Mission Grey Daily Brief - July 02, 2024
Summary of the Global Situation for Businesses and Investors
The world is witnessing a new era of violence and conflict, with escalating global unrest and a rise in state-based conflicts. The war in Ukraine continues to rage on, with China's support for Russia's war efforts fuelling security concerns in Europe and Asia. France's parliamentary elections have resulted in a historic victory for the far-right National Rally, threatening economic stability and causing alarm among other nations. In the UK, the Conservatives are facing a catastrophic defeat in the upcoming July 4 election, with Labour's Keir Starmer poised to take the lead. Meanwhile, China's Belt and Road Initiative continues to expand its influence in Africa, and Azerbaijan is denying Western journalists access to the upcoming UN Climate Summit in Baku later this year.
France's Far-Right Victory
France's parliamentary elections have resulted in a historic victory for Marine Le Pen's far-right National Rally (RN) party, which secured 33.15% of the vote in the first round. This unprecedented outcome has sent shockwaves across France and the world, as the RN has never governed at the national level. The party's success can be attributed to economic issues, with voters trusting the RN more than its competitors when it comes to managing the French economy. However, experts are sceptical about the RN's economic platform, which includes various tax giveaways and costly promises. The second round of elections will take place on July 7, and the outcome remains uncertain. If the RN gains a majority, it could lead to a far-right government for the first time since the Nazi occupation during World War II.
China-Russia Alliance
US Secretary of State Antony Blinken has expressed concerns about China's support for Russia's war efforts in Ukraine. He warned that China is fuelling "the biggest security threat to Europe since the Cold War," a sentiment echoed by China's neighbours in Asia. China's assistance to Russia, including investments in its defence industrial base, has allowed Russia to sustain its aggression and continue the war. This has prompted calls for Europe to present Beijing with a stark choice: curb support for Russia or face consequences. Meanwhile, China continues to deny providing weapons to nations engaged in wars and asserts control over the export of dual-use items.
UK's July 4 Election
The UK's upcoming general election on July 4 is shaping up to be a significant moment for electoral democracy worldwide. The Conservatives, led by Rishi Sunak, are facing a potential catastrophic defeat, with Labour's Keir Starmer emerging as the frontrunner. Sunak's decision to call for an early summer election has backfired, as the Reform UK Party, led by Nigel Farage, gains momentum. The election will have implications for the UK's future, particularly regarding issues such as immigration and identity.
China's Belt and Road Initiative
China's Belt and Road Initiative (BRI) continues to expand its influence in Africa, with Nigeria's Foreign Minister highlighting the positive impact of BRI projects in the country. The BRI has facilitated the construction of roads, bridges, and power generators in Nigeria, as well as created much-needed jobs. The Nigerian Foreign Minister refuted the "debt trap" narrative, calling it an "insult" to African countries. He expressed expectations for deeper ties with China and a desire to expand cooperation in areas such as electric vehicles.
Azerbaijan Denies Access to Journalists
Azerbaijan is denying Western journalists access to the upcoming United Nations Climate Summit (Cop29) in Baku later this year. <co: 4,24,44>At least three journalists from Britain and France</
Further Reading:
Australia urged to provide 'emergency uplift' visa for Palestinians fleeing Gaza war - Arab News
BRI helps Africa build infrastructure, create much-needed jobs: Nigerian FM - People's Daily
China sets stage for violent crackdown: ‘Taiwan is a rebel regime’ - Washington Examiner
France Elections: Economic Issues Drove Far-Right Win in First Round - Foreign Policy
France election 2024: Live updates and latest news - The Associated Press
France elections 2024: Le Pen's far right wins. Now the horse-trading begins - NPR
From Ukraine and Syria to Sudan and Gaza, a new era of violence and conflict unfolds - Arab News
Themes around the World:
Critical Minerals Strategy Reshapes Trade
Australia's $1.2 billion Critical Minerals Reserve prioritizes antimony, gallium, and rare earths, aiming to secure supply chains and attract investment. This government-backed push is vital for global electronics, defense, and clean energy sectors, impacting international partnerships and supply security.
Fragmentation of Global Governance
The US withdrawal from multilateral organizations, including climate bodies, signals a shift toward bilateralism and regional blocs. This undermines global regulatory coherence, complicating cross-border operations and increasing compliance complexity.
Green Transformation and Regulatory Burden
Germany’s ambitious green policies have increased regulatory complexity and compliance costs for businesses. While supporting climate goals, these measures contribute to capital flight, slower investment, and concerns about overregulation, particularly for small and medium-sized enterprises.
