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Mission Grey Daily Brief - February 19, 2025

Summary of the Global Situation for Businesses and Investors

The US and Russia have begun peace talks in Riyadh, Saudi Arabia, to end the war in Ukraine and restore relations, without the presence of Ukraine or European allies. This meeting is a significant shift in US foreign policy and raises concerns about the future of European security and the potential for a peace deal that may not be favourable to Ukraine and European allies. British couple Craig and Lindsay Foreman have been charged with spying in Iran, arrested by the Islamic Revolutionary Guard Corps last month. Mexico is threatening to sue Google over the "Gulf of America" name change in its map service following President Donald Trump's order. India and Qatar have formalised a new strategic partnership, with Qatar announcing a $10 billion investment in India, covering sectors such as hospitality, food security, technology, and logistics. India and the US are dealing with the arrival of 112 illegal Indian immigrants in Amritsar, transported in a US military plane.

US-Russia Peace Talks: Implications for Ukraine and Europe

The US and Russia have begun peace talks in Riyadh, Saudi Arabia, to end the war in Ukraine and restore relations, without the presence of Ukraine or European allies. This meeting is a significant shift in US foreign policy and raises concerns about the future of European security and the potential for a peace deal that may not be favourable to Ukraine and European allies. US Secretary of State Marco Rubio and Russian Foreign Minister Sergey Lavrov met in Riyadh to discuss a potential settlement to the nearly three-year-long war in Ukraine, despite the absence of Ukrainian officials. The meeting is expected to focus on thawing relations between the two countries, whose ties have fallen to their lowest level in decades. It is meant to pave the way for a meeting between Trump and Russian President Vladimir Putin.

Kyiv's absence at the talks has rankled many Ukrainians, and European allies have expressed concerns they are being sidelined. French President Emmanuel Macron vowed to work with all Europeans, Americans, and Ukrainians to achieve a strong and lasting peace in Ukraine. Kremlin spokesman Dmitry Peskov stated that Putin has repeatedly expressed readiness for peace talks, but a comprehensive settlement is impossible without considering security issues in Europe.

The meeting in Riyadh highlights Saudi Arabia's role in diplomacy, with Crown Prince Mohammed bin Salman seeking to be a major diplomatic player and burnishing his reputation after the 2018 killing of Washington Post journalist Jamal Khashoggi. Saudi Arabia has maintained close relations with Russia throughout the war in Ukraine, both through the OPEC+ oil cartel and diplomatically. Saudi Arabia has also helped in prisoner negotiations and hosted Ukrainian President Volodymyr Zelenskyy for an Arab League summit in 2023.

The recent US diplomatic blitz on the war has sent Ukraine and key allies scrambling to ensure a seat at the table, amid concerns that Washington and Moscow could press ahead with a deal that won't be favourable to them. Kyiv's participation in such talks was a bedrock of US policy under Trump's predecessor, Joe Biden, whose administration also led international efforts to isolate Russia over the war. White House officials have pushed back against the notion that Europe has been left out, noting that administration officials have spoken to several leaders.

Kyiv has insisted it will not accept the outcome of any discussions if Kyiv does not have a say in its own future. European allies have expressed concerns they are being sidelined, with France calling an emergency meeting of European Union countries and the UK to discuss the war. Sir Keir Starmer has called for the US to provide a 'backstop' for any deal in Ukraine, and European leaders have <co: 10,


Further Reading:

British couple charged with spying in Iran

Europe and Zelensky excluded from Ukraine peace talks as US and Russia gather in Saudi Arabia; Germany leaves summit over concerns of Trump’s commitment to the Baltics

Mexico Threatens to Sue Google Over ‘Gulf of America’ Change

PM Modi's Efforts Strengthen India-Qatar Ties As Both Nations Announce Strategic Partnership

Russian delegation arrives in Saudi Arabia for talks with U.S. to end Ukraine war

Third Batch Of 112 Illegal Indian Immigrants Lands In Amritsar In US Military Plane

Top Russian, US officials are discussing improving ties and ending the Ukraine war — without Kyiv

Trump’s new world: US and Russia begin Ukraine peace talks

US and Russia meet without Ukraine for first talks on ending war

Themes around the World:

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Digital Influence Economy Expansion

Brazil’s influencer market has become a significant economic force, with top creators generating multimillion-dollar revenues and shaping consumer behavior. High social media penetration and engagement drive marketing shifts toward authentic, data-driven influencer partnerships. This digital economy transformation presents new opportunities and challenges for brands, investors, and regulators in Brazil’s evolving commercial landscape.

