Mission Grey Daily Brief - December 15, 2024
Summary of the Global Situation for Businesses and Investors
The world is witnessing a geopolitical crisis with escalating tensions and conflicts across multiple regions. NATO is preparing for a potential war with Russia, while Britain is criticised for its lack of preparedness. Russia's attacks on Ukraine have intensified, targeting critical infrastructure and causing widespread damage. Tensions between Kosovo and Serbia have escalated following a terrorist attack on a crucial canal. Israel's airstrikes in Gaza have resulted in civilian casualties, raising concerns about the ongoing conflict. China and the US are signalling a willingness to mend ties and avoid a trade war, but challenges remain.
NATO Prepares for Potential War with Russia
The geopolitical landscape is increasingly volatile, with rising tensions and conflicts across multiple regions. NATO, the military alliance, is preparing for a potential war with Russia, warning that its members are not spending enough on defence. Mark Rutte, NATO's Secretary-General, has called for a "war-mentality", emphasising the need for increased military spending and readiness.
Britain, a key NATO member, has faced criticism for its lack of preparedness. Retired senior general Sir Richard Shirreff has warned that Britain is not adequately prepared to defend itself in a war with Russia. He emphasises the importance of a strong defence posture and calls for increased investment in military capabilities. Former defence secretary Ben Wallace and Labour peer Admiral Lord West have echoed these concerns, stressing the need for a robust defence strategy.
Russia's Attacks on Ukraine's Critical Infrastructure
Russia's attacks on Ukraine have intensified, targeting critical infrastructure and causing widespread damage. Ukrainian President Volodymyr Zelenskyy has condemned the attacks, describing them as terrorising millions of people. Western allies have provided Ukraine with air defence systems, but Russia has sought to overwhelm these defences with combined strikes involving large numbers of missiles and drones.
Russia's attacks have significantly damaged Ukraine's energy infrastructure, leading to widespread power outages and disruptions in essential services. Ukrainian officials have warned that Russia is stockpiling missiles for further attacks, posing a significant threat to Ukraine's defence capabilities.
Tensions Escalate Between Kosovo and Serbia
Tensions between Kosovo and Serbia have escalated following a terrorist attack on a crucial canal that supplies water to key power plants. Kosovo's Interior Minister Xhelal Sveçla has condemned the attack, describing it as a "terrorist act", and authorities have arrested eight suspects, seizing a significant cache of military gear.
NATO, which has maintained peacekeeping forces in the region since 1999, has condemned the attack and increased security provisions. Kosovo's security council has urgently convened to assess and enhance protective measures for essential infrastructures.
The escalating tensions between Kosovo and Serbia raise concerns about the stability of the region, particularly in areas with ethnic tensions. Experts predict that a comprehensive dialogue between the two countries is necessary to prevent further violence.
Israel's Airstrikes in Gaza
Israel's airstrikes in Gaza have resulted in civilian casualties, raising concerns about the ongoing conflict. Medical teams in Gaza have reported that an Israeli airstrike killed at least 10 people at a market. Gaza's civil defence agency has condemned the attacks, stating that they have killed at least 58 people.
Ceasefire talks are ongoing, but uncertainty remains about the future of the conflict. Israel's actions have drawn international criticism, with calls for a strong reaction from the global community.
China and the US Signal a Willingness to Mend Ties
China and the US are signalling a willingness to mend ties and avoid a trade war, but challenges remain. President Xi Jinping has expressed a desire to work with US President-elect Donald Trump to resolve trade disputes and avoid a potential trade war. Trump's policy stance of putting America first has posed challenges for Chinese policymakers, who are already facing economic difficulties.
Trump has vowed to impose additional tariffs on Chinese goods, while China has responded by banning exports of certain rare materials. Experts believe that both sides are likely to negotiate a deal rather than forcefully implement heavy tariffs. Exports have been a bright spot for China's economy, but higher tariffs could slow down this sector.
President Xi has reiterated his commitment to open up the Chinese market to foreign companies, including US businesses. Trump has invited Xi to attend his inauguration, signalling a potential thaw in relations. However, challenges remain, and both sides must work together to find a mutually beneficial solution.
Further Reading:
Breaking Tensions: Arrests Made After Canal Explosion - Qhubo
Britain is failing to prepare itself for war with Russia, military chief warns - The Independent
China signals readiness to mend ties with U.S. ahead of Trump inauguration - CNBC
Russia launches barrage of missiles and drones on Ukraine's energy sector - Sky News
Ukrainian drones strike Russia as Kyiv reels from air attacks - Guernsey Press
WW3 fears rise as NATO jets scrambled in Poland after Putin's huge attack on Ukraine - Express
Themes around the World:
EV and Battery Ecosystem Expansion
Indonesia is rapidly developing an integrated EV and battery ecosystem, attracting major foreign investment. Over $7 billion is being invested in battery supply chains, with EV-related investment reaching 15.5% of total FDI, positioning Indonesia as a regional hub.
