Mission Grey Daily Brief - February 18, 2025
Summary of the Global Situation for Businesses and Investors
The world is in a state of flux, with former British Prime Minister Sir John Major warning of a "rather more dangerous" world if the United States does not support its allies. This comes as European leaders convene an emergency summit in Paris to discuss the war in Ukraine and concerns over the United States' commitment to Europe. Meanwhile, British Prime Minister Sir Keir Starmer has expressed willingness to send peacekeeping troops to Ukraine, but former British Army Chief Lord Richard Dannatt has warned of the UK's limited military capabilities. In other news, Sam Pitroda, leader of the Congress's Overseas Department, has criticised the US for labelling foes and called for international collaboration over discord.
US-Europe Relations and the Ukraine War
The Ukraine war has been a source of tension between the United States and Europe. European leaders are convening an emergency summit in Paris to discuss the war and concerns over the United States' commitment to Europe. The United States and Russia are planning to meet in Saudi Arabia to negotiate a peace agreement, but Kyiv has been excluded from these talks. British Prime Minister Sir Keir Starmer has expressed willingness to send peacekeeping troops to Ukraine, but former British Army Chief Lord Richard Dannatt has warned of the UK's limited military capabilities. This raises questions about the UK's ability to fulfil its pledge and the potential costs of such an operation.
US-China Relations and the Threat of Isolationism
Former British Prime Minister Sir John Major has warned of a "rather more dangerous" world if the United States does not support its allies. He cited the potential for increased influence by China and Russia if the United States retreats into isolationism. This raises concerns about the future of democracy and the potential for emboldening authoritarian regimes. However, Sam Pitroda, leader of the Congress's Overseas Department, has criticised the US for labelling foes and called for international collaboration over discord. This highlights the complex nature of US-China relations and the need for a nuanced approach.
European Security and the Role of NATO
The Ukraine war has raised questions about European security and the role of NATO. European leaders are concerned about being shut out of negotiations and emphasise the importance of European unity. Ukrainian President Volodymyr Zelensky has called for the creation of a European military force to ensure Europe's security and sovereignty. However, US officials have signalled a potential shift away from NATO allies and a focus on domestic security concerns. This creates uncertainty about the future of NATO and the potential for a realignment of geopolitical power structures.
India-China Border Tensions and the Role of International Collaboration
Sam Pitroda, leader of the Congress's Overseas Department, has criticised the US for labelling foes and called for international collaboration over discord. This comes amid India-China border tensions and concerns about the overstatement of the China threat. Pitroda's remarks highlight the importance of international cooperation and the need for a nuanced approach to geopolitical challenges. This raises questions about the future of US-China relations and the potential for a shift in global power dynamics.
Further Reading:
China threat blown out of proportion: Sam Pitroda
European Leaders Call Emergency Summit on Ukraine Fearing Trump Has Shut Them Out
Europeans leaders plans emergency summit amid isolation in talks to end war in Ukraine
Ex-Army chief's dire warning after Keir Starmer says he would send troops to Ukraine
Ex-PM Major warns of ‘dangerous world’ if US does not stand behind allies
Ex-PM Sir John Major warns of ‘dangerous world’ if US does not stand behind allies
John Major warns of ‘dangerous world’ if US does not stand behind allies
Macron calls emergency European summit on Trump, Polish minister says
Rubio and other US officials set to meet with Russia in Saudi Arabia: Reports
UK Prime Minister Keir Starmer willing to send peacekeeping troops to Ukraine after war - USA TODAY
Ukraine War: Europe at ‘turning point’ as leaders meet in Paris
Themes around the World:
UK as a Stable Investment Destination
UK leaders are leveraging global volatility to position the country as a haven for investment, emphasizing regulatory stability, financial sector strength, and innovation in AI and tech. This narrative aims to attract capital and talent, but is tested by ongoing geopolitical shocks.
Downstreaming and Industrial Policy Challenges
Indonesia’s downstreaming success in nickel, driven by Chinese investment and favorable market conditions, is difficult to replicate for other minerals like copper. High capital costs and thin margins threaten resource depletion and discourage new exploration, raising concerns about the sustainability of the industrialization model.
Labor Shortages and Supply Chain Disruptions
Persistent labor shortages, especially in agriculture and export sectors, are causing supply chain bottlenecks. Reliance on migrant workers from Cambodia and Myanmar, combined with stricter export inspections and logistics challenges, is impacting competitiveness and market access.
