Mission Grey Daily Brief - January 02, 2025
Summary of the Global Situation for Businesses and Investors
The Russia-Ukraine war continues to rage on, with Putin launching a New Year's Day drone attack on Kyiv, North Korean troops joining the fight, and Western countries lifting their ban on Ukraine using long-range missiles to attack targets inside Russia. Meanwhile, Israel is wary of deepening ties between Russia and Iran, which could involve a nuclear program. In Montenegro, several people were killed in a shooting after a bar brawl, and the shooter is still on the run. Thailand's aviation sector is expected to improve in 2025, but the country will need to manage its power supply as the data centre industry grows.
Russia-Ukraine War
The Russia-Ukraine war has been internationalised, with North Korean troops joining the fight and Western countries lifting their ban on Ukraine using long-range missiles to attack targets inside Russia. Russia has been receiving military assistance from Iran and North Korea, while Ukraine has been receiving financial and military assistance from the US, NATO, and the EU. Ukraine has ended a five-year deal that allowed Russian gas to flow to EU states through its pipeline networks, significantly reducing Russian gas imports to the EU. This move will cost Russia billions and impact countries like Moldova, which rely on Russian gas via Ukraine.
Israel-Russia-Iran Relations
Israel is wary of deepening ties between Russia and Iran, which could involve a nuclear program. Russia and Iran have been working together on a nuclear program, and Israel is concerned about the potential implications of this collaboration. Israel has been working to neutralise its enemies, and the deepening ties between Russia and Iran could pose a threat to Israel's security.
Montenegro Shooting
In Montenegro, several people were killed in a shooting after a bar brawl, and the shooter is still on the run. The shooter, identified only by his initials AM, fled the scene armed, and police have dispatched special troops to search for him. The shooting has caused concern among residents, and police have urged them to remain calm and stay indoors.
Thailand's Aviation Sector and Power Supply
Thailand's aviation sector is expected to improve in 2025, but the country will need to manage its power supply as the data centre industry grows. Thailand is seeing a significant increase in power demand as the government pushes the growth of data centres and the cloud service industry. The Board of Investment is supporting investment projects in data centres and cloud services, and Thailand is becoming a regional digital innovation hub. However, data centres are crucial infrastructure for artificial intelligence (AI) technology, and if AI-based tasks continue to grow in Thailand, a huge amount of electricity will be needed to keep the facilities running. One AI-embedded data centre requires between 300 and 1,000 megawatts of electricity, and Thailand will need to find a way to meet this demand while reducing its carbon footprint and ensuring a stable supply.
Further Reading:
Breaking News: Several killed as man opens fire in Montenegro bar - Telangana Today
Consulting the oracles - Bangkok Post
How the wars of 2024 brought together rivals and created enemies - BBC.com
Israel wary as Russia-Iran ties deepen, possibly involving nuclear program - Al-Monitor
Ukraine ends Russian gas pipeline to Europe – but how much will it cost Moscow? - The Independent
Themes around the World:
Chabahar Port and Regional Connectivity Setbacks
US sanctions and tariffs have forced India to scale back its investment in Iran’s Chabahar port, a critical node for regional trade and access to Central Asia. The project’s future is uncertain, undermining Iran’s ambitions as a logistics hub and limiting diversification of supply routes.
Critical Minerals Strategy Accelerates
Canada is rapidly advancing its critical minerals sector, with new provincial and federal strategies, international partnerships (notably with India), and investment in recycling. This positions Canada as a key supplier for global EV, battery, and tech supply chains, reducing reliance on China.
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.
US Tariff Escalation and Trade Wars
Recent US tariff threats against China, the EU, and South Korea have intensified global trade tensions, disrupting supply chains and raising costs. Tariffs averaging 18%—the highest since 1934—are largely borne by US consumers and businesses, impacting inflation and investment strategies.
Internal Unrest and Political Crackdown
Mass protests over economic hardship and government repression have resulted in thousands of deaths and ongoing internet blackouts. Political instability and human rights concerns heighten unpredictability for foreign investors and may trigger further international punitive measures.