Foreign Investment Remains Resilient
France saw an 11% rise in foreign investment decisions in 2025, supporting nearly 48,000 jobs. Key sectors include automotive, AI, and renewables. However, persistent political instability and high public debt could affect future attractiveness and project execution.
BOJ tightening and yen swings
Rising Japanese government bond yields and intervention speculation are increasing FX and funding volatility. Core inflation stayed above 2% for years and debt is about 230% of GDP, raising hedging costs, repatriation risk, and pricing uncertainty for exporters and importers.
FX volatility and yen defense
Yen weakness and intervention signalling (rate checks, possible US coordination) heighten hedging costs and pricing uncertainty for importers/exporters. Policy risk rises around election-driven fiscal expectations, complicating repatriation, procurement contracts, and Japan-based treasury management.
Supply Chain Diversification and Resilience
Brazilian and regional supply chains are undergoing realignment due to geopolitical tensions, climate events, and infrastructure investments. Companies are investing in logistics, digital tools, and nearshoring to mitigate disruption risks and enhance operational reliability across the Americas.
Critical minerals industrial policy shift
Canberra is accelerating strategic-minerals policy via a A$1.2bn reserve, production tax incentives and project finance, amid allied price-floor talks. Heightened FIRB scrutiny of Chinese stakes and governance disputes increase compliance risk but expand opportunities for allied offtakes and processing investment.
Nearshoring meets security costs
Nearshoring continues to favor northern industrial corridors, but cartel violence, kidnappings and extortion elevate operating costs and duty-of-care requirements. Firms face higher spending on private security, cargo theft mitigation and workforce safety, shaping site selection, insurance and logistics routing decisions.
Regulatory Reforms and Business Transparency
Reforms led by the Securities and Exchange Commission of Pakistan have enhanced transparency, digitalized company registration, and aligned regulations with international standards. These measures have improved Pakistan’s global business rankings and investor confidence, supporting easier market entry and compliance.
Industrial policy reshoring incentives
CHIPS/IRA-style subsidies, procurement preferences, and accelerated permitting are steering investment toward U.S. manufacturing, energy, and AI infrastructure. Multinationals must optimize site selection, local-content strategies, and subsidy compliance while anticipating partner-country countermeasures.
Rail-border bottlenecks and gauge mismatch
Efforts to integrate Ukraine’s rail with EU networks highlight structural constraints: different track gauges require transshipment at borders, creating durable chokepoints. Any surge in exports or reconstruction imports can overwhelm terminals, extending lead times and pushing firms to diversify routing via Danube and road.
Regulatory enforcement and raids risk
China’s security-focused regulatory climate—anti-espionage, state-secrets, and data-related enforcement—raises due-diligence and operational risk for foreign firms. Expect tighter controls on information flows, heightened scrutiny of consulting, and increased need for localized compliance and document governance.
PPP privatization pipeline expansion
A new National Privatization Strategy targets 220+ PPP contracts by 2030 and over $64bn (SAR240bn) private capex across transport, water, health, education and airports. This expands investable infrastructure, but requires tight bid compliance, local partners, and long-term risk pricing.
Dezenflasyon ve lira oynaklığı
Ocak 2026 enflasyonu yıllık %30,65, aylık %4,84; konut %45,36 artışta. Dezenflasyon sürse de kur ve fiyat oynaklığı ücret, kira, girdi maliyetleri ve fiyatlama stratejilerinde belirsizlik yaratıyor; stok, kontrat ve hedge ihtiyacını artırıyor.
Strategic Role in European Value Chains
Turkey is deeply embedded in EU value chains, especially in automotive, machinery, textiles, and electronics. Its manufacturing and logistics capacity, combined with energy corridor status, make it a strategic partner for Europe’s competitiveness and supply chain resilience.
China decoupling in high-tech
Stricter export controls, higher chip tariffs and conditional exemptions tied to U.S. fab capacity reshape electronics, AI infrastructure and China exposure. Firms face redesign of product flows, licensing risk, higher component costs, and pressure to localize critical semiconductor supply chains.
USMCA Review and North America Rules
Washington and Mexico have begun talks ahead of the July 1 USMCA joint review, targeting tougher rules of origin, critical‑minerals cooperation, and anti‑dumping measures. Automotive and industrial supply chains face redesign risk, while Canada‑US tensions add uncertainty for trilateral planning.
Permitting and local opposition hurdles
Large battery projects face heightened scrutiny on safety and environmental grounds. In Gironde, the €500m Emme battery project on a high-Seveso site drew calls for independent risk studies, signalling potential delays, added mitigation costs and reputational risks for investors and suppliers.
AI governance in retail finance
FCA’s call for input on AI’s long-term impact to 2030 signals reliance on outcome-based frameworks rather than new rules. Online investing firms must prove model governance, explainability and third‑party controls to deploy AI in advice, nudging and surveillance.
