit, while Poland, Hungary and Slovakia restrict Ukrainian grain imports. Hungary’s conditional openness to sealed transit trains offers limited relief, not assured market access.
Automakers Expand Export Footprints
Hyundai plans $15.5 billion of Indian investment through 2032, adding capacity, R&D and supplier development. Broader partnerships aim to use India for vehicle platforms and exports, but raw-material security and possible European localization barriers remain risks.
China Capital, Domestic Value
China remains Indonesia's largest trade partner; Chinese investment totaled $34.4bn in 2021–25, concentrated in mineral processing, EV batteries and manufacturing. This capital supports capacity expansion, while policymakers emphasize domestic value-added, jobs and technology transfer requirements.
Energy-Industrial Policy Coordination Risks
Combining the energy and downstreaming portfolios may align power supply with energy-intensive industrial policy; mineral investment reached Rp300.1 trillion in H1 2026. Experts nevertheless flag oversight and accountability, making policy execution and regulatory checks material investor-monitoring priorities.
European Investment Brings Technology
VEFTA is intended to attract advanced technology and management expertise. By end-2025, Swiss investors had 234 Vietnamese projects worth more than US$2.4 billion, while Norwegian investors had 62 projects exceeding US$201 million, including activity in technology, energy and manufacturing.
Stricter Customs Enforcement
CBP is using data analytics and more CF-28 inquiries to flag classification, valuation and origin anomalies, while DOJ prioritizes tariff evasion and import fraud. Companies should strengthen documentation and compliance controls to limit broader duty assessments, penalties and litigation. [SmTp]
Foreign Capital, Selective Opportunities
Foreign direct investment reached €54 billion last year, but first-half 2026 inflows were €17.4 billion. Defense, industrial AI, energy systems and infrastructure offer an estimated €2.9–4.1 trillion investment potential through 2035, though actual funding remains uncertain.
Renewables Target Reshapes Energy
The government targets 50% renewable-energy reliance by 2030 and says grid upgrades can absorb added generation. High imported-fuel costs and supply-chain disruptions strengthen the case for diversification, creating opportunities in generation, storage, grid equipment, and project finance.
Weaker Growth And Investment Outlook
The IMF’s latest projection cited a 3.3 percent contraction in 2026, while Saudi officials had forecast a 3.6 percent decline; foreign investment fell in both first-half quarters. This combination raises uncertainty around demand, financing conditions and the pace of market expansion.
Grain Export And Planting Risks
Export disruption threatens crop revenue and next-season planting: reports indicate September grain shipments fell 45% year-on-year and officials warn sowing areas could shrink 35–40% if sales remain constrained, raising procurement uncertainty and global food-price exposure.
Fiscal Credibility Drives Market Risk
Lula’s 51.76% victory leaves a right-leaning Congress and heightened scrutiny of fiscal plans. Analysts cite public debt near 83% of GDP and deficits around 10%; credibility will shape currency, bond yields, borrowing costs, and investment timing.
Sovereign Risk and Financing Costs
Public debt near 120% of GDP, deficits above 5%, and rising borrowing costs are increasing France’s sovereign risk premium. With 10-year yields approaching 5% and debt-service costs rising, companies face potential pressure on financing conditions, confidence and investment.
EU Deal Opens Markets, Faces Resistance
Provisional Mercosur–EU implementation coincided with Brazilian exports to the bloc rising 30.7% from May to September 2026. Remaining European political and environmental objections, plus pending legal review, leave companies with attractive tariff opportunities but continuing implementation and market-access uncertainty.
China Remains Supply-Chain Hub
Trade diversification has not removed China from global production networks: reporting describes Chinese firms supplying machinery, components and materials to factories abroad, while major US companies retain China-linked operations and sourcing. Businesses should balance exposure reduction against the cost of losing established capabilities.
Fiscal uncertainty raises financing costs
The 2027 budget targets a deficit of 5% of GDP through €43–54 billion in savings, but parliamentary deadlock and possible emergency passage threaten predictability. Ten-year borrowing costs approached 5%, raising sovereign-risk exposure, financing costs and uncertainty around public investment.