Mission Grey Daily Brief - December 16, 2024
Summary of the Global Situation for Businesses and Investors
The global situation is marked by geopolitical tensions and economic challenges. The era of unconstrained global trade is ending, with national security and economic relations becoming increasingly intertwined. The United States and its allies are adopting industrial policies to safeguard critical sectors, while the World Trade Organization's inability to curb China's mercantilist practices diminishes its relevance in guiding global trade. Russia's war in Ukraine continues, with North Korean troops supporting Russian forces and North Korean forces killing Russian troops. Israel and Ireland are experiencing diplomatic tensions, with Israel closing its embassy in Dublin due to perceived anti-Israel policies. Britain is facing criticism for its lack of preparedness for a potential war with Russia, with concerns about the strength of Donald Trump's commitment to NATO. Russian oil tankers have broken up in the Black Sea, leading to oil spills and rescue operations.
The End of Unconstrained Global Trade
The era of unconstrained global trade is coming to an end, as national security and economic relations become increasingly intertwined. The United States and its allies are adopting industrial policies to safeguard critical sectors, while the World Trade Organization's inability to curb China's mercantilist practices diminishes its relevance in guiding global trade. This shift marks the end of the era of unconstrained globalization that drove the global economy over the past four decades.
The United States has a massive stake in the resilience of economic alliances among like-minded nations, similar to security blocs. The combined economic weight of the United States, the European Union (EU), Japan, and the United Kingdom exceeds half of global gross domestic product, dwarfing that of the China-Russia-Iran-North Korea axis. To capitalize on these advantages, the United States should foster economic alliances by deepening sector-specific agreements, closely coordinating financial markets, co-developing rules and standards for future technologies, and bolstering joint efforts to strengthen trade ties with Global South countries.
Russia's War in Ukraine and Diplomatic Tensions
Russia's war in Ukraine continues, with North Korean troops supporting Russian forces and North Korean forces killing Russian troops. The Ukrainian president, Volodymyr Zelensky, has warned that the deployment of North Korean forces could extend to other battle zones. Kyiv estimates around 11,000 North Korean troops are now in the region, bolstering Russia's forces.
Israel and Ireland are experiencing diplomatic tensions, with Israel closing its embassy in Dublin due to perceived anti-Israel policies. The Irish government officially recognised the Palestinian state, and Ireland will formally intervene in South Africa's genocide case against Israel at the International Court of Justice (ICJ). Israel's ambassador to Dublin was recalled in May following the Palestinian state recognition.
Britain's Preparedness for a Potential War with Russia
Britain is facing criticism for its lack of preparedness for a potential war with Russia, with concerns about the strength of Donald Trump's commitment to NATO. A retired senior general, Sir Richard Shirreff, has warned that Britain is not properly prepared to defend itself in a war with Russia and cannot rely on the United States and NATO. He argues that another global conflict will only be prevented if there is a "band of deterrent steel from the Baltic to the Black Sea", something he believes the UK may have to be prepared to help realise without the support of Washington.
Former defence secretary Ben Wallace and Labour peer Admiral Lord West have also warned of the potential consequences of a failure to prioritise defence. NATO general secretary Mark Rutte has declared that the West is not ready to deal with the threat of war from Russia, and has called for a shift to a wartime mindset and a turbocharge of defence production.
Russian Oil Tanker Breakup and Oil Spills
Russian oil tankers have broken up in the Black Sea, leading to oil spills and rescue operations. The tankers, Volgoneft 212 and Volgoneft 239, were in the Kerch Strait between mainland Russia and Crimea when they issued distress signals. Russian officials have opened criminal cases to investigate possible safety violations, and President Vladimir Putin has ordered a working group to be set up to organise rescue operations and cleanup works after the oil spill.
The Kerch Strait is a key route for exports of Russian grain and is also used for exports of crude oil, fuel oil, and liquefied natural gas. The tankers have a loading capacity of about 4,200 metric tons of oil products. Russian officials have deployed rescue tugboats and helicopters to the area, and specialists are assessing the damage at the site of the incident.
Further Reading:
Britain is failing to prepare itself for war with Russia, military chief warns - The Independent
Oil spills into Kerch Strait after Russian tanker breaks apart in storm - Yahoo! Voices
Russian oil tanker breaks up, another in distress in Black Sea - POLITICO Europe
The era of economic alliances beckons. The US should lead the way. - Atlantic Council
Ukrainian drones strike Russia as Kyiv reels from air attacks - Guernsey Press
Themes around the World:
Administrative Reform and Anti-Corruption Drive
To Lam’s administration has cut bureaucracy, eliminated ministries, and intensified anti-corruption efforts. While these measures improve the business environment, rapid changes and centralization can create uncertainty for foreign investors regarding legal enforcement and policy direction.
