Mission Grey Daily Brief - January 13, 2025

Summary of the Global Situation for Businesses and Investors

The global situation remains complex, with several key developments impacting the geopolitical and economic landscape. In Ukraine, the capture of North Korean soldiers has raised questions about Pyongyang's involvement with Russia, while the Biden administration's new sanctions on Russia's energy sector aim to further limit its ability to finance the invasion. Meanwhile, Turkey and Saudi Arabia are finding common ground on Syria, with Saudi Arabia calling for the lifting of sanctions to boost post-Assad reconstruction. In Europe, Sweden's contribution of warships to NATO's Baltic presence highlights continued efforts to strengthen regional security. Lastly, Japan's PM urges Biden to address concerns over the U.S. Steel deal, emphasising the importance of economic security and cooperation among allies.

Russia-Ukraine War and North Korea's Involvement

The Biden administration's new sanctions on Russia's energy sector are a significant development in the ongoing Russia-Ukraine war. The sanctions, announced on January 10, target two of Russia's largest oil producers, a major liquefied natural gas project, and over 100 tankers in its "shadow fleet", aiming to further limit Russia's ability to finance its invasion of Ukraine. Oil is Russia's most important source of revenue, accounting for over a third of its federal budget. The new measures are expected to drain billions of dollars from the Kremlin's war chest, increasing the costs and risks for Moscow to continue the war.

The sanctions come as Ukraine has captured two North Korean soldiers, transporting them to Kyiv for questioning, in what Ukraine's security services call "irrefutable evidence" of Pyongyang's involvement with Russia. Both soldiers were captured on January 9 in the Russian border region of Kursk. One had fake Russian identification documents, while the other had none. Russia and North Korea deny their soldiers are working together, but the US, Ukraine, UK, and South Korea believe otherwise. Communication with the prisoners is being done through translators and in cooperation with South Korean intelligence.

Ukrainian President Volodymyr Zelensky has posted pictures of the prisoners, saying "the world needs to know the truth about what is happening", and has instructed the Security Service of Ukraine to grant journalists access to the prisoners.

The sanctions and North Korea's involvement have significant implications for businesses and investors. The sanctions target key Russian energy companies and infrastructure, which could disrupt energy supply chains and increase energy costs, impacting businesses and consumers globally. The involvement of North Korean soldiers also raises concerns about the war's escalation and potential for further international involvement.

Businesses with operations or supply chains in the region should closely monitor the situation, assess potential risks, and consider contingency plans. Investors should also consider the potential impact on energy markets and related industries, as well as the broader geopolitical implications.

Syria's Future and Saudi Arabia's Role

Turkey and Saudi Arabia are finding common ground on Syria, with Saudi Arabia calling for the lifting of sanctions to boost post-Assad reconstruction. European and Middle Eastern diplomats met in Riyadh to discuss Syria's future, with Saudi Arabia urging the EU to lift sanctions to facilitate Syria's economic recovery. Germany has called for a "smart approach" to sanctions, providing rapid relief for the Syrian population, and has announced additional aid for food, emergency shelters, and medical care.

The US and European countries have been wary of Syria's new rulers, former insurgents who overthrew Assad, due to their Islamist roots. They have stated that ending sanctions depends on the progress of the political transition. The interim government has vowed to move towards a pluralist, open system and is seeking international support as the country recovers from a devastating civil war.

Turkey, a strong supporter of the Syrian opposition to Assad, has pledged support to the new government, especially in combating threats from the Islamic State group. Turkey's Foreign Minister, Hakan Fidan: 2>, has co: 2>emphasised the importance of establishing a balance between international expectations and the new administration's realities.

The evolving dynamics between Turkey and Saudi Arabia regarding Syria's future have significant implications for businesses and investors. The potential lifting of sanctions could open up new opportunities for investment and trade in Syria, particularly in sectors related to reconstruction and development. However, businesses should carefully assess the political and security risks associated with operating in a post-conflict environment, and consider the potential impact of changing regional dynamics on their operations.

Sweden's Contribution to NATO's Baltic Presence

Sweden's decision to contribute up to three warships to NATO's Baltic presence is a significant development in European security. This move strengthens NATO's presence in the Baltic region, which has gained strategic importance due to Russia's invasion of Ukraine. The warships will enhance NATO's capabilities in maritime surveillance, anti-submarine warfare, and other critical areas.

Sweden's contribution is part of a broader effort by NATO to reinforce its presence in the Baltic, which has become a focal point of tensions with Russia. The region's strategic importance has increased due to its proximity to Russia and key energy infrastructure.

For businesses and investors, Sweden's contribution highlights the continued focus on European security and the importance of regional stability. While the Baltic region may not be a direct area of operation for many businesses, the broader implications of this development should be considered. The reinforcement of NATO's presence could impact regional trade and investment flows, and influence the geopolitical landscape in Europe.

