Mission Grey Daily Brief - December 25, 2024
Summary of the Global Situation for Businesses and Investors
The US has imposed sanctions on Pakistan's missile program, citing concerns over the country's development of long-range missiles that could potentially reach the US. This move has drawn criticism from Pakistan, which denounced the sanctions as biased and discriminatory. Meanwhile, a US-sanctioned Russian cargo ship sank in the Mediterranean Sea after an explosion in its engine room, leaving two crew members missing. In other news, Donald Trump has stirred tensions with his remarks on buying Greenland and seizing the Panama Canal, challenging the sovereignty of some of Washington's closest allies. Lastly, Airbus, a European aerospace giant, has been criticised for its partnership with AVIC, a Chinese state-owned group of civil aviation, aerospace, and defence companies, due to AVIC's transfer of military goods to Myanmar.
US Sanctions on Pakistan's Missile Program
The US has imposed sanctions on Pakistan's missile program, targeting entities involved in the development and proliferation of long-range missiles. This move comes as the US views Pakistan's missile program as a potential threat to its security, with concerns over the development of missiles that could reach the US. The sanctions have been met with strong criticism from Pakistan, which denounced the move as biased and discriminatory, claiming that it puts regional peace at risk.
For businesses and investors, the sanctions on Pakistan's missile program could have significant implications for trade and investment in the region. The sanctions may disrupt supply chains and limit access to certain technologies and resources, potentially affecting businesses operating in Pakistan or with Pakistani partners. It is crucial for businesses to monitor the situation closely and assess the potential impact on their operations, especially in the aerospace and defence sectors.
US-Sanctioned Russian Ship Sinks in the Mediterranean
A US-sanctioned Russian cargo ship, the Ursa Major, sank in the Mediterranean Sea after an explosion in its engine room, leaving two crew members missing. The ship's operator, Oboronlogistika, was sanctioned by the US Treasury in 2022 for its links to the Russian military and has been heavily involved in transporting cargo to Syria's Tartus port, which is critical to Moscow's operations in the Mediterranean and Africa.
The sinking of the Ursa Major highlights the ongoing tensions between the US and Russia and the impact of sanctions on Russian entities. For businesses and investors, this incident serves as a reminder of the risks associated with operating in regions affected by geopolitical tensions and the importance of due diligence in supply chain management. It is crucial to monitor the situation in the Mediterranean and Africa, as Russian operations in these regions rely heavily on the Tartus port and the Khmeimim air base.
Trump's Remarks on Greenland and Panama Canal
Donald Trump has stirred tensions with his remarks on buying Greenland and seizing the Panama Canal, challenging the sovereignty of some of Washington's closest allies. Trump's comments have renewed fears from his first term that he will be harsher on US friends than on adversaries like Russia and China. However, there are suspicions that Trump is looking for leverage as part of his negotiation tactics, aiming to grab headlines and appear strong at home and abroad.
Trump's remarks have created uncertainty and unease among US allies, particularly Denmark and Panama. For businesses and investors, this situation highlights the importance of geopolitical stability and the potential impact of political rhetoric on international relations. It is crucial to monitor the situation closely and assess the potential implications for trade and investment in the affected regions.
Airbus and AVIC Partnership
Airbus, a European aerospace giant, has been criticised for its partnership with AVIC, a Chinese state-owned group of civil aviation, aerospace, and defence companies, due to AVIC's transfer of military goods to Myanmar. Airbus has publicly denied any wrongdoing, insisting that its financial stake and business dealings with AVIC are exclusively focused on civil aviation and services. However, AVIC's business activities are inseparable from its military applications, particularly given China's policy of military-civil fusion.
The criticism of Airbus's partnership with AVIC raises serious questions about the company's commitment to mitigating human rights risks and its compliance with international standards on business and human rights. For businesses and investors, this situation serves as a reminder of the importance of conducting thorough due diligence on business relationships and assessing the potential reputational and ethical risks associated with partnerships. It is crucial to monitor the situation closely and assess the potential impact on Airbus's operations and reputation, especially in the context of growing public scrutiny and ethical concerns.
