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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

Ukraine's NATO Ally 'Ready' to Deploy Troops

Themes around the World:

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Semiconductor Industry Dominance

Taiwan is a global leader in semiconductor manufacturing, crucial for electronics and automotive industries worldwide. Disruptions in Taiwan's chip production can significantly affect global supply chains, emphasizing the importance of Taiwan in technology investment strategies and international trade dependencies.

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Labor Unrest and Strikes

Frequent labor strikes in key sectors such as mining, transport, and manufacturing create significant operational disruptions. Labor disputes increase production downtime and raise wage costs, impacting profitability and supply chain reliability for multinational companies operating in South Africa.

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Regulatory Environment and Compliance

Evolving EU and national regulations on data privacy, environmental standards, and corporate governance impose compliance costs on businesses. These regulatory changes impact operational flexibility and necessitate strategic adjustments in market entry and product development.

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Energy Transition and Nuclear Policy

France's commitment to expanding its nuclear energy capacity aims to secure energy independence and reduce carbon emissions. This shift impacts international energy markets, supply chains for nuclear technology, and investment in renewable alternatives, influencing global energy trade and France's industrial competitiveness.

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Supply Chain Resilience Amid Global Disruptions

Ongoing global supply chain disruptions, exacerbated by geopolitical tensions and the COVID-19 aftermath, compel German businesses to diversify suppliers and localize production. This strategic shift aims to reduce dependency on single sources, enhancing resilience but potentially increasing operational costs and affecting international trade dynamics.

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Nusantara Capital City Development

The government allocated Rp6 trillion for the new capital, Nusantara, focusing on transparent governance and strategic infrastructure. This project attracts global investors, reshapes regional logistics, and creates new opportunities for construction, services, and technology firms.

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Sustainability and Regulatory Challenges

The EU-Mercosur deal and global buyers increasingly require traceability and environmental compliance. Brazil’s exporters must adapt to stricter anti-deforestation laws and sustainability standards, which may limit access for non-compliant producers and increase operational costs.

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Infrastructure Development and Connectivity

Massive investments in infrastructure, including transportation, logistics, and digital connectivity, are enhancing supply chain efficiency. Improved ports, highways, and digital networks reduce transit times and costs, benefiting international trade and multinational operations.

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Supply Chain Diversification and Realignment

Indian exporters are actively shifting supply chains, establishing subsidiaries in the US and Africa, and targeting new markets in Europe and Asia to offset US tariff risks. This trend is accelerating India’s integration into alternative global value chains and reducing overdependence on single markets.

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UK Trade Growth Lagging Global Average

UK trade growth is forecast at 2.3% annually, below the global average of 2.5%, due to slow expansion with the US and China. Deepening ties with the EU and other rule-based economies is seen as crucial for exporters and supply chain resilience.

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Energy Transition Faces Supply Constraints

France’s accelerated shift to electrification and decarbonization is challenged by hardware shortages, grid bottlenecks, and mineral dependencies. Energy supply tensions and infrastructure delays threaten industrial competitiveness and reliability for international operations.

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Record Export Growth to United States

Mexico’s exports to the US reached historic highs in late 2025, with a 6.7% increase to $48.5 billion in October. This strengthens Mexico’s position as the US’s top trading partner, but exposes it to US protectionist policies and sudden regulatory shifts.

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Thai-Cambodian Border Conflict Risks

Persistent clashes and fragile ceasefires along the Thai-Cambodian border have disrupted trade, displaced over 500,000 people, and led to significant investment delays in border regions. Ongoing tensions threaten cross-border supply chains and regional stability.

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High-Tech Investment and Cybersecurity Growth

Israel’s high-tech sector, particularly cybersecurity and AI, continues to attract substantial foreign venture capital. Early-stage investment models and government support drive innovation, but ongoing conflict and regulatory changes may affect talent mobility, valuations, and cross-border partnerships.

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China-Japan Trade Tensions Escalate

China’s sweeping ban on dual-use exports and rare earths to Japan, in retaliation for Tokyo’s Taiwan stance, threatens Japan’s manufacturing supply chains and economic growth. This marks a significant rise in geopolitical risk for international investors and supply chain managers.

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Black Sea Grain Export Disruptions

Ongoing Russian attacks on Odesa and other Black Sea ports target civilian ships and port infrastructure, aiming to disrupt Ukraine’s agricultural exports. These disruptions threaten global food security and complicate logistics for international trade partners.

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Regional Trade Shifts And Diversification

Iran is expanding technical, engineering, and preferential trade agreements with countries like Turkey and Indonesia. These efforts aim to offset Western isolation, but supply chain and payment risks persist, requiring careful partner selection and risk management for international firms.

