Mission Grey Daily Brief - December 28, 2024
Summary of the Global Situation for Businesses and Investors
The Russia-Ukraine conflict continues to dominate global headlines, with Slovakia offering to host peace talks and EU leaders engaging in diplomacy with Russia. However, fighting between the two countries has intensified, with Russia launching waves of drones and missiles across Ukrainian territory, and Kyiv retaliating with attacks on Russian oil and energy targets. In a separate development, Israel launched airstrikes in Yemen, hitting Sanaa airport for the first time, which some analysts believe could be a prelude to targeting Iran's nuclear sites. Meanwhile, Finland detained a Russia-linked vessel suspected of damaging undersea power and data cables, raising concerns about Russia's "shadow fleet" and its potential impact on European infrastructure. Lastly, Iran's halt of crude oil shipments to Syria has prompted the country to seek alternative energy sources, with Saudi Arabia and Qatar emerging as potential suppliers, which could significantly impact regional dynamics.
Russia-Ukraine Conflict
The war in Ukraine has entered its third year, with Slovakia offering to host peace talks between the two countries. Slovak Prime Minister Robert Fico has visited Moscow and proposed his country as a neutral location for negotiations. While Slovak authorities have long sought a peaceful solution, Ukraine has yet to comment on the offer. President Volodymyr Zelenskyy has criticised Slovakia for its friendly tone towards Russia, but his position on negotiations appears to have shifted. In an interview with Sky News, Zelenskyy suggested a ceasefire deal could be struck if the Ukrainian territory he controls could be taken "under the NATO umbrella", allowing him to negotiate the return of the rest later "in a diplomatic way".
However, fighting between Russia and Ukraine has intensified, with Russia launching waves of drones and missiles across Ukrainian territory, mainly aimed at civilian and energy infrastructure. Kyiv has retaliated with attacks on Russian oil and energy targets just inside Russian territory, striking high-rise buildings in Kazan, the capital of Russia's oil-rich republic of Tatarstan. The Institute for the Study of War (ISW) has noted that Russia's priorities in the current fighting remain unclear, as troops make incremental advances south and southwest of the key city of Pokrovsk in the Donetsk region.
Israel's Airstrikes in Yemen
Israel has launched airstrikes in Yemen, hitting Sanaa airport for the first time. This development has raised concerns among some analysts, who believe it could be a prelude to targeting Iran's nuclear sites. Al-Monitor reports that Israel's strikes in Yemen could be a way to test Iran's response, as Yemen is a key ally of Iran and hosts Iranian military bases. The strikes could also be a way for Israel to gather intelligence on Iran's military capabilities and prepare for potential future strikes on Iranian nuclear sites.
Russia's "Shadow Fleet" and European Infrastructure
Finland has detained a Russia-linked vessel, the Eagle S, suspected of damaging undersea power and data cables in the Baltic Sea. The vessel is believed to be part of Russia's "shadow fleet", a network of aging ships used to evade Western sanctions and generate revenue to fund Russia's war efforts in Ukraine. The detention of the Eagle S has raised concerns among European officials about the potential impact of Russia's shadow fleet on critical infrastructure, including undersea power and data cables. NATO has assured Finland and Estonia of added military support, and the European Union has threatened new sanctions against Russia in response to the suspected acts of sabotage.
Iran's Oil Halt and Syria's Energy Crisis
Iran's halt of crude oil shipments to Syria has worsened the country's energy crisis, prompting Syria to seek alternative energy sources and explore potential cooperation with regional actors like Saudi Arabia, Qatar, and Türkiye. Saudi Arabia's potential oil supply to Syria is seen as a strategic move that could reshape regional energy dynamics, reduce Syria's dependence on Iranian energy, and strengthen diplomatic ties between Syria's new administration and Gulf countries. Qatar's investments in power plants and energy infrastructure are in line with Gulf countries' strategies to enhance energy integration with regional states, and its participation in Syria's energy sector could bolster its efforts to increase its regional influence. The possibility of a revival of the Qatar-Türkiye pipeline, initially proposed in the 2000s, depends on Syria's ability to achieve stability in the upcoming period.
Further Reading:
Fico threatens to cut electricity supplies to Ukraine - POLITICO Europe
Finland detains Russia-linked vessel over damaged undersea power cable in Baltic Sea - NPR
Has Russia’s Shadow Fleet Added Sabotage to Its List? - The New York Times
History Of The Tragedy Of The Fall Of Malaysia Airlines MH17 - VOI English
How Israel’s Yemen strikes could be prelude to target Iran nuclear sites - Al-Monitor
Iran’s oil halt pushes Syria toward new regional cooperation - Türkiye Today
Israel launches new airstrikes in Yemen, hits Sanaa airport for first time - Al-Monitor
Putin open to peace talks with Ukraine in Slovakia 'if it comes to that' - Sky News
U.S. official says early indications Azerbaijan plane was hit by Russia - Yahoo! Voices
What We Know About the Ship Finland Seized Over Fears of Russian Sabotage - The New York Times
Themes around the World:
Suez Canal Security and Trade Disruptions
Despite partial recovery, Red Sea and Suez Canal traffic remains volatile due to ongoing regional security threats, especially Houthi attacks. This unpredictability disrupts global supply chains, increases insurance costs, and threatens Egypt’s vital foreign currency revenues.