Further Reading:
'Putin-esque': Trump's comments on control of Greenland and Panama Canal 'create chaos' - MSNBC
Greenland PM Claps Back at Trump: ‘We Are Not For Sale’ - The Daily Beast
Myanmar junta receives new planes from Airbus close partner AVIC - Mizzima
Pakistan’s long-range missile plans raise alarm in Washington - Straight Arrow News
Trump '100% serious' about US acquiring Panama Canal and Greenland, sources say - Fox News
Trump again calls to buy Greenland after eyeing Canada and the Panama Canal - Toronto Star
Trump renews interest in acquiring Greenland from Denmark - TICKER NEWS
Trump stirs tensions with remarks on buying Greenland, seizing Panama Canal - FRANCE 24 English
US-sanctioned Russian ship sinks in Mediterranean after explosion - The Independent
Themes around the World:
Regulatory push for digital sovereignty cloud
France continues to steer sensitive workloads toward “sovereign” cloud and security certifications (e.g., SecNumCloud), affecting public procurement and regulated sectors. Non-EU hyperscalers may need partnerships or ring-fenced operations; compliance can reshape IT sourcing.
Black Sea corridor shipping fragility
Ukraine’s export corridor via Odesa/Chornomorsk/Pivdennyi remains operational but under persistent missile, drone and mine threats. Attacks on ports and vessels raise insurance premiums, constrain vessel availability, and can cut export earnings—NBU flagged ~US$1bn Q1 hit—tightening FX liquidity for importers.
Economic-security industrial policy intensifies
Taiwan is deepening “economic security” cooperation with partners, prioritizing trusted supply chains in AI, chips, drones, and critical inputs. This favors vetted vendors and data-governance discipline, but increases screening, documentation, and resilience requirements for cross-border projects and M&A.
FX Volatility and Capital Flows
The won remains prone to sharp moves amid foreign equity flows and shifting hedging behavior. Korea’s National Pension Service, with ~59.6% of AUM overseas and 0% FX hedge, may change strategy in 2026, potentially moving USD/KRW and altering pricing, repatriation and hedging costs.
US tariff and NTB pressure
Washington is threatening to restore 25% tariffs unless Seoul delivers on a $350bn US investment pledge and eases non-tariff barriers (digital rules, agriculture, auto/pharma certification). Policy uncertainty raises pricing, compliance, and sourcing risks for exporters.
Energy security and transition investment
Rapid growth targets are forcing revisions to energy planning and grid investments. New frameworks—such as a two-part tariff for battery energy storage (effective Jan 2026)—aim to attract private capital, reduce curtailment, and improve reliability, affecting industrial uptime and PPA economics.
Orta Koridor lojistik fırsatı
Trans-Hazar Orta Koridoru, Çin‑Avrupa transit süresini deniz yolundaki 35–50 günden 18–25 güne düşürebiliyor. Türkiye’nin demiryolu/liman bağlantıları, depolama ve gümrük verimliliği yatırımları önem kazanıyor; kapasite darboğazı ve sınır geçiş gecikmeleri operasyonel risk.
Clean-tech investment uncertainty
Major industrial greenfield plans remain volatile as firms reassess EV and battery economics. Stellantis cancelled a subsidized battery plant (over €437m support, up to 2,000 jobs), echoing other paused megaprojects. Investors face policy, demand and permitting uncertainty across clean-tech.
US reciprocal tariff deal pending
Indonesia and the US are preparing to sign an Agreement on Reciprocal Tariff (ART), with talks reportedly reducing a mooted 32% US tariff to ~19% and carving out key Indonesian exports. Commitments may include ~$15bn Indonesian purchases of US energy, reshaping trade flows.