Currency Controls and Ruble Transactions Rise
Over 85% of Russia’s foreign trade is now settled in rubles or other non-dollar currencies, reducing exposure to Western financial systems. International businesses face increased currency risk, limited convertibility, and compliance challenges in cross-border transactions with Russian entities.
Regulatory Overhaul and NGO Restrictions
Israel’s sweeping regulatory changes in 2026 impose stringent requirements on foreign NGOs operating in Gaza and the West Bank, restricting aid and international staff. These measures heighten compliance risks and complicate humanitarian supply chains for global organizations.
Environmental Licensing and Climate Policy Reform
Brazil’s new General Environmental Licensing Law streamlines approvals for business projects, while COP 30 participation and new climate governance policies signal a commitment to sustainable development. These changes reduce regulatory bottlenecks but also require compliance with stricter environmental and emissions standards.
Sovereign Wealth Fund and State Enterprise Reform
The Danantara sovereign wealth fund, managing $1 trillion in assets, is positioned to finance future industries and co-invest with global partners. Plans to rationalize state-owned enterprises from 1,044 to 300 aim to enhance efficiency and governance, signaling a more modern and open investment environment.
Persistent Dependence on China Trade
Despite diversification efforts, China remains Germany’s largest trading partner, with bilateral trade at $287 billion in 2024-25. This dependence exposes German businesses to geopolitical risks and supply chain vulnerabilities, complicating efforts to realign trade and investment strategies.
Geopolitical Influence and Security Alliances
Australia’s balancing act between the US and China shapes its trade, investment, and security policies. Participation in initiatives like AUKUS and Indo-Pacific partnerships, as well as G7 critical minerals talks, underscores the growing importance of geopolitical alignment for international business operations.
AI-Driven Semiconductor Expansion
TSMC’s 35% profit surge in Q4 2025, driven by AI chip demand, underpins massive capital expenditures of up to $56 billion in 2026. The AI megatrend is fueling sustained growth, with advanced node technologies (3nm, 2nm) dominating revenue and global market leadership.
Labor Market Restructuring and Foreign Workers
Israel has sharply reduced Palestinian labor, replacing it with foreign workers, especially in construction and agriculture. This structural shift affects wage dynamics, labor standards, and operational costs, introducing new vulnerabilities and regulatory scrutiny for businesses reliant on manual labor.
Manufacturing and FDI Surge Amid PLI Schemes
India attracted $51 billion in FDI in six months, driven by government incentives, PLI schemes, and a focus on advanced manufacturing. Sectors like semiconductors, EVs, and electronics are seeing robust investment, strengthening India’s position as a global manufacturing hub.
US-China Relations Remain Volatile
Ongoing tensions and policy reversals in US-China economic relations continue to disrupt trade flows, investment decisions, and technology transfers. Businesses face persistent risk from tariffs, regulatory changes, and unpredictable bilateral negotiations.
Supply Chain Relocation and Resilience
Vietnam remains a top destination for supply chain relocation, with firms like Google shifting production from China. However, underdeveloped local supplier networks, logistics gaps, and regulatory bottlenecks present ongoing risks to supply chain resilience and operational efficiency for international manufacturers.
Labour Market Tensions and Wage Pressures
Persistent high unemployment, wage negotiations, and potential for labour unrest present ongoing risks. While recent data shows slight improvements in employment, structural barriers and the threat of strikes in key sectors like mining and manufacturing remain a concern for supply chain continuity.
Currency Volatility and Economic Disconnect
The South African rand has shown strength against the US dollar, driven by global liquidity rather than domestic fundamentals. This disconnect, coupled with weak manufacturing and low GDP growth, creates uncertainty for investors and complicates hedging and pricing strategies for international trade.
Vision 2030 Economic Diversification Acceleration
Saudi Arabia is entering the third phase of Vision 2030, shifting from launching reforms to maximizing their impact. The focus is on logistics, tourism, and non-oil sectors, with hundreds of billions in government and private investment, reshaping trade and supply chain opportunities for global firms.
ESG, Regulatory, and Investment Climate
Taiwan’s evolving regulatory landscape, with a growing focus on ESG and sustainable development, shapes investment strategies. Infrastructure modernization and compliance with international standards are increasingly important for attracting capital and maintaining global market access.
Japanese Industrial Policy Response
Japan is accelerating policies to strengthen supply chain resilience, invest in alternative sources, and support domestic innovation. Government and industry are collaborating to mitigate strategic material shortages, shaping future investment and industrial strategies.