Critical minerals bloc reshaping rules
The U.S. is pushing a preferential critical-minerals trade zone with price floors, reference pricing, and stockpiling (Project Vault), amid China’s dominant refining share. Canada is engaged but not always aligned, affecting mining investment, offtake deals, and EV/defence supply chains.
Energy mix permitting and local opposition
While no renewables moratorium is planned, the PPE points to slower onshore wind/solar and prioritizes repowering to reduce local conflicts. Permitting risk and community opposition can delay projects, affecting PPAs, factory decarbonization plans, and ESG delivery timelines.
Internet shutdowns and digital controls
Near-total internet blackouts and tighter censorship have cut businesses off from customers, suppliers, and payments, with reported losses from millions to tens of millions of dollars per day. Expect unreliable connectivity, mandatory use of domestic platforms, and elevated cybersecurity exposure.
USMCA review and tariff risk
The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.
Pharma market access and import controls
US–India framework provisionally shields Indian generic pharma exports (≈$10bn/yr) from reciprocal tariffs, while India pledges to address medical device barriers. Separately, India restricts low-priced penicillin imports via minimum CIF thresholds, influencing API sourcing and pricing.
Infrastructure Delays Challenge Competitiveness
Major infrastructure projects, such as the Fehmarnbelt tunnel, face significant delays and cost overruns. Persistent issues with transport and logistics modernization threaten Germany’s long-term competitiveness and the efficiency of European supply chains, impacting international trade and investment.
Regulatory enforcement and customs friction
Customs procedures, standards enforcement, and intermittent import restrictions can create compliance burdens and lead-time uncertainty. Firms should anticipate documentary scrutiny, inspection delays, and evolving rules for controlled goods. Robust broker management, classification discipline, and local warehousing reduce disruption risk.
Sustainable Development And Regulatory Compliance
Vietnam’s wood and agricultural sectors are adapting to stringent international sustainability and legality standards, especially from the US and EU. Compliance with deforestation-free and traceability requirements is now essential for continued access to major export markets.
Sweeping US Sanctions and Oil Restrictions
The US has intensified sanctions on Iran, targeting oil exports and shipping, with new measures including a 25% tariff on countries trading with Iran. These actions have severely restricted Iran's access to global markets, undermined its fiscal stability, and forced key partners like India to reconsider strategic investments such as the Chabahar port.
Electricity contracts underpin competitiveness
Battery makers and other electro-intensive industries are locking in long-term power contracts with EDF; Verkor signed a 12-year deal alongside its Bourbourg gigafactory. Secured low-carbon electricity is becoming a key determinant of cost, investment viability, and export pricing.
Energy tariffs and circular-debt risk
Power pricing, gas availability, and circular-debt reforms directly affect industrial competitiveness. Recent tariff cuts for industry may support exports, but ongoing sector restructuring implies continued volatility in energy costs, outages, and subsidy policy—key variables for manufacturing site selection and contracts.
High debt and refinancing sensitivity
Despite improving macro indicators, Egypt’s large public financing needs and high real interest costs keep rollover risk elevated. Any global risk-off shift can widen spreads, pressure the currency, and delay state payments—material for contractors, suppliers, and banks.
Balochistan security threatens projects
Militant violence in Balochistan is disrupting logistics and deterring FDI, including audits and security redesigns around the $7bn Reko Diq project. Attacks on rail and highways raise insurance, security and schedule costs for mining, energy, and corridor-linked supply chains.
Shadow-fleet oil trade disruption
Iran’s crude exports rely on a mature “dark fleet” using AIS spoofing, ship-to-ship transfers and transshipment hubs (notably Malaysia) to reach China at discounts. Expanded interdictions and tanker seizures increase freight, insurance, and contract-frustration risks for energy-linked supply chains.
New fees, taxes, and compliance load
Egypt continues updating VAT and tax administration and adding port/terminal charges (e.g., inspection fees). Combined with evolving customs requirements such as mandatory Advance Cargo Information for air freight, compliance costs and penalties risks rise for importers and logistics providers.
US-Australia Strategic Minerals Partnership
Australia and the US have deepened cooperation on critical minerals, with multi-billion-dollar funding and joint ventures. This partnership supports supply chain diversification for Western industries, boosts investment opportunities, and reduces exposure to geopolitical shocks from China.
Currency Shift Reduces Dollar Exposure
Russia now conducts nearly all trade with China and India in national currencies, minimizing reliance on the dollar and euro. This currency shift alters payment risk profiles, complicates cross-border transactions for global firms, and signals a long-term pivot away from Western financial systems.