USMCA renegotiation and North America risk
Signals of a tougher USMCA review and tariff threats elevate uncertainty for integrated US‑Canada‑Mexico manufacturing, notably autos and batteries. Firms should stress-test rules-of-origin compliance, cross-border inventory strategies, and contingency sourcing as negotiations and enforcement become more politicized.
Strike disruptions across logistics
A renewed strike cycle is hitting transport and services: Lufthansa cancellations reached ~800 flights affecting ~100,000 passengers, while further rail and public‑sector actions are possible from March. Recurrent stoppages raise lead times, logistics costs and contingency needs.
Infrastructure works disrupt logistics corridors
Large-scale Deutsche Bahn renewals and signalling upgrades are causing multi-month closures, with wider EU freight impacts on the Scandinavia–Mediterranean corridor. Congestion and modal shifts raise lead times and costs; shippers should diversify routes, build buffers, and lock capacity early.
BRICS payments push sanctions exposure
Brazil’s joint statement with Russia criticising unilateral sanctions and promoting local-currency settlement comes as bilateral trade reached US$10.9bn in 2025. Firms must strengthen sanctions screening, banking counterparties and shipping/insurance checks to avoid secondary-sanctions and compliance disruptions.
Labor law rewrite by 2026
Parliament plans to finalize a new labor law before October 2026 to comply with Constitutional Court directions and adjust the Omnibus Law framework. Revisions could change hiring, severance, and compliance burdens—material for labor-intensive investors, sourcing decisions, and HR risk.
Water scarcity and urban infrastructure failures
Gauteng’s water constraints—Johannesburg outages lasting days to nearly 20—reflect aging networks, weak planning and bulk-supply limits. Operational continuity risks include downtime, hygiene and labour disruptions, higher onsite storage/treatment costs, and heightened local social tensions.
Grid constraints reshape renewables rollout
Berlin plans to make wind and clean-power developers pay for grid connections and to better align renewables expansion with network build-out. Higher project costs, slower connection timelines and curtailment risks can affect PPAs, site selection and data-center/industrial electrification plans.
Stablecoins become fiscal tool
US policy is positioning Treasury-backed stablecoins as a new buyer base for short-term bills and a lever of dollar reach. This may shift liquidity from bank deposits, alter credit availability, and create new compliance, treasury, and settlement models for multinationals.
Volatilidad macro: moneda e inflación
La depreciación del rial y episodios de inflación elevada distorsionan precios, márgenes y planificación. Empresas enfrentan controles de divisas, dificultades de repatriación, mayor riesgo de impago y costos de importación impredecibles, impulsando dolarización informal y contratos más cortos.
Robo de carga y costos logísticos
El robo de carga se concentra en Centro (51%) y Bajío (31%), 82% del total en 2025; picos martes‑viernes. Afecta inventarios, seguros y tiempos de entrega, obligando a rediseñar rutas, escoltas, telemetría y estrategias de almacenes más cercanos al cliente.
IMF programme conditionality pressure
Late‑February IMF review will determine release of roughly $1.2bn under the $7bn EFF plus climate-linked RSF funding, tied to tax, energy and governance reforms. Slippage risks delayed disbursements, confidence shocks, and tighter import financing for businesses.
Semiconductor and electronics scale-up
Budget 2026 doubles electronics component incentives to ₹40,000 crore and advances ISM 2.0 to deepen design, equipment, and materials capacity. This accelerates supplier localization and India-plus-one strategies, while raising competition for talent and requiring careful IP, export-control, and vendor qualification planning.
Black Sea corridor shipping fragility
The maritime corridor carries over 90% of agricultural exports, but repeated strikes on ports and logistics cut shipments by 20–30%, leaving a 10 million‑tonne grain surplus. Businesses face volatile freight rates, schedule unreliability, cargo security exposure, and alternative routing costs.
