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Mission Grey Daily Brief - June 28, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains complex, with the war in Ukraine continuing to rage and causing significant disruptions. The conflict has led to increased cooperation between Russia, China, North Korea, and Iran, raising concerns about global security. Meanwhile, the Communist Party in China faces questions about its ability to address the country's economic challenges. In the UK, a betting scandal involving members of the Conservative Party and Prime Minister Rishi Sunak's security detail has emerged, while in El Salvador, President Nayib Bukele has ordered the mass firing of 300 employees from the Culture Ministry. Lastly, international experts warn of a growing famine crisis in Sudan, with 755,000 people at risk in the coming months.

Ukraine-Russia War

The war in Ukraine continues to rage, with Russia targeting Ukraine's energy infrastructure, causing chronic power cuts and aiming to make cities unlivable. This systematic destruction is considered a war crime under international law, and it has already wiped out 50% of Ukraine's electricity-generating capacity. The conflict has also resulted in the world's largest displacement crisis, with over 11 million people forced to flee their homes. The war has now been ongoing for almost two and a half years, and Ukraine is facing significant challenges in terms of mobilization and government fatigue.

Growing Cooperation Between Russia, China, North Korea, and Iran

The US has flagged a growing threat to global security as Russia deepens its cooperation with China, North Korea, and Iran. This quasi-alliance now covers weapons sales, energy, and finance, with Russia seeking assistance for its war in Ukraine. The four countries are also increasing their space collaboration, with Russia launching an Iranian satellite and plans for a Russo-Chinese lunar nuclear power plant. Additionally, Russia and North Korea have revived a mutual defense agreement, with both nations pledging military assistance to each other in the event of war. This growing partnership adds complexity to the already contested space domain and has raised concerns among US officials.

China's Communist Party Faces Challenges

With China's economy facing vulnerabilities, investors, analysts, and business leaders are questioning whether the Communist Party is willing and able to design and execute an effective response. The upcoming meeting of the party's Central Committee on July 15 will be an opportunity for China's leaders to address these concerns. However, it seems more likely that the meeting will highlight the gap between the party's rhetoric and its actions.

UK Betting Scandal

In the UK, a betting scandal has emerged, involving members of the Conservative Party and Prime Minister Rishi Sunak's security detail. Up to 15 Conservative Party members are being investigated by the Gambling Commission for allegedly using insider information to place bets on the surprise election date announced by Sunak. This scandal has led to the withdrawal of support for two MPs and the suspension of several individuals, including a police officer assigned as a bodyguard to the Prime Minister.

El Salvador's Culture Ministry Firings

In El Salvador, President Nayib Bukele has ordered the mass firing of 300 employees from the Culture Ministry, stating that they were <co: 13,33,5


Further Reading:

'Ukrainians have reached the stage where, exhausted by a sprint, they realize they actually have to run a marathon' - Le Monde

A clear-eyed account of Ukraine under siege - The Economist

A pivotal moment for China's Communist Party - The Economist

A space quad: Russia, China, North Korea and Iran - Asia Times

Breaking Down the U.K. Election Betting Scandal - TIME

El Salvador Plans Mass Firing of Culture Ministry Employees - U.S. News & World Report

Experts Warn That 755,000 People at Risk of Famine in the Coming Months in War-Torn Sudan - U.S. News & World Report

Experts warn that 755000 people at risk of famine in the coming months in war-torn Sudan - KSTP

Experts warns that 755,000 people at risk of famine in the coming months in war-torn Sudan - Yahoo! Voices

Themes around the World:

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Sanctions enforcement intensifies at sea

UK and allies are escalating action against Russia’s ‘shadow fleet’, including interdictions, proposed boarding powers and broader maritime-services bans. Shipping, insurers, traders and banks face higher compliance burdens, detention risk, route disruption and potentially higher freight and war-risk premiums.

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Strategic Role in Global Supply Chains

Indonesia’s position as a top beneficiary of global supply chain shifts—especially as U.S.-China trade tensions persist—has led to a 34% increase in U.S. imports from Indonesia in 2025. This strengthens Indonesia’s role as a preferred sourcing hub, but also exposes it to external demand and regulatory volatility.

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Tightening Technology and Export Controls

China has expanded export controls on critical minerals and high technology, mirroring US restrictions. These measures increase compliance risks for foreign firms, disrupt global supply chains, and reinforce China’s leverage in strategic sectors like rare earths and advanced manufacturing.

