We derive a system of nonlinear equations that govern the dynamics of low-frequency short-wavelength electromagnetic waves in the presence of equilibrium density, temperature, magnetic field and velocity gradients. In the linear limit, a local dispersion relation is obtained and analyzed. New ηe-driven electromagnetic drift modes and instabilities are shown to exist. In the nonlinear case, the temporal behaviour of a nonlinear dissipative system can be written in the form of Lorenz- and Stenflo-type equations that admit chaotic trajectories. On the other hand, the stationary solutions of the nonlinear system can be represented in the form of dipolar and vortex-chain solutions.