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Mission Grey Daily Brief - July 14, 2024

Summary of the Global Situation for Businesses and Investors

The world is witnessing a period of geopolitical fragmentation, with escalating tensions between major powers, trade disputes, and rising nationalism challenging globalization. The UK Labour Party's landslide victory signals a shift away from the Conservatives, while France faces political uncertainty with a hung parliament. The US and its allies remain silent on Israeli strikes in Gaza, and China's military drills in Belarus send a strong message to NATO. Meanwhile, political instability in Nepal and India's crackdown on NGO funding impact development and social welfare.

Political Instability in Nepal

Nepal's government has collapsed after losing a trust vote, triggering a period of political uncertainty. The country has seen three governments since 2022, and the latest coalition between the Nepali Congress and the Communist Party of Nepal-UML is unlikely to bring stability. This constant political upheaval has hindered Nepal's development, impacted its tourism industry, and led to large-scale outward migration.

China's Military Drills in Belarus

Chinese and Belarusian soldiers are conducting joint military exercises near the Polish border, sending a clear message to NATO. This comes as tensions rise on the Poland-Belarus border, with Poland closing border crossings and planning to fence off its frontier. The drills, named "Eagle Assault 2024," are a show of unity between China and Russia, and a response to Western sanctions and criticism.

US-Israel Relations

US President Biden has blamed Israel for the failure to end the war in Gaza, sparking controversy. He criticized Israel's conservative war cabinet and called for a two-state solution. Meanwhile, Türkiye's President Erdoğan has opposed NATO's cooperation with Israel, stating that it goes against the alliance's core values.

India's Crackdown on NGO Funding

India's cancellation of FCRA licenses for thousands of NGOs has disrupted vital services and exacerbated unemployment. Smaller NGOs have been particularly affected, and the loss of jobs in the sector has had a significant impact. This move by the Modi government has created uncertainty and a chilling effect on civil society, with organizations fearing further crackdowns.

Recommendations for Businesses and Investors

  • Nepal: Businesses and investors should be cautious about operating in Nepal due to the country's political instability. The frequent changes in government and lack of long-term policies, especially in foreign relations, create an unpredictable environment.
  • China-Belarus Drills: The military exercises demonstrate the strengthening alliance between China and Russia, which could have implications for businesses operating in the region. Investors should monitor the situation and assess the potential impact on their interests.
  • US-Israel Relations: The strained US-Israel relations may affect businesses operating in the region, particularly those in the defense and security sectors. Investors should consider the potential impact on their portfolios, especially in light of the ongoing conflict in Gaza.
  • India's NGO Crackdown: Businesses and investors with interests in India should monitor the situation and assess the potential impact on their operations. The loss of NGO funding has disrupted vital services, and the Indian government's crackdown on civil society could create further uncertainty.

Further Reading:

As Nepal government loses trust vote, the country enters another period of political uncertainty - Scroll.in

As polls from UK to France show, fragmented geopolitics still a challenge - South China Morning Post

Biden Blames Israel - The New York Sun

Chinese Communist Soldiers Train in Belarus, the Kremlin’s Satellite in Eastern Europe and a Stone’s Throw From NATO - The New York Sun

Empty beds, lost jobs: the price of India's crackdown on NGO funds - Context

Erdoğan says Türkiye opposes NATO cooperation with Israel - Hurriyet Daily News

How Hong Kong really threatens America’s security and economy - South China Morning Post

Themes around the World:

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Brexit Trade Cost Drag

Recent reporting says Brexit is costing the UK £11.7 billion annually in lost exports, while goods export tonnage has fallen 20.7% since the referendum and administrative burden reached £1.8 billion in 2022. This continues to weigh on productivity, logistics and export strategy.

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US tariff threat escalation

Washington warned a 100% tariff on UK goods is “not a bluff” unless Britain removes its 2% digital services tax, which raised £800 million in 2024/25, creating material export risk for UK-US trade, pricing, and investment planning.

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Healthcare and Pharmaceutical Partnerships

Saudi Arabia and France signed health cooperation and Sanofi-linked research agreements covering public health security, digital health, clinical trials, supply chains, and pharmaceuticals. This expands opportunities in healthcare investment, life sciences R&D, and resilient medical supply networks tied to Vision 2030.

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Agriculture And Input Market Strain

Protest leaders highlighted farmers’ difficulty accessing fertiliser, sugar mills allegedly refusing crop purchases, and Punjab achieving less than half its cotton target. These pressures signal supply risks for agribusiness, textiles, food processors, and export-linked manufacturing dependent on domestic raw materials.