Shadow fleet interdictions and safety
France’s boarding of the GRINCH and allied moves to seize or detain shadow‑fleet tankers signal a shift from monitoring to physical enforcement. Aging, falsely flagged ships elevate spill, detention and force‑majeure risk for shippers, insurers, and terminals.
Digital Economy and Financial Innovation
Thailand is advancing digital finance, with the SEC set to regulate crypto ETFs and futures, and hosting the 2026 IMF–World Bank Meetings. These moves aim to position Thailand as a regional financial hub, attracting fintech investment but also requiring compliance with evolving regulations.
Logistics and rail capacity buildout
Saudi ports handled 8.3m containers in 2025 (+10.6% YoY), while Saudi Arabia Railways carried 30m tons of freight and 14m passengers in 2025, cutting 2m truck trips. Accelerating multimodal capacity supports supply-chain resilience and inland distribution competitiveness.
Suez Canal Disruptions Impact Trade
The Gaza conflict caused Egypt to lose $9 billion in Suez Canal revenue over two years, disrupting global shipping and supply chains. Recovery is underway, but ongoing regional instability remains a risk for trade flows and foreign exchange earnings.
US–China trade war resurgence
Tariffs, export controls, and screening of China-linked supply chains remain structurally entrenched. Even during tactical truces, businesses face sudden policy reversals, higher landed costs, customs enforcement, and intensified due-diligence on origin, routing, and end-use across jurisdictions.
Yuan Internationalization and Financial Strategy
China is promoting the yuan’s global usage, expanding offshore liquidity hubs and payment frameworks. This financial strategy aims to reduce dollar dependence, enhance China’s influence in cross-border transactions, and provide alternatives for international businesses.
Labor Shortages Drive Immigration Policy Shifts
Persistent skilled labor shortages are prompting Germany to expand ethical pathways for foreign workers, notably from India. This trend is vital for modular sector growth, affecting project delivery, wage structures, and operational scalability for international investors.
Critical Minerals and Geoeconomic Competition
Pakistan’s rare earth and mineral sector is attracting US and Chinese interest, but faces governance, certification, and processing challenges. Despite high-value deals, lack of infrastructure and provincial disputes limit immediate supply chain impact, making the sector more a geopolitical lever than a business engine.
Supply Chain Resilience and Diversification
South Korea and the EU are launching a dedicated supply chain dialogue to reduce dependence on specific countries and diversify channels. This initiative, driven by US-China competition, aims to enhance resilience and strategic partnerships, affecting sourcing and logistics decisions for international firms.
Expansion of Battery Recycling Infrastructure
Significant investments are underway in France to expand battery recycling and reconditioning facilities. Projects like Weeecycling and new reconditioning centers will boost capacity, create jobs, and support circular economy goals, directly impacting supply chains and operational costs.
Semiconductor tariffs and carve-outs
The U.S. is imposing 25% tariffs on certain advanced semiconductors while considering exemptions for hyperscalers building AI data centers, linked to TSMC’s $165bn Arizona investment. This creates uneven cost structures, reshapes chip sourcing, and influences investment-location decisions.
Outbound investment screening expands
New U.S. outbound investment restrictions for semiconductors, quantum, and advanced AI create approval or notification burdens for cross-border deals and R&D. Companies must reassess Asia tech exposure, ring-fence sensitive IP, and build deal timelines around regulatory review risk.
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.
US-Taiwan Strategic Trade Integration
A new US-Taiwan trade agreement lowers tariffs to 15% and commits over $250 billion in bilateral investments, especially in semiconductors and AI. This deepens economic ties, boosts exports, and enhances Taiwan’s role in trusted supply chains.
Monetary Policy, Currency Strength, and Consumer Trends
The Israeli shekel remains strong, supported by a trade surplus and foreign investment. The Bank of Israel’s rate cuts and low unemployment are fostering economic growth, while consumer markets shift toward buyer dominance, affecting real estate, automotive, and retail sectors.
Transshipment and origin enforcement risk
Growing US scrutiny of origin fraud and transshipment is pushing Vietnam to tighten customs controls, creating higher audit, documentation, and supplier-traceability burdens for manufacturers. Sectors vulnerable to tariffs (e.g., solar components) face elevated trade-remedy exposure.
