Mission Grey Daily Brief - February 23, 2025
Summary of the Global Situation for Businesses and Investors
As the third anniversary of the Russia-Ukraine war approaches, the Ukrainian people are rallying around President Volodymyr Zelenskyy, who has been denigrated by US President Donald Trump and Russian President Vladimir Putin. Trump's false claims that Zelenskyy is a dictator and started the war have been criticised by Democrats and Republicans in the US Congress, and even some of Zelenskyy's harshest domestic critics have begun defending him. Meanwhile, Russia is preparing to declare victory in the war, and preparations are underway for a face-to-face meeting between Trump and Putin. In other news, Hamas has freed three more Israeli hostages as part of a fragile ceasefire deal, and Swedish authorities are investigating a damaged cable in the Baltic Sea, which has heightened fears of Russian sabotage and spying in the region.
Ukraine-Russia War
The Russia-Ukraine war is approaching its third anniversary, and the Ukrainian people are rallying around President Volodymyr Zelenskyy, who has been denigrated by US President Donald Trump and Russian President Vladimir Putin. Trump's false claims that Zelenskyy is a dictator and started the war have been criticised by Democrats and Republicans in the US Congress, and even some of Zelenskyy's harshest domestic critics have begun defending him. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the US Congress, where defending Ukraine from Russia has had bipartisan support. However, Vice President JD Vance admonished Zelenskyy for publicly warning Trump about falling for Russian disinformation.
Trump's false claims have caused a political rift with the US, as Ukrainian forces, outnumbered and outgunned, increasingly struggle to hold back Russia's slow but steady advances. Trump has also signalled his desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia. Reports have emerged of US and Russian officials meeting in Saudi Arabia to discuss a possible ceasefire without input from Ukraine.
Meanwhile, Russia is preparing to declare victory in the war, and preparations are underway for a face-to-face meeting between Trump and Putin. Senior US officials have suggested Ukraine will have to give up its goals of joining NATO and retaining the 20% of its territory seized by Russia. No Ukrainian officials were present at the Saudi meeting, and European allies have also expressed concerns that they are being sidelined.
Israel-Hamas Ceasefire Deal
Hamas has freed three more Israeli hostages as part of a fragile ceasefire deal, which has paused over 15 months of war but is nearing the end of its first phase. The latest hostage release, to be followed by the freeing of hundreds of Palestinians imprisoned by Israel, is going ahead after tensions mounted over a grisly and heart-wrenching dispute triggered this week when Hamas initially handed over the wrong body for Shiri Bibas, an Israeli mother of two young boys abducted by militants.
The dispute over the body's identity raised new doubt about the ceasefire deal, and negotiations over a second phase, in which Hamas would release dozens more hostages in exchange for a lasting ceasefire and an Israeli withdrawal, are likely to be even more difficult. The six hostages being freed are the last living ones to be released under the ceasefire's first phase. The new releases brought a moment of joy and relief for families, but with the ceasefire's future uncertain, fears remain over the fate of the remaining hostages seized during the Oct. 7, 2023, attack by Hamas that killed 1,200 in Israel and ignited the war.
Damaged Cable in the Baltic Sea
Swedish authorities are investigating a damaged cable that was discovered in the Baltic Sea, according to Swedish news agency TT. The breakage is the latest in a string of recent incidents of ruptured undersea cables that have heightened fears of Russian sabotage and spying in the region. Late last month, authorities discovered damage to the undersea fiber-optic cable running between the Latvian city of Ventspils and Sweden’s Gotland. A vessel belonging to a Bulgarian shipping company was seized but later released after Swedish prosecutors ruled out initial suspicions that sabotage caused the damage.
The most recent break was found off the island of Gotland, south of Stockholm, in the Swedish economic zone, TT reported Friday. The cable runs between Germany and Finland. Prime Minister Ulf Kristersson said on the social media platform X on Friday that the government takes all reports of damage to infrastructure in the Baltic Sea very seriously.
Russia-Ukraine War and Business
The Russia-Ukraine war has had a devastating impact on both countries, with hundreds of thousands killed or wounded, tens of thousands missing, and millions fleeing the country. The war has also had a significant impact on the global economy, with rising energy prices and supply chain disruptions.
For businesses, the war has created significant uncertainty and risk, particularly for those with operations in the region. The war has also disrupted global supply chains, particularly for energy and food, which has led to higher prices and reduced availability.
To mitigate these risks, businesses should diversify their supply chains and consider alternative sources of energy and food. They should also monitor the situation closely and be prepared to adapt their operations as needed.
Further Reading:
BBC forced to apologise as EastEnders star says a racial slur live on air
Hamas frees 3 more Israeli hostages
Sweden is investigating a cable break in the Baltic Sea
Three More Israeli Hostages Freed By Hamas As Gaza Ceasefire Deal Advances
Trump-Putin summit preparations are underway, Russia says
Ukrainians Rally Around Zelensky as Trump and Putin Denigrate Him
Ukrainians rally around their president after Trump seeks to denigrate him
Ukrainians rally around their president after Trump’s harsh comments
Themes around the World:
EU trade pact advances
Thailand and the EU concluded about two-thirds of their 24-chapter free trade agreement, with 15 chapters finalized. Remaining talks cover agriculture, industrial goods, digital trade, services and investment, creating meaningful implications for market access, compliance, and investor positioning.