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Digital Economy Expansion

Rapid growth in Indonesia's digital economy, driven by e-commerce and fintech sectors, presents new opportunities for market entry and consumer engagement. However, digital infrastructure gaps and cybersecurity concerns require careful navigation by international investors and partners.

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Infrastructure and Industrial Policy Accelerate

Major federal investments in infrastructure and industrial clusters are fostering innovation and supply chain security. Policies favor US-made products, boosting domestic manufacturing but challenging foreign suppliers and investors.

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Nuclear Program Developments

Iran's nuclear activities remain a focal point of geopolitical tension, influencing global diplomatic relations and economic sanctions. Escalations or negotiations around the nuclear program directly affect investor confidence and the stability of trade agreements involving Iran.

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Political Uncertainty Ahead of Elections

Political volatility, including Parliament dissolution and upcoming elections, creates uncertainty for business operations and investment planning. Coalition dynamics and reform agendas may alter regulatory environments, affecting strategic decisions for international investors.

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Supply Chain Fragmentation and Near-Shoring

Trade tensions, tariffs, and export controls have accelerated supply chain fragmentation, prompting US and global firms to pursue near-shoring and diversification. This shift increases operational costs but enhances resilience, requiring strategic adjustments in procurement, logistics, and risk management.

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Regulatory Divergence from EU Standards

The UK’s regulatory divergence from EU frameworks introduces complexities for companies operating cross-border. Variations in product standards, data protection, and financial regulations necessitate enhanced compliance mechanisms, potentially increasing operational costs and affecting market competitiveness internationally.

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Food Self-Sufficiency and Export Shift

Indonesia will halt rice and sugar imports in 2026, relying on robust domestic production and reserves. The government aims to export rice and corn, marking a strategic shift toward food sovereignty and new export opportunities for agribusiness and logistics.

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Geopolitical Relations and Trade Agreements

The UK is actively pursuing new trade agreements beyond the EU, including with the US, Commonwealth countries, and Asia-Pacific. These efforts reshape trade patterns and investment landscapes, offering new market access but also introducing negotiation uncertainties.

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Political Stability and Governance

Political developments and governance practices in Russia influence investor confidence. Stability concerns or policy shifts can lead to sudden changes in the business environment, affecting long-term strategic planning.

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Labor Market Dynamics and Wage Inflation

Rising wages and labor shortages in key industrial regions challenge Vietnam's cost competitiveness. While improving living standards, these trends may prompt companies to automate or relocate certain operations, impacting investment strategies and necessitating adjustments in supply chain planning to maintain profitability.

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Fragile Ceasefire and Humanitarian Challenges

Despite a ceasefire agreement in Gaza, repeated violations and severe humanitarian crises persist. International pressure and UN findings of genocide affect Israel’s reputation, regulatory environment, and risk profile for global investors and supply chain operators.

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Accelerating Food Self-Sufficiency Policies

Indonesia has achieved rice self-sufficiency and halted rice and sugar imports for 2026, with surplus production and plans to export. This shift strengthens food security, impacts global commodity prices, and signals major changes for agribusiness supply chains.

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Technological Innovation and Regulation

Advancements in AI, semiconductor technology, and data privacy regulations shape the competitive landscape. Regulatory scrutiny on tech giants impacts market access and investment opportunities, affecting global technology supply chains.

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Persistent Inflation and Policy Uncertainty

Despite strong GDP growth, inflation remains elevated, fueled by tariffs, a weaker dollar, and policy ambiguity. Businesses face higher input costs and pricing pressures, with monetary policy divided between supporting growth and containing inflation, complicating planning for investment and operations.

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Currency Fluctuations and Exchange Rate Risks

The Pakistani rupee experiences significant volatility against major currencies, driven by macroeconomic imbalances and external shocks. Exchange rate instability raises transaction costs and financial risks for businesses engaged in cross-border trade and investment.

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Nationwide Protests and Legitimacy Crisis

Iran faces its largest protests in decades, driven by economic collapse, inflation exceeding 40%, and a generational rejection of the ruling system. The unrest, spreading to all provinces, threatens regime stability and disrupts business operations.

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Migration Surges and Border Dynamics

Political turmoil in Venezuela and regional instability are driving increased migration flows through Mexico. This strains border infrastructure, affects labor availability, and complicates regulatory compliance for businesses reliant on cross-border movement of goods and people.

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Aging Population and Labor Shortages

Japan’s demographic challenges, including an aging workforce and declining birth rates, strain labor markets and productivity. This compels businesses to invest in automation and reconsider workforce strategies, impacting operational costs and long-term growth prospects in the Japanese market.

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Escalating Security Risks and Terrorism

Pakistan faces a surge in terrorist incidents, with 71% originating from Khyber Pakhtunkhwa and a 40% rise in violence in 2025. Persistent attacks, especially targeting infrastructure and foreign interests, elevate operational risks for international businesses and supply chains.