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Monetary Policy and Interest Rate Dynamics

The Bank of Russia's recent decision to cut the key interest rate from 21% to 20% signals cautious optimism amid slowing inflation and stable economic growth. However, tight monetary conditions persist to control inflation, impacting borrowing costs, investment activity, and corporate debt servicing. This monetary stance influences business financing, investment strategies, and overall economic stability in Russia.

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Iran-Israel Conflict Impact

The escalating Iran-Israel conflict has triggered a surge in global oil prices, directly affecting Indonesia's economy through increased commodity costs, exchange rate volatility, and capital flow disruptions. Indonesia's reliance on energy imports exacerbates fiscal pressures, with oil prices rising above budget assumptions, threatening state budget stability and inflation, while also impacting global trade routes and investor confidence.

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Iran-US Nuclear Negotiations and Sanctions

Ongoing indirect talks between Iran and the US focus on Iran's nuclear program, with the US demanding cessation of uranium enrichment. Despite negotiations, the US imposed fresh sanctions targeting Iranian entities linked to the National Iranian Tanker Company. Iran demands verifiable, irreversible sanctions relief as a core condition, emphasizing economic benefits and trust restoration for sustainable agreements.

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LNG Sector Expansion Challenges

Canada’s liquefied natural gas (LNG) industry faces a critical 18-month window to remove regulatory barriers and attract investment to meet growing global demand, particularly in Asia. Despite geographic advantages over U.S. Gulf Coast exports, stringent permitting and policy uncertainty risk losing investment to competing projects like Alaska LNG, affecting energy export growth and supply chain dynamics.

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Security Concerns: Espionage and Technology Transfer

Trials of German nationals accused of spying for China highlight vulnerabilities in high-tech and dual-use sectors. These incidents raise concerns over intellectual property protection, export controls, and cybersecurity, potentially impacting international trust, regulatory scrutiny, and the strategic positioning of German technology firms in global supply chains.

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Energy Supply Stability and Diesel Reserves

Iran's Oil Ministry reported an 85% increase in diesel reserves for power plants, reaching 1.5 billion liters, alongside significant rises in mazut deliveries. These measures ensure energy supply stability amid rising domestic demand and external challenges. Strengthened fuel reserves support uninterrupted industrial and commercial operations, mitigating risks of energy shortages that could disrupt production and economic activities.

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Workforce Digital Skills Gap

Indonesia faces a critical challenge in developing a future-ready workforce amid rapid digital transformation and AI disruption. Less than half of ASEAN youth receive adequate digital skills training, risking economic competitiveness. National programs like Kartu Prakerja aim to upskill millions, but gaps remain in aligning skills with emerging industries, impacting Indonesia’s ability to capitalize on its demographic dividend.

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Supply Chain Vulnerabilities in Rare Earths

China's export restrictions on rare earth magnets pose significant risks to India's automotive and electronics sectors, especially electric vehicle production. With over 80% of rare earth magnet imports sourced from China, delays and export licensing issues threaten production continuity. India is actively building alternative supply chains, boosting domestic production, and exploring strategic reserves to mitigate long-term supply risks.

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US Tariff Policies and Trade Uncertainty

The US International Trade Court blocked President Trump's broad import tariffs, citing overreach, but tariff threats persist, including a 25% tariff on phones made outside the US. These policies create uncertainty for Indonesian exporters and global supply chains, influencing investment decisions and prompting companies like Apple to diversify production away from China.

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Canada-U.S. Trade Tariffs Impact

The escalating U.S. tariffs on Canadian steel, aluminum, and other goods, including a recent doubling to 50%, have severely disrupted integrated North American supply chains. Canadian industries face existential threats, with calls for government retaliation and diversification of trade partners. These tariffs increase costs, threaten jobs, and create uncertainty, impacting investment decisions and bilateral trade relations.