Ongoing War Disrupts Trade Flows
The Russia-Ukraine conflict continues to cause major disruptions in international trade, especially in commodities and manufacturing. Persistent hostilities have led to volatile markets, increased insurance costs, and unpredictable logistics, impacting global supply chains and business operations.
Defence exports and geopolitical positioning
Turkey’s defence industry is expanding exports and co-production, exemplified by a reported $350m arms agreement with Egypt and large-scale drone manufacturing capacity growth. This supports industrial upgrading and regional influence, but can elevate sanctions, licensing and reputational due-diligence requirements.
Surge in Foreign Direct Investment
FDI inflows to India soared by 73% to $47 billion in 2025, driven by major investments in services, manufacturing, and data centres. Policy reforms and global supply chain integration underpin this growth, reinforcing India’s appeal as a destination for international capital and technology.
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.
Resilience and Diversification of Manufacturing
TSMC and other Taiwanese firms are accelerating overseas expansion, notably in the US, Germany, and Japan, to mitigate geopolitical and operational risks. While Taiwan remains the core hub, a gradual shift in advanced manufacturing capacity abroad is underway.
Critical minerals and rare earth security
Seoul is moving to strengthen rare-earth supply chains by easing public-sector limits on overseas resource development, expanding domestic processing and recycling, and coordinating with partners while managing China export-control risks. This supports EV, wind, defense, and electronics supply continuity and investment pipelines.
US-Israel Policy Divergence on Reconstruction
Tensions between the US and Israel over the pace and conditions of Gaza’s reconstruction and demilitarization are intensifying. Divergent priorities—US emphasis on rapid rebuilding versus Israel’s insistence on security preconditions—create policy uncertainty, complicating the operating environment for international businesses.
AI regulation and compliance burden
China is expanding AI governance via draft laws and sector rules, emphasizing safety, content controls, and data governance. Foreign firms deploying AI or integrating Chinese models face product localization, auditability demands, and higher legal exposure around censorship and algorithm accountability.
Supply Chain Disruptions from Geopolitical Crises
Ongoing instability in the Red Sea and Mediterranean, including French shipping giant CMA CGM’s route reversals, creates unpredictability in global supply chains. These disruptions affect transit times, freight rates, and inventory management for businesses dependent on Asia-Europe trade.
Energy reform and grid constraints
CFE’s new “mixed project” rules allow private partnerships but require CFE majority (≥54%) in joint investments, shaping contract design and bankability. Meanwhile grid modernization, storage and microgrids accelerate as industrial demand rises, making power availability a gating factor for plants.
Centralization of Political Power
General Secretary To Lam is consolidating authority, possibly merging party chief and presidency roles. This centralization may enable swift reforms but raises concerns about institutional checks, policy continuity, and long-term governance risks for international investors.
Escalating Western Sanctions Enforcement
Western powers have intensified enforcement of sanctions on Russian oil exports, including direct maritime interdictions and seizures of shadow fleet tankers. This escalation increases legal, operational, and reputational risks for businesses involved in Russian energy logistics or trade, and heightens global supply chain volatility.
Fiscal volatility and higher taxes
Le budget 2026 est adopté via 49.3, dans un contexte de majorité introuvable. Déficit visé à 5% du PIB, dette projetée à 118,2% et surtaxe sur grandes entreprises (7,3 Md€) augmentent le risque de changements fiscaux rapides.
Semiconductor Supply Chain Resilience
Japan is accelerating investment in domestic and allied semiconductor capacity, with TSMC's Kumamoto expansion and TOPPAN's new lines. The sector is driven by AI demand, strategic 'de-China' moves, and advanced process upgrades, reshaping global supply chains and investment flows.
Port labor and automation tensions
East/Gulf Coast port labor negotiations and disputes over automation remain a recurring tail risk for U.S. logistics. Even with tentative deals, threats of slowdowns or strikes can disrupt ocean schedules, raise demurrage, and push costly rerouting toward West Coast or air freight.