Japan-US Relations and Economic Security

Japan's Prime Minister, Shigeru Ishiba, has urged US President Joe Biden to address concerns over the blocked takeover of United States Steel Corp. by Nippon Steel Corp. Ishiba emphasised the importance of an investment-friendly environment for allies and partners, particularly in ensuring economic security. The blocked deal has raised concerns in business circles and highlighted the complex nature of US-Japan economic relations.

Ishiba stressed the need for cooperation among allies and like-minded partners in building robust supply chains and making their countries investment-friendly. The three leaders also agreed to jointly counter economic coercion and unilateral attempts to change the status quo by force, in an apparent reference to China. They confirmed progress in ensuring maritime and economic security and agreed to continue working towards a free and open Indo-Pacific.

Ishiba is considering a visit to the US to meet with President-elect Donald Trump, underscoring the importance of maintaining strong US-Japan ties.

For businesses and investors, the evolving US-Japan relationship and focus on economic security have significant implications. The blocked deal highlights the potential challenges of cross-border investments, particularly in sectors deemed critical to national security. Businesses should closely monitor the evolving US-Japan relationship and consider the potential impact on investment opportunities and supply chains. The emphasis on economic security also underscores the growing importance of geopolitical factors in business decisions.

Themes around the World:

Gaza ceasefire uncertainty persists

Ceasefire implementation remains fragile, with intermittent strikes, aid-flow constraints and contentious governance/disarmament sequencing for post-war Gaza. Businesses face elevated security, force‑majeure and personnel-duty-of-care risks, plus potential reputational exposure and operational volatility tied to border closures.

Expanded secondary sanctions, tariffs

US pressure is escalating from targeted sanctions to broader secondary measures, including proposed blanket tariffs on countries trading with Iran. This raises compliance costs, narrows counterparties, and increases sudden contract disruption risk across shipping, finance, insurance, and procurement.

Vision 2030 Economic Transformation

Saudi Arabia’s Vision 2030 drives diversification beyond oil, fostering rapid growth in non-oil sectors, digital innovation, and foreign investment. This transformation reshapes market opportunities, regulatory frameworks, and competitive dynamics for international businesses.

EU battery regulation compliance burden

EU Batteries Regulation requirements—carbon footprint calculation and disclosure, due diligence and upcoming battery passports—raise data, auditing and IT costs across French supply chains. Non-compliance risks market access, while compliant producers can differentiate via lower-carbon nuclear-powered output.

Escalating Australia-China Trade Tensions

Australia is considering tariffs and quotas on Chinese steel imports to protect domestic industry, risking renewed trade hostilities with China. Such measures could trigger retaliatory actions, impacting sectors reliant on Chinese markets and complicating bilateral investment flows.

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.

US Tariffs Disrupt German Exports

Recent US tariffs have led to a 9.4% drop in German exports to the US, particularly impacting the automotive and machinery sectors. The resulting volatility and unpredictability in transatlantic trade relations are forcing German businesses to seek alternative markets and reconsider investment strategies.

Energy Sector Reform and Pemex Strategy

Mexico is investing $323 billion in energy and infrastructure through 2030, with Pemex targeting 1.8 million barrels daily and expanding natural gas. Reforms focus on debt reduction, domestic refining, and attracting private capital, but Pemex’s financial health remains a concern.

Allied defence-industrial deepening (AUKUS)

AUKUS-related procurement and wider defence modernisation continue to reshape industrial partnerships, technology controls and security vetting. Suppliers in shipbuilding, cyber, advanced manufacturing and dual-use tech may see growth, but face stricter export controls, sovereignty requirements and compliance burdens.

Energy Independence and Import Reduction

The government is aggressively pursuing energy independence by reducing fuel imports through refinery upgrades, biofuel mandates, and new gas infrastructure. These efforts aim to lower import bills, stabilize the rupiah, and create new opportunities for energy sector investment.

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.

Accelerated EU Accession and Market Integration

Ukraine aims for EU membership by 2027, viewing integration as a key security and economic guarantee. Many EU states support this timeline, but accession depends on reforms and consensus. Rapid integration could reshape trade, regulatory, and investment landscapes for international businesses.

Water security and municipal failures

Urban and industrial water reliability is deteriorating amid aging infrastructure and governance gaps. Non-revenue water is about 47.4% (leaks ~40.8%); the rehabilitation backlog is estimated near R400bn versus a ~R26bn 2025/26 budget, disrupting production, hygiene, and workforce continuity.

Chronic Debt Dependency Crisis

Pakistan’s reliance on foreign loans from China, Saudi Arabia, UAE, and the IMF has reached critical levels, with external debt exceeding $128 billion. This dependency forces policy compromises and exposes businesses to currency volatility, regulatory unpredictability, and lender-driven reforms.

Industrial Policy and Electricity Pricing

High electricity costs have led to smelter closures and job losses in energy-intensive industries. Recent tariff relief for ferrochrome producers highlights the urgent need for a sustainable, competitive electricity pricing policy to prevent deindustrialization and protect employment.