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Regional security ties diversify supply webs

Tokyo is building tighter defense and industrial links with Australia, India, the Philippines, New Zealand and European partners. These arrangements extend beyond military affairs into logistics, maintenance and supply-chain resilience, opening new routes for firms serving defense and strategic industries.

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Security and strategic asset protection

Indonesia is debating a new anti-espionage and foreign-interference law, while PLN and prosecutors are strengthening legal support for strategic power projects. Together with crackdowns on illegal fuel operations, the trend points to tighter oversight of strategic sectors and critical infrastructure.

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UAE Cuts Trade With Iran

The UAE has suspended all commercial, financial, and trade activity with Iran, despite being one of Tehran’s most important regional partners and re-export hubs. This widens Iran’s commercial isolation, disrupts import channels, and may force firms to redesign regional sourcing, warehousing, and payment structures.

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US-China summit policy uncertainty

Ahead of a planned Xi-Trump meeting, Taiwan has become entangled with trade, technology controls and military signaling. Businesses face uncertainty over whether cross-Strait stability, tariffs and export restrictions will improve, or become bargaining chips in broader US-China negotiations.

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EU-Taiwan Trade Deepening

Taiwan is pushing for double-taxation avoidance and investment protection agreements with the EU, while European officials and lawmakers deepen semiconductor dialogue in Taipei. The trend supports broader industrial cooperation, but also raises competition for Taiwan-based capacity and talent.

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Chinese input reliance in manufacturing

India’s export manufacturing model still depends heavily on Chinese intermediates. Electronic components in imports from China rose from 3.3% in Q1 FY16 to nearly 13% in Q1 FY27, indicating that tariff or sourcing restrictions could lift costs and weaken export competitiveness.

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Regional security threatens energy flows

Houthi missile and drone attacks on Saudi cities, Aramco sites and the Jizan refinery, with 73 injuries reported, are raising concerns over production continuity, insurance costs and wider Gulf supply risk. Brent rose toward $100, reinforcing volatility for importers and shippers.

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Infrastructure projects face strain

Major China-backed projects, including the Jakarta-Bandung high-speed railway and Cirata floating solar plant, remain central to investment ties, yet disagreements over pricing, timing, low passenger volume, and debt persist. Execution risks may affect contractors, lenders, and infrastructure-linked supply chains.

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Autos, metals, lumber exposed

Negotiations highlighted unresolved pressure on autos, steel, aluminum, copper, and softwood lumber. Existing U.S. duties range from 10% to 50%, while proposed future 50% tariffs on Canadian vehicles, parts, and steel intensify investment hesitation in export-oriented industrial corridors.

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Immigration Backlogs Constrain Talent

Employment-based green-card backlogs now exceed 1.2 million, with Indian applicants facing waits of up to 179 years in some categories and possible EB-1 unavailability. U.S. employers in technology, healthcare, and research face retention problems and hiring uncertainty.

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US alliance turns transactional

Washington is increasingly linking security cooperation to trade and investment outcomes, using reduced joint drills and tariff leverage while Seoul negotiates a $350 billion U.S. investment package. This raises strategic uncertainty for exporters, investors and firms dependent on stable bilateral policy coordination.

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Shadow Fleet Sustains Oil Exports

Russia continues exporting crude through aging, underinsured shadow-fleet tankers that evade price caps and port bans. With hundreds of sanctioned vessels and more than two-thirds of Russian crude moving on such ships, maritime, insurance and chartering risk remains elevated.

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Iran sanctions spillover risk

Impending US secondary sanctions on Iran are heightening compliance and counterparty risks across Gulf trade networks. Saudi Arabia is balancing exposure while alternative export routes are discussed, creating uncertainty for companies handling shipping, finance, insurance and energy transactions linked to the region.

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Mexico holds tariff relative advantage

Despite headline disputes, officials say about 85% of Mexican exports to the United States still enter tariff-free under USMCA, and Mexico’s effective tariff rate remains comparatively low. That preserves a relative manufacturing advantage, though it is vulnerable to changes in ongoing negotiations.

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US Sanctions Pressure Turkish Banks

Washington’s designation of Golden Global Bank and subsidiaries shows Turkish financial institutions can become sanctions targets when linked to Iran-related flows. This raises correspondent-banking, compliance, and de-risking costs for lenders, traders, and firms using Turkey as a regional payments hub.

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Recovery Remains Investment Fragile

Germany’s economy grew 0.2% quarter on quarter in Q2, but private investment remains weak: equipment investment has contracted since summer 2023 and private construction is nearly 20% below early-2021 levels. This limits confidence in a durable business recovery.