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Western Sanctions and Trade Disruptions

The imposition of extensive Western sanctions, including a proposed US bill with 500% tariffs on imports from countries buying Russian energy, significantly disrupts international trade and investment. These sanctions isolate Russia economically but also risk retaliatory impacts on global supply chains, US domestic markets, and relations with key partners like China and India, complicating global business operations.

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European Political Developments and Elections

Political movements and elections across Europe, including France's Monaco visit and EU member states' referendums, influence policy continuity and regulatory environments. These developments affect investor confidence, cross-border cooperation, and the strategic outlook for French businesses operating within the EU framework.

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National Security and Chinese Tech Risks

The infiltration of Chinese technology in critical US infrastructure, including solar farms, payment terminals, and telecom equipment, poses cybersecurity and national security risks. Allegations of espionage and sabotage have led to calls for restricting Chinese firms from key sectors, impacting procurement, supply chains, and technology partnerships.

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Municipal Corruption Investigations and Governance Challenges

Ongoing investigations and arrests related to corruption within Istanbul's municipal administration highlight governance challenges at local levels. These issues raise concerns about transparency and accountability, potentially undermining public trust and complicating public-private partnerships, infrastructure projects, and urban development initiatives critical for economic growth.

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Geopolitical Instability and Security Risks

Ongoing military conflicts involving Ukraine, Russia, Israel, and Iran significantly heighten geopolitical risks affecting France. These tensions threaten global supply chains, energy markets, and trade routes, especially with potential escalation involving NATO. French businesses face uncertainty in international operations, increased security costs, and volatility in commodity prices, impacting investment strategies and cross-border commerce.

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Brazil-Venezuela Diplomatic and Economic Rift

Tensions between Brazil and Venezuela over disputed elections and ideological divergence strain regional leadership ambitions. Despite political friction, robust trade and energy interdependence persist, complicated by a significant Venezuelan migration crisis impacting Brazil’s social and economic stability.

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Economic Growth and Monetary Policy

Australia's economy shows weak GDP growth of 0.2% quarterly and 1.3% annually, with per capita output declining. The Reserve Bank of Australia is expected to cut interest rates further to stimulate growth amid rising household savings and subdued consumption. These economic conditions influence investment decisions, consumer confidence, and financial market performance.

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EU Strategic Autonomy and Defense Spending

Internal EU debates on defense budgets and cooperation, including France's role, reflect shifting priorities amid regional instability. Increased defense spending and joint weapons production initiatives influence government budgets and industrial policies, affecting sectors linked to defense manufacturing and innovation.

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Domestic Economic and Political Reforms

Iran’s recent appointment of Seyed Ali Madanizadeh as Economy Minister signals potential reforms focused on economic modeling, budget restructuring, and monetary policy. His technocratic background suggests efforts to stabilize the economy amid sanctions and conflict pressures. These reforms could influence Iran’s fiscal environment, investment climate, and structural economic resilience.

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Escalating Defence and Security Threats

The UK faces heightened military threats primarily from Russia, China, Iran, and North Korea, prompting a strategic defence overhaul. The government plans to increase defence spending to 2.5% of GDP by 2027 and aims for 3% in the next parliament. This includes investments in submarines, munitions factories, and advanced technologies to counter cyber attacks, missile strikes, and biological warfare, impacting defence industries and national security policies.

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Foreign Investment Dynamics and Market Maturity

India remains an attractive investment destination with gross FDI inflows rising 14% to $81 billion in 2024-25. However, net FDI moderated due to increased repatriation, signaling a mature market with smooth investor entry and exit. Robust foreign exchange reserves and a low current account deficit reflect external sector resilience amid global uncertainties.

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Security Concerns: Drug Trafficking and Border Instability

Thailand confronts a deepening narcotics crisis with massive methamphetamine flows from Myanmar’s Wa State, fueling social instability and crime. High-profile drug busts underscore the challenge of controlling porous northern borders amid regional conflicts. This security threat poses risks to social cohesion, investor confidence, and cross-border trade stability.

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Transport Infrastructure and US Connectivity Expansion

Thailand is advancing plans to open direct flights to the United States, supported by regained FAA Category 1 status and government backing. This initiative aims to boost tourism, trade, and investment by enhancing international connectivity, positioning Thailand as a regional aviation hub and facilitating stronger economic ties with a key global market.

