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:
Mining push for critical minerals
Vision 2030 is scaling mining as a third pillar, citing $2.5tn mineral wealth and targeting SR240bn GDP contribution by 2030. Reforms include a mining investment law cutting taxes to 20% from 45% and digital licensing, creating openings in exploration, processing, and related industrial services.
Data Centres Reshape Power Markets
Data centres consumed 22% of Ireland’s electricity in 2024 and could reach 31-32% by 2030-2034, tightening power availability and grid capacity. For property retrofitting and energy businesses, this raises electricity-price sensitivity, connection risk, and competition for renewable power procurement.
IMF program and fiscal tightening
A new four-year IMF EFF totals $8.1bn with $1.5bn disbursed; broader support targets a $136.5bn financing gap. Conditional tax reforms and governance milestones may shift VAT, customs, and compliance burdens, affecting pricing, consumption, and investment planning.
Kredi notu, bankacılık dayanıklılığı
Fitch, çatışma kısa sürerse Türkiye’nin kredi ve bankacılık risklerinin yönetilebilir kaldığını; ancak yüksek petrol fiyatlarının enflasyonu ve dış dengeyi bozabileceğini vurguladı. Bankaların likidite/sermaye tamponları olumlu, fakat şoklar uzarsa yeniden fiyatlama ve refinansman maliyetleri yükselir.
Critical minerals decoupling from China
Japan and the U.S. are advancing a critical-minerals action plan to reduce China dependence, including potential price floors, coordinated tariffs, and investment in non-China supply. Deep-sea rare earth development near Minamitorishima and allied offtake deals reshape input costs.
Labor enforcement and visa tightening
Saudi Arabia is intensifying labor/residency enforcement—over 21,320 arrests in one week—and tightening employment visas amid fraud concerns. Firms face higher compliance, onboarding uncertainty for expatriates, and potential wage/skill‑mix shifts, affecting project delivery and service operations.
Energy-price shock and inflation
Strait of Hormuz disruption and oil above $100 can transmit quickly into Israeli import and production costs. Analysts expect fuel, gas and possibly electricity increases to lift inflation, erode purchasing power, and delay Bank of Israel rate cuts—raising financing costs and wage pressures.
Demand management and operating restrictions
To avoid blackouts, the government is imposing temporary closures and reduced hours for shops, malls, and cafes, dimming street lighting, and delaying diesel-heavy projects. While aimed at stability, these measures disrupt retail, services, cold-chain scheduling, and shift load patterns for manufacturers.
Gas Supply Security Risks
Israeli offshore gas operations remain vulnerable to security shutdowns, with Energean suspending Israel guidance and authorities closing reservoirs temporarily. This threatens domestic energy reliability, export commitments and industrial input costs, especially for energy-intensive manufacturers and regional buyers.
RBA tightening and inflation shock
The RBA lifted the cash rate to 4.10% in a split 5–4 vote as core inflation stays above target and oil-driven price pressures build. Higher borrowing costs and a stronger AUD shift demand, financing conditions, and FX hedging for importers/exporters.
Housing correction and financial oversight
Falling condo valuations and tighter OSFI scrutiny of “blanket” appraisals raise mortgage and developer risk, with potential knock-on effects for bank credit conditions. International investors should expect stricter underwriting, slower project financing, and more conservative counterparty behavior in real estate-linked sectors.
Fiscal policy uncertainty: debt brake
A coalition dispute over reforming Germany’s constitutional debt brake is creating budget uncertainty. SPD seeks an “investment booster” for rail, roads and grids; Chancellor Merz rejects more borrowing. Delays or stop‑start spending affect infrastructure delivery and investor confidence.
China trade exposure and diversification
Australia’s trade remains highly exposed to China while geopolitics intensifies across energy, minerals, and security. Reports note China’s outbound critical-minerals push and an 85% fall in China FDI into Australia since 2018, accelerating diversification to G7/Indo-Pacific partners and reshaping market access.
Biodiesel mandates reshape palm exports
Jakarta may revive a B50 biodiesel mandate mid-2026 after initially retaining B40 through 2026. Higher domestic palm use typically reduces export availability, lifting global prices and altering feedstock costs for food, oleochemicals, and energy-trading strategies across Asia and Europe.
Wage pressures and labour-market cooling
Unemployment is rising (around 5%+) while pay growth is moderating, but firms still face higher labour costs from minimum-wage increases and prior NI/employment changes. Margin pressure and skills gaps persist, influencing location decisions, automation, and service-delivery models.
China 15th Five-Year priorities
The 15th Five-Year Plan signals tighter strategic control of critical minerals, continued grid and renewables buildout, and attempts to curb heavy-industry overcapacity. It targets ~17% carbon-intensity reduction and ~25% non-fossil energy share by 2030, reshaping commodity demand and regulation.
EU-China industrial policy trade friction
Europe’s proposed “Made in Europe” procurement and investment conditions target sectors where China dominates, including EVs, batteries and solar. China calls the plan discriminatory and WTO-incompatible, raising risk of retaliatory measures, tighter market access, and more compliance burdens for cross-border investors.
Tariff Regime Legal Volatility
Supreme Court limits on broad presidential tariffs have not reduced trade risk; Washington shifted to temporary 10%-15% Section 122 duties and accelerated Section 301 probes. Importers face refund disputes, pricing instability, and fast-changing sourcing economics through mid-2026.