Strategic China-Pakistan Economic Cooperation
China’s commitment of up to $10 billion in new investments, especially in minerals, agriculture, and infrastructure, signals deepening economic ties. Joint ventures under CPEC and technology transfer initiatives are reshaping Pakistan’s resource sectors and supply chain dynamics.
Semiconductor Industry Policy Overhaul
South Korea passed a landmark law to strengthen its semiconductor sector, establishing a presidential commission and special funding. The law aims to secure technological leadership in AI chips, centralize support, and incentivize regional development, directly impacting global tech supply chains and investment flows.
SME Funding Gap and Investment Selectivity
Despite renewed investor confidence, South Africa’s SME sector faces a R350 billion funding gap due to strict financial controls and governance requirements. Only well-structured businesses attract capital, limiting broad-based economic growth and job creation.
China Relations and Supply Chain Diversification
Although overshadowed by US tensions, South Korea’s trade and supply chain strategies remain sensitive to China’s economic policies and regional dynamics. Ongoing diversification efforts are crucial for risk mitigation, especially in electronics, automotive, and critical materials sourcing.
China-Canada Economic Engagement Risks
Canada’s renewed engagement with China, including tariff reductions and sectoral agreements, brings opportunities for market access but exposes firms to US retaliation, regulatory scrutiny, and reputational risks amid intensifying US-China rivalry.
Accelerated Push for Energy Imports and Diversification
Facing energy shortages, Ukraine is rapidly increasing electricity imports and seeking alternative energy sources. This shift creates opportunities for foreign energy suppliers and technology providers, but also exposes businesses to price volatility and regulatory changes in the energy sector.
Infrastructure Concessions Drive Investment Surge
A record wave of infrastructure concessions—50 auctions in 2023-2025—has attracted over R$229 billion in private investment, especially in ports, highways, and energy. This shift to private sector-led development is improving logistics but also exposes projects to regulatory, financial, and execution risks.
Belt and Road Initiative Expansion
China signed a record $213 billion in new Belt and Road deals in 2025, focusing on energy, mining, and infrastructure in Africa and Central Asia. This expansion strengthens China’s global economic footprint but raises debt and dependency concerns in partner countries.
Labor Market Softness and Restructuring
US job growth remains sluggish, with the lowest gains outside recession years and a 4.4% unemployment rate. Tariffs and high interest rates have contributed to weak hiring, prompting the Fed to cut rates. Labor market fragility poses risks for consumer demand and business operations.
US-China Economic Competition Intensifies
US-China relations remain a dominant force in global economics, with ongoing tensions over technology, trade, and security. These dynamics influence market access, regulatory risk, and supply chain resilience for international businesses operating in or sourcing from both countries.
Ruble Volatility and Financial Policy
The ruble’s real effective exchange rate surged 28% in 2025 due to trade surpluses and high interest rates, reducing inflation but hurting export competitiveness and budget revenues. Currency volatility complicates financial planning, pricing, and investment for international businesses operating in Russia.
Energy Transition and Fossil Fuel Policy
US energy policy is increasingly polarized, with federal calls to double oil output and expand LNG exports, while some states push renewables. This divergence creates uncertainty for energy-intensive industries and complicates long-term investment in both fossil fuels and green technologies.
Strategic Partnerships and Economic Security
Japan is deepening strategic partnerships with the EU, Italy, and India, focusing on critical minerals, AI, and defense cooperation. These alliances aim to de-risk supply chains, foster innovation, and reinforce Japan’s role in Indo-Pacific and global economic security frameworks, offering new opportunities for international investors.
Escalating U.S. Secondary Tariffs
The United States has imposed a sweeping 25% tariff on any country trading with Iran, sharply escalating secondary sanctions. This move threatens to disrupt global supply chains, deter foreign investment, and force international businesses to reassess exposure to both Iran and U.S. markets.
Political and Alliance Stability at Risk
The crisis tests the cohesion of NATO and the transatlantic alliance, with economic coercion undermining trust among allies. The UK’s support for Greenland’s sovereignty and collective security is at odds with US demands, raising diplomatic and security risks for international businesses.
Belt and Road Initiative Intensifies
China’s Belt and Road Initiative signed $213 billion in new deals in 2025, focusing on energy, metals, and infrastructure in Africa and Central Asia. This expansion strengthens China’s global economic reach and creates new opportunities and dependencies for partners.
Humanitarian Crisis and Workforce Displacement
Widespread infrastructure damage and harsh winter conditions have forced hundreds of thousands to evacuate urban centers, straining labor availability and disrupting local markets. The humanitarian crisis compounds business continuity risks and complicates workforce planning for international firms.