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Frozen Russian Assets Become Fiscal Lever

EU states are debating whether to use about €200 billion in immobilized Russian assets to fund Ukraine’s defense shortfall. The dispute highlights legal, reputational and sovereign-risk concerns for custodians such as Euroclear and for investors watching asset-protection precedents.

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Strategic Minerals Cooperation Expands

During high-level China-Indonesia talks, both sides agreed to deepen cooperation in minerals, energy, technology, and rail. This supports Indonesia’s industrial upgrading and resource processing ambitions, but also increases foreign investors’ exposure to geopolitical balancing between major powers and competing standards.

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Yen volatility reshapes capital flows

Japan’s yen has swung sharply, with coordinated U.S.-Japan intervention, rising BOJ hike expectations and record bond yields changing investor behavior. The move is already affecting carry trades, repatriation, Treasury demand and funding costs for multinational businesses.

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Regional Trade Corridors Gain Importance

Turkey is advancing the Iraq Development Road, border connectivity, and broader transit links while Ukraine’s free trade agreement opens new commercial channels. These corridor projects may improve market access, but they also depend on regional security, customs efficiency, and infrastructure delivery.

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Origin scrutiny threatens trusted exports

Recent commentary linked Taiwan’s high export volumes to stricter US attention on tariff evasion and transshipment, warning that false Taiwanese origin claims could trigger tougher inspections. Legitimate exporters therefore face rising customs-delay, documentation and reputational risks in key overseas markets.

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US tariff dispute escalates

Washington’s cumulative tariffs of up to 37.5% on selected Brazilian goods have become the dominant external trade risk, affecting 15% of Brazil’s 2025 exports to the US, or US$5.8 billion, with footwear, machinery, wood, ceramics and sugar especially exposed.

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Rare earth ambitions attract interest

Vietnam’s large rare-earth reserves are drawing attention as buyers seek alternatives to Chinese supply. However, limited processing capability, skills shortages, environmental risks, and the need to balance US investment with deep trade ties to China complicate commercialization and downstream supply-chain planning.

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China link drives enforcement risk

China remains Iran’s dominant seaborne oil customer, taking more than 80% of shipped volumes according to Kpler data cited in reporting. That makes Chinese buyers, intermediaries, insurers and banks central to sanctions enforcement risk and possible wider trade friction.

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Winter Infrastructure And Logistics Risk

Russian attacks are intensifying against logistics and critical infrastructure ahead of winter, with officials warning of severe disruptions to daily economic activity. Businesses operating in Ukraine face higher risks to transport, power reliability, supply continuity, and workforce safety.

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Gulf Partnership and Stockpile Expansion

Japan is broadening energy and investment cooperation with Saudi Arabia and the UAE, including joint storage arrangements and the POWERR Asia framework. These measures can improve supply resilience, but also reshape refining, logistics and inventory strategies across Asian energy-dependent industries.

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Select Markets Gain Longer Stays

Thailand is extending visa-free stays to 90 days for Peru, Brazil, and South Korea, while maintaining separate bilateral arrangements for some countries. This uneven treatment may affect market-specific travel planning, regional partnerships, and country-by-country mobility strategies.

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Supply Chain Recalibration Across Borders

Businesses are being given limited time to recalibrate logistics before Canada’s Sept. 8 counter-tariffs, while integrated North American supply chains face higher friction. Firms in vehicles, energy, agriculture and manufacturing must adjust inventories, routing and procurement quickly.

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Global South diplomacy amid tariffs

South Africa is aligning with Brazil, India and BRICS/IBSA partners to respond to U.S. tariff pressures and wider geopolitical uncertainty. Businesses reliant on exports, critical minerals or cross-border trade should expect more diversification efforts and shifting market alignments.

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US-China Truce Remains Fragile

Officials are preparing to extend the Busan trade truce and a possible Board of Trade, but recent tariffs, export controls and retaliatory measures show how quickly the deal can unravel. Companies should plan for policy swings rather than durable détente.

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Cyprus-Egypt gas hub integration

The final investment decision on Cyprus’s Cronos project and plans to connect it to Egyptian infrastructure strengthen Egypt’s regional energy-hub strategy, potentially increasing LNG throughput, infrastructure utilization, and cross-border commercial opportunities for logistics and industrial users.

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Fast-track new gas discoveries

The Denise West offshore discovery, estimated at 2 TCF of gas and 130 Mbbl of condensate, is being advanced toward a final investment decision within months, with first gas targeted in under two years, supporting future feedstock and export capacity.