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Political Instability and Governance Challenges

Brazil’s persistent political feuds, exemplified by the Bolsonaro-Lula rivalry and congressional conflicts over fiscal policies, create institutional uncertainty. This political drama distracts from economic reforms, undermines investor confidence, and stalls long-term development, affecting Brazil’s global business reputation and policy predictability.

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Geopolitical Engagement with Syria

Turkey’s engagement with the Syrian interim government, including high-level visits and cooperation at the Tank Palet Factory, signals strategic regional involvement. The lifting of EU and US sanctions on Syria and Turkey’s role in defense manufacturing partnerships may affect regional stability, trade routes, and defense sector investments.

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European Union's Strategic Autonomy Efforts

The EU is pursuing greater independence from both China and the US, seeking to reduce dependencies in defense, technology, raw materials, and energy. While aiming to build self-reliant capacities and industries, European businesses face pressure to choose sides amid geopolitical tensions, complicating trade relations and investment flows between Europe, China, and the US.

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Supply Chain Vulnerabilities from Infrastructure Disruptions

Flood-induced road blockages and power outages in northern provinces disrupt logistics and supply chains. Such vulnerabilities necessitate investment in resilient infrastructure to ensure continuity of business operations and maintain Vietnam's role as a reliable manufacturing and export hub.

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Canada-U.S. Trade Tensions and Tariffs

Ongoing U.S. tariffs under the Trump administration are straining Canada-U.S. trade relations, threatening jobs and raising costs in key sectors like automotive and clean energy. Provincial leaders advocate for ending tariffs to protect cross-border supply chains and energy cooperation. Tariffs have already delayed major investments, such as Ontario's $15 billion EV supply chain project, impacting Canada's manufacturing competitiveness.

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Security Challenges and Drug Trafficking Crackdown

Mexico faces severe security issues, with 20 of the world’s 50 most violent cities and ongoing drug cartel activity. Government operations like 'Operation Northern Border' have led to significant drug seizures and arrests. Security instability impacts investor risk assessments, supply chain safety, and overall business environment perceptions.

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Brazil-Venezuela Diplomatic Crisis

Deteriorating Brazil-Venezuela relations amid contested elections and migration crises strain regional leadership ambitions. Despite political tensions, economic and energy interdependence persists, complicating diplomatic ties. This fragile alliance affects regional stability, cross-border trade, and Brazil's geopolitical positioning in South America.

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Eurasian Security Architecture and Alliances

Russia advocates for a new security architecture in Eurasia to counter aggressive military alliances and prevent Cold War-style confrontations. Initiatives promote collective security through organizations like SCO, CSTO, and CIS, aiming to reduce external influence and stabilize production, technological, and investment chains critical for regional economic integration and business continuity.

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Technology Sector Supply Chain Vulnerabilities

Dependence on critical components like rare earth magnets and semiconductors, concentrated in geopolitically sensitive regions, exposes US technology supply chains to disruption. Trade restrictions and export controls heighten risks for automotive, defense, and consumer electronics industries, necessitating strategic diversification and domestic manufacturing investments.

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Financial Sector Adjustments and Monetary Policy

The Central Bank of Egypt cut key interest rates by 100 basis points in April 2025 to stimulate lending and investment amid rising liquidity (M2 at EGP 12.68 trillion). Enhanced foreign currency deposits reflect growing investor trust. These monetary policy shifts aim to foster economic growth while managing inflationary pressures.

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Electric Vehicle Adoption and Energy Security

India's push for electric vehicle adoption is critical to reducing oil import dependence and enhancing energy security. Supported by government incentives and global clean energy trends, EV sales have surged, with India recognized as a leader in solar energy and electrification programs. However, supply chain risks in critical minerals necessitate diversification to sustain this transition and maintain competitive advantage.

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Sanctions on Israeli Far-Right Ministers

Australia, alongside allies, imposed Magnitsky-style sanctions on Israeli ministers Ben-Gvir and Smotrich for inciting violence against Palestinians. These targeted sanctions signal Australia's commitment to human rights but risk diplomatic tensions, potentially affecting bilateral trade, foreign investment, and Australia's geopolitical positioning in Middle East affairs.