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.
Political Instability and Budget Deadlock
France faces acute political instability as the government struggles to pass the 2026 budget, risking no-confidence votes and potential snap elections. This uncertainty undermines investor confidence, complicates fiscal planning, and could affect France’s credit rating and business environment.
Record Trade Surplus Fuels Expansion
China’s 2025 trade surplus hit $1.2 trillion, driven by export growth to Africa, ASEAN, Latin America, and the EU, offsetting US declines. This export reliance boosts global influence but risks long-term structural imbalances and protectionist backlash.
Regulatory Uncertainty and Standards Divergence
Diverging regulatory regimes between the UK, EU, US, and China complicate compliance for international businesses. Ongoing disputes over digital services, food standards, and AI governance increase operational complexity and may fragment market access for UK-based firms.
Labor Market Weakens Amid Stagnation
Unemployment rose to 6.2% in December 2025, the highest since 2010, with nearly 2.91 million unemployed. The labor market faces demographic pressures, a persistent skills gap, and weak demand, impacting both domestic consumption and the attractiveness of Germany for international investors.
Foreign Investment Trends and Regulatory Hurdles
Foreign direct investment, especially from Japan, is rising in Australian real estate and infrastructure, driven by housing undersupply and growth prospects. However, complex regulatory processes and development approvals present challenges, requiring strategic navigation for international investors.
US–Taiwan Strategic Trade Pact
The new US–Taiwan trade agreement lowers tariffs on Taiwanese exports to 15%, secures preferential treatment for key sectors, and cements Taiwan’s role as a strategic US partner. This enhances market access but may provoke Chinese retaliation and regulatory uncertainty.
Armenia–Turkey Border Reopening Prospects
The anticipated partial reopening of the Armenia–Turkey border is set to reduce logistics costs, expand market access, and boost regional trade and investment. This development could reshape supply chains and enhance Turkey’s connectivity with the Caucasus and beyond, with positive spillovers for international business.
Currency Volatility and Fiscal Reforms
The South African rand has shown recent strength, supported by improved fiscal management, credit rating upgrades, and inflation control. However, volatility remains a risk, influenced by global economic shifts, policy changes, and domestic fiscal vulnerabilities, affecting import costs and investment planning.
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.
Semiconductor Sector Under Geopolitical Pressure
South Korea’s semiconductor industry faces mounting pressure from US industrial policy, including demands for increased US-based production and threats of tariffs. This creates strategic dilemmas for Korean firms, affecting global supply chains and technology investment decisions.
Regulatory Reforms and Business Environment
Ongoing economic reforms target improved investment climate, streamlined licensing, and expanded digital and physical infrastructure. The government is enhancing free zones, logistics corridors, and industrial clusters, notably in the Suez Canal Economic Zone, to boost exports and attract diversified FDI, especially in manufacturing and green energy.
Critical Minerals and Mining Ambitions
With $2.5 trillion in mineral reserves, Saudi Arabia is investing $110 billion to become a regional mining and processing hub. Strategic partnerships, especially with the US, aim to reduce supply chain dependence on China and position the Kingdom as a key player in global mineral supply chains.
Manufacturing and FDI Surge Amid PLI Schemes
India attracted $51 billion in FDI in six months, driven by government incentives, PLI schemes, and a focus on advanced manufacturing. Sectors like semiconductors, EVs, and electronics are seeing robust investment, strengthening India’s position as a global manufacturing hub.
Energy Transition and Nuclear Expansion
South Korea’s commitment to build two new nuclear reactors by 2038 reflects a strategic pivot toward clean energy and carbon neutrality. This policy shift impacts energy-intensive industries, investment in renewables, and long-term infrastructure planning.
America First and Investment Nationalism
The US is pursuing an 'America First' agenda, leveraging tariffs and investment controls to promote domestic industries and national security. This approach complicates relations with allies, influences defense procurement, and increases compliance burdens for multinational firms.
Regulatory and Policy Shifts for Business
Japan is implementing regulatory reforms to attract foreign investment and enhance business resilience. Policy changes in economic security, industrial strategy, and trade are designed to support supply chain diversification, technological innovation, and long-term competitiveness for international firms.
Rising Chinese Trade Influence
South Africa’s trade deficit with China is widening, driven by surging imports of Chinese vehicles and manufactured goods. This trend threatens local industries and complicates trade balances, requiring strategic adaptation by businesses to remain competitive in key sectors.