US–China tech controls tightening
Advanced semiconductor and AI chip trade remains heavily license-bound. Recent U.S. scrutiny over Nvidia H200 terms and penalties for tool exports to Entity-Listed firms signal elevated enforcement risk, end-use monitoring, and disruption to China-facing revenue, R&D collaboration, and capex plans.
Minerais críticos e nova geopolítica
Terras raras ganham prioridade: Serra Verde obteve empréstimo de US$565 mi com opção de participação minoritária dos EUA; o setor projeta US$76,9 bi em investimentos 2026–2030, incluindo ~US$2,4 bi em terras raras. Oportunidades crescem, porém com riscos regulatórios e de processamento doméstico.
Security, service delivery, labour disruption
Persistent crime and intermittent municipal service breakdowns—waste collection stoppages, water-utility strikes, and power-substation incidents—create operational risk for sites, staff mobility and last-mile distribution. Businesses increasingly budget for private security, redundancy, and contractual force-majeure safeguards.
Trade rerouting and logistics costs
With port disruptions, exporters increasingly divert cargo by rail and road through EU borders, raising transit time, capacity constraints and costs. Agriculture remains the largest export driver (commodities US$41.7bn in 2024), so volatility in corridors affects global buyers’ sourcing strategies and contract performance.
Property slump and confidence drag
Housing weakness persists despite policy easing: January new‑home prices fell 0.4% m/m and 3.1% y/y, with declines in 62 of 70 cities. This weighs on consumption and credit, increasing payment risk, project delays, and cautious capex by China‑exposed partners.
Long-term LNG contracting, energy security
Jera signed a 27-year deal with QatarEnergy for 3 mtpa LNG from 2028; Japan imported 66.15m tons in 2023. More long-term contracting supports power reliability for data centers and chip fabs but locks in fossil exposure and price-index risks.
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.
Defense-led industrial upswing
Industrial orders surged 7.8% m/m in Dec 2025 (13% y/y), heavily driven by public procurement and rearmament. Defense spending targets ~€108.2bn and weapons-related orders reportedly exceed pre-2022 averages by 20x. Opportunities rise, compliance burdens increase.
Budget 2026 capex-led growth
Union Budget 2026–27 targets a 4.3% fiscal deficit with ₹12.2 lakh crore capex, prioritizing roads, rail corridors, waterways, and urban zones. Expect improved project pipelines and demand, but also procurement scrutiny and execution risk across states.
Border infrastructure leverage risk
U.S. threats to restrict the Canada-funded Gordie Howe Detroit–Windsor bridge highlight how critical crossings can become bargaining chips. With Detroit handling about US$126B in truck trade value, any disruption could delay just-in-time supply chains and raise logistics costs.
Financial isolation and FATF blacklisting
FATF renewed Iran’s blacklist status and broadened countermeasures, explicitly flagging virtual assets and urging risk-based scrutiny even for humanitarian flows and remittances. This further constrains correspondent banking, raises settlement friction, and increases reliance on opaque intermediaries—complicating trade finance and compliance for multinationals.
Defense spending gridlock and procurement
A roughly US$40B multi‑year defense plan is stalled in parliament, risking delays to U.S. Letters of Offer and Acceptance and delivery queues. Uncertainty around air defense, drones and long‑range fires investment affects investors’ risk pricing and operational resilience planning.
Gargalos portuários e competição
Portos bateram 1,4 bi t em 2025 (+6,1%), mas Santos enfrenta risco de colapso sem expansão; o Tecon Santos 10 segue com disputas regulatórias e risco de judicialização. Atrasos elevam demurrage, perdas logísticas e confiabilidade de exportação/importação de cargas conteinerizadas.
New trade deals and friend-shoring
US is using reciprocal trade agreements to rewire supply chains toward strategic partners. The US–Taiwan deal caps many tariffs at 15%, links chip treatment to US investment, and includes large procurement and investment pledges, influencing regional manufacturing footprints and sourcing decisions.