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:
Sanctions Enforcement and Maritime Security
France has intensified enforcement of sanctions against Russia’s shadow oil fleet, including high-profile naval seizures. This escalates geopolitical risks in maritime trade, raises insurance costs, and could provoke Russian retaliation, affecting global shipping and energy supply chains.
Expansion of Non-Energy Exports
Russia is targeting a 67% increase in non-energy exports by 2030, focusing on machinery, chemicals, and agriculture. While energy remains dominant, this diversification drive—mainly toward 'friendly' countries—offers new opportunities and risks for foreign investors navigating Russia’s evolving trade landscape.
Cross-Border Trade and Supply Chain Complexity
France’s integration into the European battery value chain means used batteries frequently cross borders for reuse or recycling. Regulatory divergence, logistics, and certification requirements create both risks and opportunities for international supply chain participants.
Debt Crisis and Fiscal Pressures
Egypt faces acute fiscal stress, with external debt exceeding $161 billion and controversial proposals to swap strategic assets for debt relief. The military’s economic dominance and reluctance to release reserves hinder effective crisis management, while IMF-mandated reforms require reduced state and military roles in the economy.
Inflation resurgence and rate volatility
Core inflation has re-accelerated (trimmed mean 0.9% q/q; 3.4% y/y), lifting expectations of near-term RBA tightening. Higher and more volatile borrowing costs raise hurdle rates, pressure consumer demand, and change hedging, funding, and FX assumptions for cross-border investors.
Digitalization and Technology Innovation Surge
Rapid adoption of digital tools, automation, and BIM is transforming modular construction in Germany. These advances are improving efficiency, quality control, and lifecycle management, while attracting foreign investment and enabling new business models in the sector.
EV incentives and industrial policy resets
Les dispositifs de soutien aux véhicules électriques se reconfigurent: fin du leasing social après 50 000 véhicules, ajustements de bonus et débats fiscaux (malus masse EV lourd supprimé). Cela crée volatilité de la demande, impacts sur chaînes auto, batteries, réseau et occasion.
Northern Sea Route and Arctic Ambitions
Russia’s development of the Northern Sea Route, with Chinese and Indian involvement, aims to create a major Eurasian trade corridor. While promising shorter Asia-Europe shipping, the project faces geopolitical risks, environmental concerns, and possible sanctions exposure for participating firms.
Financial Sector Resilience and Growth Outlook
Israel’s economy demonstrates resilience, with strong currency performance, low unemployment, and robust growth forecasts for 2026. Rate cuts and potential normalization agreements could further boost foreign investment and exports, enhancing the country’s attractiveness for global investors.
Yuan Internationalization and Financial Opening
China is deepening capital account opening and promoting the yuan’s global use. These efforts aim to enhance financial sector strength and support cross-border trade, but gradual reforms and market volatility require careful navigation by international investors and corporates.
Targeted Sectoral Trade Actions
Beyond country tariffs, the U.S. is signaling sector-focused measures (autos, steel/aluminum, aerospace certification disputes) that can abruptly disrupt specific industries. Companies should expect episodic shocks to cross-border flows, inventory strategy, and after-sales service for regulated products.
Strategic Expansion of Gas Infrastructure
Brazil is investing hundreds of millions of dollars in new pipelines, LNG terminals, and storage to secure domestic gas supply, reduce reliance on imports, and support industrial growth. Projects like TAG, SEAP, and GASOG are critical for energy security, especially amid declining Bolivian imports and rising pre-salt production.
State Intervention in Industrial Policy
Australia is shifting toward greater state intervention in strategic sectors, using price floors, tax incentives, and direct support for critical minerals. This marks a departure from market orthodoxy, aiming to crowd in private investment and manage economic risks tied to geopolitical competition.
Downstream Industrialization and Value Addition
Indonesia continues to prioritize downstream processing in mining and energy, leveraging foreign investment—especially from China—to move up the value chain. This strategy increases export value, supports job creation, and enhances industrial competitiveness.
Snap Election and Policy Uncertainty
Prime Minister Takaichi’s snap election on February 8, 2026, introduces significant policy uncertainty. Key campaign issues include fiscal stimulus, tax cuts, and defense spending, with the election outcome set to shape Japan’s economic and regulatory environment for years, impacting investor confidence and market stability.
Supply Chain Diversification and Resilience
Amid US tariffs and rising protectionism, China has diversified export markets and supply chains, boosting trade with ASEAN, Africa, and Latin America. However, supply chain ‘reallocation’ through third countries keeps China central to global manufacturing, complicating true decoupling efforts.
Geopolitical Tensions and Security Risks
Ongoing cross-strait tensions with China, including military posturing and economic coercion, create persistent risks for business continuity, supply chain stability, and foreign investment in Taiwan. The region remains a flashpoint with global ramifications for trade and security.