Security Risks and Regional Instability
Persistent terrorism, border tensions with Afghanistan, and internal unrest continue to disrupt supply chains, deter foreign investment, and raise operational costs. Recent US and international travel advisories highlight sustained security risks, especially in Khyber Pakhtunkhwa and Balochistan, impacting business confidence and insurance premiums.
Regulatory and Geopolitical Frictions Rise
Escalating trade disputes, tariffs, and new cybersecurity rules in the EU and India target Chinese firms and supply chains. These frictions increase operational uncertainty, compliance costs, and market access risks for international investors and exporters.
Immigration Policy and Labor Market Volatility
Australia's high immigration rate—31.5% foreign-born—fuels economic growth but also political debate amid cost-of-living and housing crises. Rising populist rhetoric and calls for policy reform create uncertainty for workforce planning, talent mobility, and social stability, affecting business operations and investment climate.
Supply Chain Resilience and Nearshoring
Canadian policy emphasizes strengthening domestic supply chains, especially for critical minerals and EVs, and leveraging nearshoring opportunities. Investments in infrastructure and technology aim to reduce vulnerabilities exposed by global disruptions and geopolitical tensions.
Export-Led Growth Under Global Pressures
Vietnam’s export-driven economy faces mounting US tariffs (up to 20%) and EU trade measures, threatening key market access. The government is actively diversifying export destinations to mitigate risks, but global trade tensions remain a significant operational challenge.
Semiconductor Industry Resilience and Expansion
Japan is rapidly expanding its semiconductor sector, attracting major investments such as TSMC’s Kumamoto plant and boosting domestic equipment and materials suppliers. This is part of a broader strategy to strengthen supply chain resilience, reduce China dependence, and capitalize on global AI and automotive demand.
Humanitarian Crisis and Aid Access Constraints
Israel’s control over Gaza’s borders and restrictions on humanitarian aid have led to severe shortages and a potential famine. The reopening of the Rafah crossing is anticipated but not guaranteed. These dynamics disrupt logistics, increase compliance risks, and heighten reputational concerns for multinationals.
Accelerated Trade Policy Reforms
India’s government has rapidly expanded free trade agreements with the UK, New Zealand, Oman, and EFTA, recalibrating trade policy to diversify export markets and attract FDI. These reforms enhance global market access but also expose India to external risks, including US tariffs and global trade disruptions.
Energy Transition and Green Ammonia Expansion
Japan is leading Asia in green ammonia co-firing projects and renewable energy investments, targeting decarbonization of power generation. Major projects and international supply agreements position Japan as a regional leader in clean energy, with significant implications for energy-intensive industries and supply chains.
Geopolitical Risks in Resource Supply Chains
Global supply chain vulnerabilities, especially in critical minerals, are heightened by concentrated production in China and Russia. Australia’s efforts to build strategic reserves and diversify sourcing are crucial for business continuity, risk management, and long-term investment planning.
Energy Stability and Eskom Turnaround
South Africa’s power grid has achieved its most stable period in five years, following Eskom’s recovery plan and a R254 billion bailout. Load shedding has virtually ended, boosting investor confidence and reducing operational risks for businesses.
Green Hydrogen Investment Surge
Over R$64 billion in green hydrogen projects are awaiting final investment decisions in 2026, contingent on regulatory clarity and grid access. Brazil’s emerging hydrogen sector is positioned for global supply chains, with China’s strategic focus and domestic incentives accelerating industrial and export opportunities.
Labor Reform and Compliance Pressures
Sweeping labor reforms—including a reduced 40-hour workweek, higher minimum wages, and stricter inspections—are reshaping Mexico’s labor market. These changes increase compliance costs and operational complexity, particularly for manufacturing, logistics, and digital platform employers, with direct implications for competitiveness and labor relations.
Supply Chain Vulnerability and Diversification
Japan’s dependence on Chinese rare earths and strategic materials exposes its industries to supply shocks. Despite efforts to reduce reliance, over 60% of rare earth imports remain from China, highlighting ongoing risks and the urgency of alternative sourcing.
Infrastructure Expansion Faces Local Resistance
Major infrastructure and tech projects, such as Nvidia’s Kiryat Tivon campus, are transforming Israel’s economic landscape. However, local opposition, concerns over land use, and social tensions may delay projects, increase costs, and complicate stakeholder engagement for international investors and operators.