Semiconductor controls and AI choke points
Tighter export controls, selective approvals, and new tariffs on advanced chips are reshaping global tech supply chains. Firms face compliance burdens, China retaliation risk, and higher hardware costs; U.S.-based capacity and trusted suppliers gain strategic priority.
Local content procurement intensifies
Local-content policies are deepening: PIF-linked spending reached SAR591bn ($157bn) in 2020–24, and government procurement increasingly scores local value-add. Foreign firms face higher compliance costs, partner-selection risk, and incentives to localize manufacturing, services, and workforce.
Tariff volatility and trade deals
U.S. tariff policy remains highly volatile amid court scrutiny of IEEPA authority, shifting “reciprocal” rates, and ad‑hoc bilateral deals (e.g., India set at 18%). Importers front‑load shipments; NRF forecasts H1 2026 container imports -2% y/y, complicating pricing, inventory and sourcing.
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.
Section 232 national-security investigations
Section 232 remains a broad, fast-moving trade instrument spanning sectors like pharmaceuticals/ingredients, semiconductors and autos/parts. Outcomes can create sudden tariffs, quotas or TRQs (as seen in U.S.–India auto-parts quota talks), complicating procurement and pricing strategies.
Rising Non-Oil Exports and Trade Diversification
Non-oil exports grew by 17% in 2025 to $48.6 billion, narrowing the trade deficit by 9%. Key export sectors include building materials, chemicals, and food. This diversification supports economic resilience and offers new opportunities for international trade partnerships.
Industrial decarbonisation subsidy wave
Paris is deploying large-scale state aid to keep energy‑intensive industry in France: €1.6bn over 15 years for seven sites, targeting ~3.8 Mt CO2/year abatement (~1% of national emissions). Subsidy conditionality and EU state‑aid scrutiny affect project bankability.
USMCA review and regional risk
The coming USMCA review is a material downside risk for North American supply chains, with potential counter-tariffs and compliance changes. Canada’s central bank flags U.S.-driven policy volatility; businesses may defer capex, adjust sourcing, and build contingency inventory across the region.
Shadow Economy and Sanctions Evasion
Iran’s reliance on shadow fleets, barter trade, and crypto channels to bypass sanctions has grown. US Treasury actions against crypto exchanges and shipping networks highlight enforcement risks for counterparties and the need for enhanced due diligence in all Iran-linked transactions.
Industrial policy reshapes investment maps
CHIPS, IRA, and related subsidy programs are steering manufacturing and energy investment into the U.S., but with strict domestic-content and “foreign entity of concern” limits. Multinationals must align capex, JV structures, and supplier qualification to retain incentives and avoid clawbacks.
High-risk Black Sea shipping
Merchant shipping faces drone attacks, sea mines, GNSS jamming/spoofing, and sudden port stoppages under ISPS Level 3. Operational disruption and claims exposure rise for hull, cargo, delay, and crew welfare, complicating charterparty clauses, safe-port warranties, and routing decisions.
Frozen assets, litigation, retaliation risk
Debate over using immobilized Russian sovereign assets to back Ukraine financing is intensifying, alongside Russia’s lawsuits against Euroclear seeking about $232bn. Businesses face heightened expropriation/retaliation risk, asset freezes, and legal uncertainty for custodial holdings, claims, and arbitration enforceability.
Mining investment and regulatory drag
South Africa risks missing the next commodity cycle as exploration spending remains weak—under 1% of global exploration capital—amid policy uncertainty and infrastructure constraints. Rail and port underperformance directly reduces realized mineral export volumes, raising unit costs and deterring greenfield projects.
Fraud warnings pressure onboarding controls
Recurring FCA warnings on unauthorised online trading sites highlight persistent retail fraud. Regulated platforms face rising expectations on KYC, scam detection, customer communications and complaints handling, while banks and PSPs may tighten de-risking of higher-risk flows.
USMCA review and North America
The approaching USMCA review is heightening risk for automotive, agriculture, and manufacturing flows across the US–Canada–Mexico corridor. Threatened tariffs and rules-of-origin pressures incentivize nearshoring but complicate cross-border planning, inventory placement, and long-term supplier commitments.
Coupang breach escalates to ISDS
Coupang’s data-leak investigation is triggering US political pushback and investor-state dispute settlement threats under the Korea–US FTA. A prolonged legal-diplomatic fight could chill US tech investment, complicate enforcement predictability, and heighten retaliatory trade risk perceptions.
Digital regulation–trade linkage escalation
Coupang’s data-breach probe has triggered U.S. investor ISDS and Section 301 pressure, showing how privacy, platform and competition enforcement can become trade disputes. Multinationals should expect higher regulatory scrutiny, litigation risk, and bilateral retaliation dynamics in digital markets.
High-tech FDI and semiconductors
FDI remains resilient and shifts toward higher-value electronics and semiconductors, with 2025 registered FDI at US$38.42bn and realized US$27.62bn; early-2026 approvals exceed US$1bn in key northern provinces. This supports supply-chain diversification but increases competition for talent and sites.