Regional Export Corridor Integration
Saudi Arabia is reportedly discussing pipeline expansion with Gulf neighbors including Kuwait, Bahrain, Qatar and Iraq. If pursued, shared overland export options could alter regional trade flows, create infrastructure opportunities, and reduce some countries’ exposure to chokepoint disruptions and maritime volatility.
Xenophobic unrest threatens investors
Escalating anti-migrant protests and forced closures of foreign-owned businesses are generating economic, financial and diplomatic costs. Analysts warn reputational damage, job losses and disrupted regional commerce could deter African and Asian investors, particularly ahead of local elections in 2026.
CUSMA Review Deadline Drives Trade Uncertainty
The July 1 CUSMA review opens with the US position unclear; Trump has threatened termination while Canada and Mexico seek a 16-year extension. Likely annual reviews would prolong uncertainty across the $1.6 trillion trade bloc, dampening investment decisions.
Alternative Gulf-Europe Trade Corridors
Saudi Arabia is central to revived overland logistics plans linking Gulf ports to Europe via rail. Proposed corridors could cut transit times from 14-22 days by sea to 5-7 days, but depend on multibillion-dollar investment and cross-border customs harmonization.
Malaysia border logistics upgrade
Thailand opened the new Sadao checkpoint and road link to Malaysia’s Bukit Kayu Hitam, replacing the old crossing. Modern ICQS-CIQ infrastructure, longer operating hours, and faster customs processing should reduce freight delays, lower logistics costs, and strengthen cross-border supply chains.
Weak Domestic Demand and Deflation
China faces its first retail sales decline since 2022, nearly three years of deflation, and a $18tn property wealth loss. Weak consumption, youth unemployment and shrinking births constrain the market, pushing Beijing to rely on exports rather than internal rebalancing.
Critical minerals alliance building
Australia is increasingly central to allied critical-minerals diversification efforts. Recent coverage highlights prospective cooperation with India on value-added processing and a proposed Western buyers’ club spanning the US, EU, Japan, South Korea, Australia, India, and the UK to underwrite long-term demand.
China Exposure Faces Scrutiny
U.S. officials are linking USMCA revisions to tighter safeguards against Chinese goods, parts and investment entering North America through partners. Canada’s investment posture toward China is under explicit scrutiny, raising potential compliance, screening and sourcing challenges for internationally exposed companies.
Syria Border Management Reset
Turkey and Syria signed cooperation memorandums on border security, anti-smuggling, police training and disaster management while coordinating refugee returns. With more than half a million Syrians reportedly returning after hosting 3.5 million at peak, border procedures and labor-market conditions may shift for logistics, retail and manufacturing firms.
Deteriorating Fiscal Trajectory
May's primary deficit hit R$53.2 billion amid pre-election spending (R$50bn MEI expansion, subsidized credit). The IFI projects public debt rising from 82.5% of GDP (2026) to 115% by 2036, warning of unsustainable deficits and a challenging outlook for the next presidential term.
Semiconductor exports drive economy
Semiconductors have become increasingly central to South Korea’s economy, with their export share rising from 15.6% in 2023 to 24.4% in 2025 and exceeding 40% in May, increasing both upside for exporters and concentration risk.
Digital Payments Interoperability Advancing
Indonesia is moving toward integration of India’s UPI with its domestic payment system, alongside broader digital public infrastructure cooperation. For international companies, faster cross-border retail payments and lower transaction friction could improve tourism, consumer services and SME commerce across the corridor.
Hawkish Fed Signals Higher Rates Longer
New Fed Chair Warsh signaled a leaner, inflation-focused central bank, holding rates at 3.50%-3.75% while markets price a possible hike by December. Higher borrowing costs for longer will pressure investment decisions, financing strategies, and capital-intensive expansion plans.
Political Friction Amid Chip Cluster Debate
President Lee's approval fell for a sixth week to 46.5% amid controversy over the Honam semiconductor cluster location and stalled legislation, with 73% of government bills blocked despite a ruling-party majority, signaling policy-execution and regulatory-continuity uncertainty for investors.
F-35 and engine access
Trump said the US would consider F-35 sales and support GE engine access for Türkiye’s KAAN program, with notices covering more than $700 million in engine sales. This could reshape aerospace supply chains, local manufacturing plans and cross-border defense investment decisions.
Critical minerals leverage grows
Trade negotiations increasingly intersect with strategic mineral access. Recent reporting linked U.S. tariff pressure partly to demands around rare earths and critical minerals, underscoring how resource security is becoming a bargaining lever that could affect investment screening, offtake agreements, and industrial partnerships.
US tariff activism escalates
Washington’s renewed use of Section 301 and Section 232 powers is driving fresh tariff uncertainty across multiple partners, including Brazil, with proposed duties reaching 25%-37.5% and existing 50% steel and aluminum tariffs reshaping sourcing, pricing, and market access decisions.