Supply Chain Realignment and China-Plus-One

Rising geopolitical tensions and global supply chain disruptions have accelerated India’s emergence as a preferred alternative to China. Multinationals are increasingly adopting a 'China-Plus-One' strategy, leveraging India’s scale, skilled workforce, and improving infrastructure for diversification and risk mitigation.

Sanctions enforcement and secondary risk

U.S. sanctions on Russia, Iran, Venezuela, and related maritime “shadow” networks are increasingly enforced with supply-chain due diligence expectations. Counterparties, insurers, shippers, and banks face heightened secondary exposure, trade finance frictions, and cargo-routing constraints for energy and dual-use goods.

Long-term LNG security push

Utilities are locking in fuel amid rising power demand from data centers and AI. QatarEnergy signed a 27‑year deal to supply JERA about 3 mtpa from 2028; Mitsui is nearing an equity stake in North Field South (16 mtpa, ~$17.5bn). Destination clauses affect flexibility.

Currency Stability and Market Growth

The Brazilian real appreciated 11.19% in 2025, while the Ibovespa index rose 33.7%, marking its best performance since 2016. Stable currency and booming equities enhance Brazil’s attractiveness for portfolio investment and international business expansion.

Infrastructure Investment and Development Hubs

A historic infrastructure plan allocates 5.6 trillion pesos to energy, transport, health, and education projects through 2030. The strategy seeks to boost growth, regional development, and social equity, with mixed public-private models and streamlined regulatory frameworks.

US-Canada Trade Tensions Escalate

President Trump’s threats of 100% tariffs on Canadian exports, triggered by Canada’s partial trade agreement with China, mark a dramatic shift in North American trade relations. These tensions inject volatility into cross-border supply chains, investment planning, and the upcoming CUSMA review.

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.

Critical minerals and battery supply chains

Canada is positioning itself as a “trusted supplier” of critical minerals, supporting mining, processing and battery ecosystems. This creates opportunities in offtakes and JV processing, but permitting timelines, Indigenous consultation, and infrastructure constraints can delay projects and cashflows.

US-linked investment and credit guarantees

Taiwan’s commitment to roughly US$250bn of investment in the US, backed by up to US$250bn in credit guarantees, will redirect corporate capital planning. It may accelerate supplier localization in North America while raising financing, execution, and opportunity-cost considerations at home.

Energy strategy pivots nuclear-led

The new 10‑year energy plan (PPE3) prioritizes nuclear with six EPR2 reactors (first by 2038) and aims existing fleet output around 380–420 TWh by 2030–2035. Lower wind/solar targets add policy risk for power‑purchase strategies and electrification investments.

Low inflation and financing conditions

L’inflation française a touché 0,4% en janvier (plus bas depuis 2020), favorisant une baisse du Livret A à 1,5%. Coût du capital potentiellement plus bas (crédit immobilier ~3,1%), mais consommation et prix de services modérés influencent prévisions de ventes et salaires.

Immigration compliance crackdown on sponsorship

New offences targeting adverts for false visa sponsorships and intensified enforcement reflect tougher Home Office posture. Employers in logistics, care, hospitality and tech face higher due-diligence and audit expectations, potential licence risk, recruitment friction and reputational exposure in supply chains.

Improving external buffers and ratings

Fitch revised Turkey’s outlook to positive, citing gross FX reserves near $205bn and net reserves (ex-swaps) about $78bn, reducing balance-of-payments risk. Better buffers can stabilize trade finance and counterparty risk, though inflation and politics still weigh on sentiment.

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.

Mercosur-EU Trade Agreement Delays

The ratification of the Mercosur-European Union trade agreement faces legal and political hurdles, with implementation potentially delayed up to two years. This uncertainty affects market access, tariff reductions, and strategic planning for exporters and investors in Brazil.

Debt Management and Fiscal Sustainability Challenges

Egypt’s reliance on local and international debt issuance remains high, with EGP 843 billion in local debt planned for February 2025 and $2 billion in international bonds for FY 2025/26. Fiscal sustainability concerns persist, influencing sovereign risk and borrowing costs.

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.

US-France Trade Tensions Escalate

Rising US tariffs on French wine and digital services, coupled with threats of broader sanctions, create uncertainty for exporters and investors. These tensions, intensified by political disputes, risk disrupting transatlantic trade and investment flows.

Infrastructure Expansion and Logistics Modernization

India’s 2026-27 budget prioritizes accelerated investment in highways, ports, and digital infrastructure. Initiatives like Gati Shakti have reduced logistics costs below 10% of GDP, improving supply chain efficiency and global competitiveness, and supporting the goal of becoming a $5 trillion economy.

Labor Market Reforms and Transparency

France is implementing EU directives on salary transparency to address gender pay gaps and workforce equity. New laws require disclosure of pay ranges and justification of disparities, impacting HR policies, compliance costs, and labor relations for domestic and international employers.

Tariff-Driven Supply Chain Reconfiguration

US tariffs have forced businesses to diversify supply chains, reduce inventory holdings, and reconfigure logistics networks. The shift from legacy mega-hubs to intermediate nodes and diversified ports is improving efficiency but increasing operational complexity and costs.