Investment Climate Amid Geopolitical Tensions
Geopolitical instability, including US-EU disputes and global conflicts, has led to increased market volatility and cautious investment. French markets have seen declines, and sectors like tech and industry face job cuts, prompting investors to adopt more defensive and selective strategies.
Port capacity expansion reshapes logistics
London Gateway surpassed 3m TEU in 2025 (+52% YoY) and Southampton exceeded 2m TEU, backed by multi‑billion‑pound expansion plans and added rail capacity. Improved throughput can reduce bottlenecks, but concentration risk and labour/rail constraints remain for time-sensitive supply chains.
Infrastructure capex boosts logistics
Economic Survey signals sustained infrastructure push via PM GatiShakti and high public capex. Rail electrification reached 99.1% by Oct 2025; inland water cargo rose to 146 MMT in FY25; ports improve global rankings—lowering transit times and costs.
Currency Collapse and Hyperinflation
Iran's rial has plunged to record lows, now trading at 1.4–1.5 million per US dollar, with inflation nearing 50%. This currency crisis, driven by sanctions, mismanagement, and corruption, has triggered mass protests, eroded purchasing power, and created severe import and operational challenges for businesses.
IMF-Led Economic Reform Momentum
Recent IMF engagement and disbursement of $1.2 billion have driven fiscal discipline, tax reforms, and macroeconomic stabilization. While these measures boost investor confidence, they also entail stringent conditions affecting trade, investment, and operational flexibility for foreign businesses.
Section 232 national-security tariffs
Section 232 tools remain active beyond steel and aluminum, with investigations spanning pharmaceuticals, semiconductors, critical minerals, aircraft, and more. Even where partner deals grant partial relief, uncertainty around scope and timing complicates long-term supplier selection and U.S. market pricing strategies.
Border crossings and movement constraints
Rafah’s limited reopening and intensive screening regimes underscore persistent frictions in people movement and (indirectly) trade flows. Firms relying on regional staff mobility, humanitarian/contractor access, or cross-border services should plan for sudden closures, enhanced vetting and longer lead times.
AI and Technology Export Boom
Taiwan’s economy grew 8.6% in 2025, driven by surging AI-related exports and technology shipments, especially to the US. This boom supports robust corporate profits and investment, but exposes the economy to volatility from tech cycles and trade policy shifts.
USMCA review and tariff brinkmanship
The mandatory USMCA review and renewed U.S. tariff threats create high uncertainty for North American supply chains, especially autos, metals and agri-food. Firms should stress-test rules-of-origin compliance, pricing, and contingency routing as policy shifts can be abrupt.
Capacity constraints and productivity ceiling
Business surveys show utilisation still elevated (around 83%+), signalling tight capacity and lingering cost pressures. Without productivity gains, growth can translate into inflation and wage pressures, affecting project timelines, construction costs, and the reliability of domestic suppliers for global value chains.
Auto Sector Faces Structural Upheaval
The Canadian auto industry is under pressure from US tariffs, competition from low-cost Chinese imports, and uncertain investment incentives. The sector’s future hinges on attracting foreign investment, adapting supply chains, and securing North American market access amid policy shifts.
Russia-China Strategic Economic Partnership
Over $100 billion in joint projects with China span minerals, transport, and military technology. China supplies critical components and payment systems, helping Russia bypass sanctions. This deepening partnership shifts Russia’s trade orientation and impacts global supply chains and investment flows.
US Trade Policy Realignment Accelerates
Recent US trade policy shifts, including new tariffs and renegotiated agreements, are reshaping global commerce. These changes drive uncertainty in cross-border operations, impacting supply chain strategies and international investment decisions for multinational firms.
Domestic unrest and security crackdown
Large-scale protests and lethal repression are elevating operational and reputational risk for foreign-linked firms. Risks include curfews, disrupted labor availability, arbitrary enforcement, asset seizures, and heightened human-rights due diligence expectations from investors, banks, and regulators.
Talent constraints and foreign hiring policy
Labor shortages in manufacturing and high-tech intensify competition for engineers and skilled technicians. Policy tweaks to attract foreign talent and expand foreign-worker quotas can help, but firms should plan for wage pressure, retention costs, and slower ramp-ups for new capacity.
Risco fiscal e trajetória da dívida
Gastos federais cresceram 3,37% acima do teto real de 2,5% em 2025 e o déficit primário ficou em 0,43% do PIB; a dívida bruta chegou a 78,7% do PIB, elevando risco-país, câmbio e custo de capital.
EU accession-driven regulatory convergence
Kyiv targets EU membership by 2027, accelerating alignment on standards, customs, competition, and public procurement. For exporters and investors this can reduce long-term market access friction, but creates near-term compliance churn, documentation demands, and shifting tariff and quota regimes.
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.