Slow Progress on Energy Transition
Despite ambitious targets, France’s decarbonization rate slowed to 1.6% in 2025, far below the 4.6% annual reduction needed for 2030 goals. Dependence on fossil fuels and policy delays increase regulatory and reputational risks for energy-intensive industries.
Geopolitical Trade Tensions Escalate
Recent U.S. tariffs on advanced chips and negotiations over tariff exemptions, alongside China’s export controls, are increasing uncertainty for Korean exporters. These developments could disrupt supply chains and require strategic adaptation for international investors and partners.
Infrastructure Expansion and Investment Bottlenecks
Vietnam is launching large-scale infrastructure projects, targeting $5.5 billion in foreign loans for 2026 and up to $38 billion by 2030. However, persistent disbursement delays, land clearance, and regulatory hurdles threaten timely execution, impacting business operations and foreign investment flows.
Reliance on Remittances Over Exports
Pakistan’s economy is increasingly sustained by remittances and debt rather than exports. The export-to-GDP ratio dropped to 10.4% in 2024, widening vulnerabilities and highlighting the urgent need for export-led reforms, infrastructure upgrades, and improved trade agreements.
US Retreats from Global Climate Leadership
The US withdrawal from the UNFCCC and 65 other international bodies marks a strategic shift away from multilateral climate action. This move risks isolating US firms, ceding clean energy leadership to China, and complicating compliance for multinationals operating across jurisdictions.
Conditional Progress Toward EU Integration
Ukraine’s EU accession talks are advancing, with Cyprus prioritizing the process during its EU Council presidency. Progress depends on sustained reforms, anti-corruption measures, and political stability. EU membership remains a strategic goal, shaping regulatory alignment and long-term market access for international business.
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.
Privatization and Investment Facilitation Initiatives
The government’s focus on privatizing state assets and the creation of the Special Investment Facilitation Council have attracted over $2 billion in new FDI. However, bureaucratic inefficiencies and inconsistent implementation continue to challenge the business environment.
Investment Bottlenecks and EEC Land Issues
Land shortages and outdated zoning regulations in the Eastern Economic Corridor (EEC) delay industrial projects and deter foreign investment. The government is fast-tracking reforms, but infrastructure and regulatory bottlenecks remain significant barriers to scaling up high-value manufacturing and technology clusters.
Geopolitical Role in Black Sea Security
Turkey is assuming a leadership role in Black Sea naval security missions amid the Russia-Ukraine conflict, enhancing regional maritime safety. This strategic position strengthens Turkey’s influence in NATO and impacts trade routes, logistics, and risk assessments for international operators.
High Energy and Tax Costs Undermine Competitiveness
Pakistan’s elevated energy tariffs and tax burdens are driving some multinational companies to exit, while others adapt through local sourcing. These costs, among the highest in the region, erode export competitiveness and deter new foreign investment, complicating business operations.
Labor Market Stagnation and Wage Pressure
US job growth slowed sharply in late 2025, with only 50,000 jobs added in December and unemployment at 4.4%. Hiring is concentrated in healthcare and leisure, while other sectors stagnate. Wage growth remains moderate at 3.8% annually, raising concerns about economic dynamism, consumer demand, and future cost structures.
Uncertainty Over North American Trade Pact
President Trump’s open criticism of the CUSMA/USMCA trade agreement and threats not to renew it create significant uncertainty for Canadian businesses. Disruption of this pact would upend North American supply chains, particularly in automotive and manufacturing sectors, impacting investment and operations.
EU-Mercosur Trade Deal Turmoil
France’s staunch opposition to the EU-Mercosur free trade agreement, driven by agricultural and environmental concerns, has isolated it within the EU. The deal’s likely ratification despite French protests signals rising trade policy uncertainty and supply chain risks for agri-food and related sectors.
Australia-China Trade Relationship Volatility
Despite new Chinese tariffs on beef and ongoing strategic tensions, China remains Australia’s largest trading partner. The relationship is resilient but unpredictable, with regulatory shifts and quotas impacting key exports, requiring businesses to diversify markets and manage risk exposure.
Currency Collapse and Hyperinflation
The Iranian rial has fallen to over 1.4 million per US dollar, losing 45% of its value in a year. Inflation exceeds 42%, eroding purchasing power, raising import costs, and destabilizing the business environment for both local and foreign enterprises.
Energy Sector Volatility and Export Risks
Despite sanctions, Iran remains a key oil exporter, especially to China. However, civil unrest, US tariffs, and regional tensions threaten output and export continuity, impacting global energy prices and the reliability of Iranian crude as a supply source.