Leadership transition raises uncertainty
Keir Starmer’s resignation and the prospect of a Burnham premiership extend political uncertainty in a country facing its seventh prime minister in a decade. Businesses should expect near-term policy delays, including postponed EU summit outcomes and investment timing risks.
Windfall tax clouds energy investment
Political pressure to end the energy profits levy highlights persistent uncertainty for North Sea operators and suppliers. Critics argue the tax is eroding investment, damaging supply chains and costing up to 1,000 jobs per month, making capital allocation to UK energy assets more contested.
Chinese competition pressures carmakers
Renault plans 800 engineering departures in France and site closures while retraining 2,500 staff and hiring in AI, software and electrification to compete with Chinese rivals. Faster development cycles and cost pressure will reshape sourcing, labor relations and investment priorities.
Defence Spending Squeezes Development Budget
The 2026-27 budget hikes defence 18% to 3 trillion rupees while capping development at 1 trillion, prioritizing debt servicing and military over infrastructure, health, and education—signaling constrained public investment and weak developmental capacity for businesses.
Blacklists replacing tariff warfare
US-China tensions are shifting from tariffs toward blacklists, export controls and administrative bans. The Pentagon expanded its China-linked list from 134 to 188 firms, while Beijing blacklisted 46 US companies, increasing compliance burdens and supply-chain disruption risks for multinationals.
Legislative Gridlock Over Defense Spending
The opposition-controlled legislature blocked the government's NT$210 billion drone bill and cut a third of the NT$1.25 trillion defense budget. Competing KMT (NT$240bn) and DPP proposals delay asymmetric-warfare buildout, weakening deterrence and creating policy uncertainty for the emerging domestic drone industry.
Trade Diversification Beyond the US
Ottawa is aggressively pursuing markets in India, ASEAN, China and Europe, aiming to double non-US exports over a decade. Provinces like BC lead missions to China. Non-US exports rising sharply and FDI at a two-decade high, though 85% of trade stays with the US.
GCC-EU Trade Talks Accelerate
Revived GCC-EU negotiations, with a Riyadh summit expected in October, increasingly focus on renewable energy, digital trade, and industrial supply chains. With EU-Gulf goods trade at €165.7 billion in 2025, progress could materially improve market access and sourcing options.
Ceasefire And Negotiations Unraveling
The June memorandum created a 60-day window for sanctions relief, shipping arrangements, and nuclear talks, but renewed strikes and official statements that the deal is effectively dead have sharply weakened commercial confidence in any near-term operating stability.
Stalled Gaza Reconstruction and Occupation
The US-backed Board of Peace has made limited progress; Israel controls ~60-70% of Gaza, Hamas resists disarmament, and only a fraction of $17bn in pledges disbursed. The stalemate delays a potential $70bn reconstruction market and prolongs instability.
US sanctions relief prospects
Washington signaled intent to lift CAATSA sanctions and revisit F-35 access after the Ankara NATO summit, potentially restoring export licenses, financing and defense cooperation. For investors and suppliers, this could reduce bilateral friction and reopen high-value aerospace, manufacturing and technology channels.
Booming Defense and Shipbuilding Exports
South Korea's arms industry, now the world's 9th largest exporter with ~$37B projected 2026 revenue, is winning contracts globally and pledged $150B in US shipbuilding investment, positioning Korean firms as key beneficiaries of Western rearmament and US naval revitalization.
Migration Politics Threatens Growth Model
Net migration fell 45% from its 2023 peak to 301,000, yet record 55% of Australians deem it 'too high' amid housing shortfalls. Rising One Nation support (31%) pressures visa settings, threatening skilled labour, international education exports and workforce supply.
Energy Security and B50 Biodiesel
Indonesia launches a 50% palm-oil B50 biodiesel mandate July 1, projected to save Rp157 trillion in imports but diverting 16-18mt of palm oil, tightening global supply. Higher oil prices lift coal and CPO export earnings, while PLN faces coal-supply and power-reliability strains.
Energy Costs Squeeze Industry
High UK energy costs threaten the £484 million British Steel rescue, North Sea oil-and-gas investment, and data centre competitiveness versus France and Ireland. Pressure mounts on Labour to reverse new fossil fuel licence bans amid post-Ukraine geopolitical shifts.
Oil Market Share Competition
Post-war OPEC strains and the UAE’s output surge are pushing Saudi Arabia to defend Asian customers through pricing and logistics. Analysts warn crude could fall toward $60 or even $50, raising volatility for energy revenues, petrochemical margins, and investment planning.
Nominee ownership enforcement tightening
Thailand ordered nationwide inspections of suspected nominee landholdings after concerns over Chinese-linked purchases in the Eastern Economic Corridor for illegal industrial estates. Tougher enforcement may improve investor confidence and legal clarity, but raises compliance scrutiny for foreign-linked property and industrial investments.
Digital payments integration advances
Progress on linking India’s UPI with Indonesia’s payment system and cross-border QR payments would streamline travel, retail transactions and SME commerce. For international businesses, deeper payment interoperability can reduce transaction costs, support tourism demand and improve digital-market access for smaller suppliers.