US-Taiwan Strategic Economic Partnership
Recent agreements deepen US-Taiwan cooperation in AI, advanced technology, and drones, with reduced tariffs and joint supply chain security initiatives. This partnership strengthens Taiwan’s global economic relevance but also draws criticism and countermeasures from China.
Ambitious Infrastructure Investment Drive
Vietnam is launching major infrastructure projects, including high-speed rail and expanded logistics networks, to support growth and regional connectivity. These initiatives are designed to enhance export capacity, attract FDI, and improve the country’s competitiveness in global value chains.
US Sanctions Policy Intensifies
The US continues to expand sanctions, targeting Iranian officials, entities, and financial networks linked to oil sales and human rights abuses. These measures increase compliance risks for global firms, especially those with exposure to sanctioned jurisdictions and complex cross-border transactions.
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.
Large infrastructure pipeline execution
Sheinbaum’s 2026–2030 plan targets roughly MXN 5.6–5.9 trillion (about $323B) across 1,500 projects, heavily weighted to energy, rail and roads, plus ports. If delivered, it improves logistics; execution, funding structure and procurement transparency remain key risks.
European Strategic Autonomy Push
France is leading calls for greater European strategic autonomy in trade, defense, and technology, especially in response to US economic coercion and global instability. This shift impacts investment strategies, regulatory risk, and the future of transatlantic business cooperation.
US Tariff Hikes Disrupt Trade
The recent increase of US tariffs on South Korean autos, lumber, and pharmaceuticals from 15% to 25% has reversed previous concessions and heightened trade tensions. This move threatens South Korea’s export competitiveness, especially in the auto sector, and may disrupt global supply chains.
Semiconductor Sector Faces US Pressure
The US is leveraging tariffs and investment incentives to push Korean semiconductor giants like Samsung and SK hynix to expand US-based production. This industrial policy shift could reshape global supply chains, affect Korea’s tech leadership, and increase operational costs for Korean firms.
Pending Supreme Court Ruling on Tariff Authority
A forthcoming Supreme Court decision will determine the executive branch’s authority to impose sweeping tariffs. The outcome could reshape the US trade landscape, affecting the predictability of future trade policy and the legal environment for international business operations.
$350 Billion Investment Pact Stalled
A $350 billion South Korean investment commitment in the US, central to a new trade deal, faces delays due to parliamentary gridlock and currency concerns. The uncertainty undermines investor confidence and complicates cross-border business planning in key sectors such as technology and manufacturing.
Regulatory and Tariff Uncertainty
US tariff policy remains unpredictable, with threats of 100% tariffs if production is not relocated. While Taiwan secured favorable terms for now, ongoing trade negotiations and political shifts in the US could alter the business environment for Taiwanese exports.
Deforestation and Environmental Risk
Deforestation in the Cerrado and Amazon remains a major concern, with over 8.5 million hectares lost in five years. New EU regulations targeting deforestation-linked commodities threaten Brazilian exports, while domestic policies and enforcement are intensifying to meet climate commitments.
Supply Chain Disruption and Resilience Imperatives
Australian supply chains face persistent disruption from geopolitical fragmentation, labor shortages, and shifting trade rules. Recent surveys show a strategic divide among leaders, with resilience, diversification, and digital transformation emerging as top priorities for international business continuity.
Technology Export Controls and Decoupling
The US maintains and expands technology export controls, particularly targeting China and sensitive sectors like semiconductors and AI. These measures drive supply chain decoupling, compliance complexity, and strategic realignment for technology firms and global investors.
Food import inspections disrupt logistics
A new food-safety regime (Decree 46) abruptly expanded inspection and certification requirements, stranding 700+ consignments (about 300,000 tonnes) and leaving 1,800+ containers stuck at Cat Lai port. Compliance uncertainty can delay inputs and raise inventory buffers.
US-Taiwan Strategic Trade Integration
A new US-Taiwan trade agreement lowers tariffs to 15% and commits over $250 billion in bilateral investments, especially in semiconductors and AI. This deepens economic ties, boosts exports, and enhances Taiwan’s role in trusted supply chains.
Green Energy and Ammonia Investments Accelerate
South Korea is investing heavily in green ammonia and renewable energy, aiming to retrofit 24 coal plants for ammonia co-firing and expand clean energy exports. These initiatives support decarbonization goals and position Korea as a leader in Asia’s green transition.
Robust Macroeconomic Stability and Growth
Indonesia maintains stable growth above 5%, low inflation (~2%), and a trade surplus ($38.5 billion in 2025), underpinning its credibility and attractiveness for international investors. This macroeconomic resilience supports active participation in global initiatives and enhances its standing as a reliable business partner.
Record Infrastructure Concessions Drive Growth
Brazil has accelerated infrastructure concessions, with 50 auctions for ports, airports, and roads through 2025 and 40 more planned for 2026. Private investment now accounts for 84% of infrastructure funding, enhancing logistics, supply chains, and business competitiveness, though some legacy projects face operational challenges.