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Offshore Wind Expansion and Grid Challenges

Germany leads Europe’s offshore wind push, targeting €1 trillion investment and enhanced energy security. However, regulatory delays, auction cancellations, and underdeveloped grid infrastructure threaten project viability, investor confidence, and the pace of decarbonization, with direct implications for energy-intensive industries.

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Technological Innovation in Battery Reuse

French firms and startups are advancing second-life battery technologies, including hydrometallurgical recycling and smart energy management. These innovations improve recovery rates, reduce environmental impact, and enhance competitiveness in international trade and investment.

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China Relations and Supply Chain Diversification

Although overshadowed by US tensions, South Korea’s trade and supply chain strategies remain sensitive to China’s economic policies and regional dynamics. Ongoing diversification efforts are crucial for risk mitigation, especially in electronics, automotive, and critical materials sourcing.

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Debt Crisis and Military Economic Dominance

Egypt’s deepening debt crisis is exacerbated by the military’s control of vast financial reserves and key economic sectors, limiting fiscal flexibility, deterring private investment, and complicating IMF negotiations for structural reform and external financing.

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Digital Economy and IT Export Growth

Pakistan’s IT exports have surged, reaching record highs with 26% year-on-year growth and over $750 million in new international investment. Regulatory reforms, digital finance, and US-linked fintech partnerships are driving the sector, making it a bright spot for diversification and global market integration.

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Auto sector reshoring and EV policy shift

Ottawa’s new auto strategy responds to U.S. auto tariffs and competitive Chinese EV inflows by combining tariff credits, renewed EV incentives and stricter emissions standards while scrapping the prior sales mandate. Impacts include location decisions, supplier localization, and model allocation.

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Rising Role in Global Supply Chains

Indonesia has emerged as a major beneficiary of global supply chain diversification, with U.S. imports from Indonesia rising 34% in 2025. This shift, driven by U.S.-China trade tensions, positions Indonesia as a key sourcing hub for international manufacturers.

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Critical Minerals and Supply Chain Security

Escalating tensions with China have led to stricter Chinese export controls on rare earths and critical minerals, exposing Japan’s supply chain vulnerabilities. Japan is accelerating diversification efforts with G7, EU, and Indo-Pacific partners to secure stable access, impacting manufacturing, EVs, and high-tech sectors.

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Gaza Conflict Reshapes Regional Stability

The ongoing Gaza conflict and evolving ceasefire arrangements have heightened regional instability, disrupted trade routes, and increased security risks. International businesses face heightened uncertainty, with supply chains, cross-border operations, and investment strategies all affected by the volatile security environment and shifting political alliances.

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Border and neighbor-country trade disruptions

Thai-Cambodian tensions and Myanmar instability create episodic border closures, rerouting costs, and inventory risk for agribusiness and manufacturers. Myanmar’s reduced FX conversion requirement (15%) may help liquidity, but security and import controls still threaten cross-border trade reliability.

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Regulatory and Geopolitical Frictions Rise

Escalating trade disputes, tariffs, and new cybersecurity rules in the EU and India target Chinese firms and supply chains. These frictions increase operational uncertainty, compliance costs, and market access risks for international investors and exporters.

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EU Trade Policy Realignment and Protectionism

Germany is navigating shifting EU trade policies, including new deals with India and Mercosur, and stricter rules on public funding for non-European production. Rising protectionism and regulatory changes could alter market access, supply chain strategies, and compliance costs for multinationals.

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EU partnership deepens market access

Vietnam–EU ties were upgraded to a comprehensive strategic partnership, reinforcing the EVFTA-driven trade surge (two-way trade about US$73.8bn in 2025) and opening new cooperation on infrastructure, cybersecurity, and supply-chain security—supporting diversification away from US/China shocks.

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Macro resilience, currency strength

Israel’s shekel strength, low unemployment and expectations of further rate cuts support domestic demand and investment planning, while war risk premia remain. Foreign firms should hedge FX volatility, stress-test financing costs, and monitor credit-rating narratives and sovereign bond market access.

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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.

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Congress agenda and regulatory churn

Congress’ 2026 restart includes major veto votes affecting tax reform regulation and environmental licensing. A campaign-driven legislature raises probability of abrupt rule changes, delayed implementing decrees and litigation, complicating permitting timelines and compliance planning for foreign investors.

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Supply Chain Regionalization and Diversification

Geopolitical polarization and rising tariffs are accelerating the shift toward regionalized and diversified supply chains. Companies are prioritizing resilience, flexibility, and scenario planning over cost efficiency, with Southeast Asia, Eastern Europe, and Latin America emerging as alternative hubs.