India-Canada Energy and Minerals Reset
Canada and India are negotiating broad accords on energy, critical minerals, and AI, aiming to double bilateral trade by 2030. This diplomatic reset opens new markets for Canadian resources, supports supply chain diversification, and strengthens Canada’s position in Asian growth markets.
Double-Digit Growth Ambitions and Risks
Vietnam targets over 10% annual GDP growth for 2026–2030, emphasizing industrial upgrading, high-tech sectors, and private sector expansion. These ambitious targets attract investment but heighten pressure on infrastructure, regulatory efficiency, and macroeconomic management.
Circular Economy Initiatives Gain Momentum
France is advancing circular economy models for EV batteries, with startups and industrial players piloting second-life and recycling projects. These initiatives are increasingly supported by public policy, enhancing resource efficiency and opening new business models for investors.
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.
2026 Presidential Election and Policy Volatility
The 2026 US presidential election introduces significant policy uncertainty, especially regarding trade, tariffs, and foreign investment. Shifts in administration priorities could rapidly alter the regulatory landscape, impacting global business strategies and risk assessments.
Persistent Supply Chain Disruptions
US supply chains continue to experience disruptions from geopolitical tensions, natural disasters, and infrastructure bottlenecks. Companies must invest in resilience, diversify suppliers, and adopt new technologies to mitigate risks and maintain operational continuity.
Escalating Cross-Strait Geopolitical Risks
China’s increased military pressure, including frequent air and naval incursions, raises the risk of conflict and supply chain disruption. Heightened tensions threaten business continuity, insurance costs, and regional stability, making contingency planning essential for international firms.
Structural Economic Challenges and Reform Agenda
Thailand faces its lowest economic growth in a decade, driven by high household debt, corruption, and an aging workforce. Political parties are prioritizing SME support, anti-corruption, digital infrastructure, and EEC revitalization, but structural reforms remain critical for sustainable long-term growth.
Nile Water Crisis and GERD Dispute
The Grand Ethiopian Renaissance Dam (GERD) has intensified Egypt’s existential concerns over Nile water security. Ongoing disputes with Ethiopia threaten agricultural output, food prices, and political stability, while U.S. and Israeli mediation efforts aim to secure binding water-release guarantees critical for Egypt’s future.
Offshore Wind Investment Surge
The UK has secured $30 billion for 8.4 GW of offshore wind capacity, powering 12 million homes and advancing decarbonization goals. This initiative attracts private investment, supports job creation, and strengthens energy security, though grid integration and supply chain challenges persist.
Regional Geopolitical Tensions and Iran’s Role
Iran’s support for Hamas and other non-state actors continues to threaten Israel’s security and regional normalization efforts. The risk of escalation with Iran or its proxies remains high, impacting energy infrastructure, cross-border trade, and investor sentiment.
Digital Blackouts and Technology Restrictions
Iran’s government has imposed repeated internet blackouts and tightened technology controls to suppress dissent, disrupting business operations, cross-border communications, and digital commerce. These restrictions have also driven a black market for smuggled technology and hindered foreign investment in Iran’s digital sector.
ESG, Regulatory, and Investment Climate
Taiwan’s evolving regulatory landscape, with a growing focus on ESG and sustainable development, shapes investment strategies. Infrastructure modernization and compliance with international standards are increasingly important for attracting capital and maintaining global market access.
Geopolitical Alliances and Trade Policy Coordination
US trade and investment policies are increasingly intertwined with geopolitical alliances, as seen in evolving US-South Korea agreements and pressure on Indo-Pacific partners to align with US strategic interests. This affects market access, regulatory frameworks, and supply chain security for international businesses.
Surge in Foreign Direct Investment
Turkey attracted $12.4 billion in FDI in the first 11 months of 2025, a 28% increase year-on-year. The EU remains the main source, with wholesale, ICT, and food manufacturing leading. Improved macroeconomic stability and policy consistency drive renewed investor confidence.
US-EU Trade Tensions Escalate
The US has imposed new tariffs of up to 25% on German and European goods, citing geopolitical disputes. This has led to a sharp decline in German exports to the US, especially in automotive and steel, and threatens supply chain stability and investment planning.
Global Supply Chain Diversification Trend
Amid US-led tariff wars, UK businesses are accelerating efforts to diversify suppliers and markets, particularly towards India and Asia-Pacific. This shift aims to mitigate risks from geopolitical shocks and ensure resilience in critical sectors such as automotive and technology.
Rising Role in Global Supply Chains
Indonesia is capturing a growing share of global supply chains as U.S.-China trade declines, with Indonesian imports to the U.S. rising 34% in 2025. This shift enhances Indonesia’s position as a sourcing hub, attracting investment and diversifying global manufacturing.