Earthquake reconstruction demand cycle
Ongoing post-earthquake rebuilding continues to influence domestic demand and construction activity, affecting cement, steel, logistics, and labor markets. For investors, it offers tender and PPP opportunities but also crowding-out risks, cost inflation, and project-execution constraints.
Palm Oil Rules Squeeze Exporters
Palm oil producers face higher export levies, possible rules retaining 50% of export proceeds for one year, and tighter domestic biodiesel demand. These measures could restrict liquidity, reduce exportable volumes and alter global edible oil and biofuel trade flows.
War-risk surcharges on trade
Shipping lines and cargo handlers are imposing war-risk and emergency surcharges linked to regional hostilities, with reported costs rising sharply per container. This increases export/import unit costs, lengthens lead times and challenges just‑in‑time supply chains.
Suez Canal security shock
Red Sea and wider Middle East conflict is again diverting major carriers from Suez. Egypt estimates about $10bn revenue losses, with traffic reportedly down ~50% since late February, raising freight times/costs and weakening a key FX source for importers.
Energiepreis-Schock und Stromreformen
Nahostbedingte Gaspreissprünge (TTF zeitweise >€50–55/MWh) erhöhen Produktionskosten und Preisvolatilität; zugleich werden EEG‑Förderung und Netzanschlüsse reformiert (u.a. Wegfall Einspeisetarif, Redispatch‑Risiko). Auswirkungen: Standortattraktivität, Investitionssicherheit, PPA‑Strategien, Energieintensive Lieferketten.
Political-legal uncertainty and resilience
Policy remains highly reactive to security and market shocks, with sudden liquidity moves and border measures. This unpredictability can affect licensing, customs throughput, tax measures (e.g., fuel-tax adjustments), and dispute risk, requiring stronger contractual protections and scenario planning.
US Trade Terms Under Review
Taiwan’s trade exposure to the US remains a top business variable as Washington’s Section 301 investigations proceed. Although ART tariff terms reportedly cut US tariffs from 20% to 15%, further scrutiny could affect exporters, sourcing decisions, and market-access planning.
Energy and geopolitical shock transmission
Middle East conflict risk and sanctions enforcement transmit into US inflation, fuel costs, and shipping insurance, while shaping US secondary measures. Higher energy and freight volatility can compress margins, alter demand, and accelerate nearshoring/friendshoring decisions across industries.
US-China Trade Truce Fragility
Paris talks preserved a fragile 2025 trade truce, but new US Section 301 and forced-labor probes could trigger fresh tariffs within months. Businesses face renewed uncertainty over market access, customs costs, compliance, and bilateral sourcing decisions across manufacturing and agriculture.
Insurance, finance, and logistics squeeze
Marine insurers’ rapid withdrawal and repricing is making Gulf voyages difficult to finance: letters of credit, charter-party clauses, and crew willingness are affected. Even with US-backed reinsurance proposals, physical-security risk keeps capacity tight, raising landed costs across supply chains.
Shipping reroutes and freight disruption
Regional and Middle East security events are prompting carriers to halt or reroute services, raising freight rates and lead times. Taiwan’s trade-dependent manufacturers should expect episodic container availability constraints and higher buffer inventories, especially for time-sensitive components.
Labour Market and Investment Freeze
Canada lost more than 100,000 full-time jobs in the first two months of 2026, while unemployment rose to 6.7%. Trade uncertainty is freezing activity in wholesale, retail and manufacturing, increasing operational caution for multinationals evaluating expansions, hiring and capital commitments.
Russia-related sanctions policy whiplash
A 30-day waiver allowing Indian purchases of Russian oil signals potential easing, sparking political backlash and uncertainty about future enforcement. Businesses must scenario-plan for rapid re-tightening, banking/OFAC screening changes, and secondary exposure across global counterparties.
War-driven energy import shock
Middle East conflict has pushed oil above $100 at times, raising Indonesia’s fuel import bill and subsidy pressures. Officials warn each $1/bbl can widen the deficit materially (est. 6.8 trillion rupiah). Higher energy costs raise inflation and disrupt industrial margins.
Tax reform and investment uncertainty
With the May budget approaching, Treasury is weighing changes to CGT discounts, negative gearing, trusts and business investment incentives. Shifting tax settings can reprice real estate, private capital, and M&A, while policy uncertainty may delay large commitments and financing decisions.
State asset seizures and nationalization
Russia continues using courts and decrees to reassign assets linked to “unfriendly” jurisdictions, illustrated by the Domodedovo airport takeover. Foreign investors face heightened expropriation, governance and exit risks, including blocked divestments, forced discounts, and constrained dividend repatriation.
US Trade Pact Rewrites Access
Indonesia’s new US trade pact cuts threatened tariffs from 32% to 19%, opens wider market access and eases US entry into critical minerals, energy and digital sectors. Ratification uncertainty still complicates investment planning, sourcing decisions and export pricing.
Infraestructura fronteriza y seguridad
El comercio bilateral México‑EE. UU. superó US$870 mil millones en 2025, elevando congestión y sensibilidad a inspecciones, seguridad de carga y robos. Las empresas deben reforzar gestión de rutas, seguros, inventarios de buffer y visibilidad logística transfronteriza.