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China decoupling in advanced tech

Tightened export controls and new duties on advanced semiconductors/AI chips are reshaping global electronics supply chains. Firms face licensing, compliance, and redesign costs, while China accelerates substitution. Expect higher component prices, longer qualification cycles, and intensified scrutiny of technology transfers.

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Supply Chain Resilience and Diversification

South Korea and the EU are launching a dedicated supply chain dialogue to reduce dependence on specific countries and diversify channels. This initiative, driven by US-China competition, aims to enhance resilience and strategic partnerships, affecting sourcing and logistics decisions for international firms.

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Energy Crisis and Cost Relief Measures

Persistent energy shortages and high tariffs have hampered industrial output. Recent government relief measures, including tariff reductions and export refinance schemes, offer short-term support but underscore ongoing risks for manufacturers and supply chain reliability.

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Foreign Investment Scrutiny and Security

US authorities have tightened restrictions on foreign, especially Chinese, investment in strategic sectors and real estate near sensitive sites. Expanded CFIUS powers and state-level laws increase compliance burdens and impact cross-border M&A and supply chain localization.

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Export and Import Dynamics Shift

Germany’s modular building exports are rising, supported by demand for sustainable and high-quality solutions in Europe and beyond. Import trends reflect increased sourcing of advanced materials and components, impacting trade balances and supply chain strategies for global firms.

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SME Vulnerability and Integration Challenges

Small and medium-sized enterprises, contributing 35% of GDP, remain exposed to global disruptions due to limited access to technology and finance. Adapting to new trade rules and integrating into global supply chains are critical challenges for sustaining SME growth and broader economic resilience.

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Chronic Debt Dependency Crisis

Pakistan’s reliance on foreign loans from China, Saudi Arabia, UAE, and the IMF has reached critical levels, with external debt exceeding $128 billion. This dependency forces policy compromises and exposes businesses to currency volatility, regulatory unpredictability, and lender-driven reforms.

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Persistent Logistics and Port Inefficiencies

Chronic inefficiencies at South African ports, especially Cape Town and Durban, continue to undermine export competitiveness. Recent failures cost the fruit sector hundreds of millions of rand, with global port rankings placing South African ports among the worst, hampering supply chains and growth.

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Currency Volatility and Inflation Management

Egypt has reduced inflation to 12.3% amid global shocks but remains vulnerable to currency volatility, external financing gaps, and import costs. Monetary policy targets further inflation reduction, while international aid and remittances provide temporary relief. Persistent macroeconomic imbalances continue to affect business planning and consumer demand.

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ESG Standards and Regulatory Pressure

Environmental and social governance (ESG) standards are increasingly shaping investment and operational decisions, especially in mining. While Indonesia is adopting international frameworks, enforcement remains uneven, and companies face rising pressure from global buyers and lenders to improve compliance and transparency.

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Political Stability Amid Global Tensions

Brazil’s diversified international relations and diplomatic tradition help mitigate risks from external interference, notably from the US. Political stability and global leadership ambitions support a favorable environment for long-term investment and trade strategies.

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USMCA renegotiation and North America risk

Rising tariff threats toward Canada and tighter USMCA compliance debates are increasing uncertainty for autos, agriculture, and cross-border manufacturing. Firms should map rules-of-origin exposure, diversify routing, and prepare for disruptive bargaining ahead of formal review timelines.

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Logistics corridors and inland waterways

Budget 2026 prioritizes freight connectivity: new Dedicated Freight Corridor (Dankuni–Surat), 20 National Waterways, coastal cargo promotion, and ship-repair ecosystems. Goal is lower logistics friction and rerouting resilience after Red Sea disruptions, improving lead times and inventory strategy.

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Resilience and Diversification of Manufacturing

TSMC and other Taiwanese firms are accelerating overseas expansion, notably in the US, Germany, and Japan, to mitigate geopolitical and operational risks. While Taiwan remains the core hub, a gradual shift in advanced manufacturing capacity abroad is underway.

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Aging Workforce and Social Security Reform

Thailand’s rapidly aging population is straining the labor market and social security system. Reforms are underway to ensure fund sustainability, attract skilled foreign workers, and turn the ‘Silver Economy’ into a growth engine, but demographic pressures remain a long-term risk.

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Energy security and LNG procurement

Taiwan’s import-dependent power system and plans to increase LNG purchases, including from the US, heighten focus on fuel-price volatility and shipping risk. Industrial users should expect continued sensitivity to outages, grid upgrades, and policy shifts affecting electricity costs.