Mission Grey Daily Brief - July 01, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains complex, with several developments that businesses and investors should monitor closely. Here is a summary of the key issues:

• France's parliamentary elections have resulted in a potential power shift towards the far-right, with Marine Le Pen's National Rally (RN) poised to gain significant influence. This could impact France's stance on immigration, European integration, and its support for Ukraine.
• China and Russia's military cooperation continues to deepen, raising concerns among Western leaders about a potential coordinated aggression.
• The expansion of the BRICS group, now including Saudi Arabia, Ethiopia, Egypt, and the UAE, has sparked debate about the potential erosion of ASEAN unity and the balance of power in the region.
• Estonia's ruling party has chosen Climate Minister Kristen Michal to replace Kaja Kallas as prime minister, signaling a continued strong support for Ukraine.

France's Parliamentary Elections

The French parliamentary elections have resulted in a potential shift towards the far-right, with Marine Le Pen's National Rally (RN) emerging as the biggest winner. This development has significant implications for France's political landscape and its stance on various issues. Madame Le Pen's protege, Jordan Bardella, is expected to become the prime minister, creating an awkward power-sharing system with President Emmanuel Macron, who he openly criticizes. Bardella aims to implement tougher laws against immigration and unwind some of Macron's economic reforms. The RN's victory could also impact France's support for Ukraine and its stance on European integration.

China and Russia's Military Cooperation

China and Russia's military cooperation continues to deepen, raising concerns among Western leaders about a potential coordinated aggression. While the partnership falls short of a solid alliance like NATO, the two countries have conducted around 25 joint military exercises since 2005. China has become a key enabler of Russia's war in Ukraine, supplying microelectronics, drone parts, and other components. Western leaders fear a scenario where Russian aggression in Europe coincides with a Chinese invasion of Taiwan, overstretching US resources. However, it is important to note that China and Russia's military cooperation is more symbolic than practical, and their partnership is fraught with historical baggage and mutual suspicions.

Expansion of BRICS and Impact on ASEAN

The expansion of the BRICS group, now including Saudi Arabia, Ethiopia, Egypt, and the UAE, has sparked debate about its potential impact on ASEAN. Malaysia and Thailand have expressed interest in joining, while Indonesia and Vietnam are considering the benefits. This expansion has ignited a fierce debate among analysts, with some arguing that it could unlock lucrative trade and geopolitical opportunities, while others warn of the risk of eroding regional unity and further aligning countries with China and Russia. Malaysia's push to join BRICS is driven by its frustration with Western-led institutions and their perceived double standards on issues like the Israeli-Gaza conflict.

Estonia's New Prime Minister

Estonia's ruling center-right Reform Party has chosen Climate Minister Kristen Michal to replace Kaja Kallas as prime minister, signaling a continued strong support for Ukraine. Michal, a seasoned politician, has served in various cabinet posts and advised former prime minister Siim Kallas. However, Michal's lack of international experience could pose a challenge in foreign affairs, contrasting Kallas' strong performance on the global stage.

Recommendations for Businesses and Investors

• France: Businesses and investors should closely monitor the political situation in France, as the potential shift towards the far-right could impact economic policies, immigration laws, and European integration. There may be opportunities in industries that align with the RN's agenda, such as those focused on domestic production and national security. However, the potential instability and policy changes could also create risks for businesses, especially in sectors that conflict with the RN's platform.
• China and Russia: Businesses should be cautious about the deepening military cooperation between China and Russia, as it could impact their operations and supply chains, particularly in the technology and defense sectors. While a direct military conflict involving both countries simultaneously is unlikely, businesses should prepare contingency plans and supply chain diversification strategies.
• BRICS Expansion: Businesses and investors should monitor the potential impact of BRICS expansion on ASEAN. While it may create new trade and investment opportunities, there are also risks associated with the potential erosion of regional unity and the shift in power dynamics. Businesses should assess the benefits and risks of operating in this evolving geopolitical landscape.
• Estonia: Businesses and investors with interests in Estonia should take note of the new prime minister's focus on economic competitiveness and national security. There may be opportunities in sectors related to climate and energy, as well as defense and security. However, the lack of international experience could impact Estonia's foreign relations, so businesses should closely follow political developments and their potential impact on the business environment.