OSLO — It’s still too early to predict how Norway’s Prime Minister-elect Erna Solberg, who was elected earlier this month, will tweak the oil policy developed by outgoing Prime Minister Jens Stoltenberg. During his eight-year tenure — even as Norway was in the process of building its wealth — the government adopted standards for managing its oil savings ethically and for aiding other oil-producing countries.
Norway famously chose not to invest any oil funds in businesses that did not respect these standards. By the end of 2012, Norway had boycotted 55 companies for forced labor, child labor, environmental damages and corruption allegations. Those companies that chose to modify their practices were considered again as partners. “Norwegian opinion upholds the responsible use of funding,” the Ministry of Finance has stated.
Norway is, in fact, one of the wealthiest countries in the world, boasting $784 billion in savings, or 1.25% of the global market capital. This prosperity is thanks, of course, to the oil trade and coastal oil extraction that has multiplied since the 1970s, with revenues held in funds abroad and managed by the central bank.
Solberg, who will take office next month, will have her work cut out for her to gain a significant majority among the various factions in Norway’s Parliament. She’ll need to pacify and form a coalition with the Progress Party, which hopes to direct annual profits from Norway’s oil wealth into the national budget.
So far, Solberg’s Conservative Party has balked at that idea. Like the Labor Party before it, its members feel that drawing more funds from the country’s considerable wealth would overstimulate the domestic economy. More importantly, they are looking toward the eventuality of depleted oil reserves, and want to manage savings such that Norway can provide for its citizens when the oil wealth dries up.
The Norwegian aid given to other oil-producing nations is another significant part of her predecessor’s policies. “We advise less-informed countries on market regulations and their options when dealing with multinational corporations,” says Petter Stigset, who works within the Norwegian public service program called Norad that deals in foreign aid and development.
“We aim to help countries develop a legislative framework before they go ahead and sign oil trade agreements,” he says. The program also helps build awareness among state employees, NGOs and journalists on the topic of oil wealth management.
“Norway’s government has developed standards that have been exemplary in dealing with petrol ethics,” says Swede Jonas Moberg, secretary of the Oslo-based Extractive Industries Transparency Initiative. “Norway has become a center of expertise in dealing with the management of mineral resources.”
Unfortunately, these policies can have their complications. “We are aware that we can serve as a mere pretext for authorities in some countries,” Stigset says. Additionally, his program plays a role in countries where Statoil, a Norwegian state oil company, also has commercial interests. Each organization claims strict autonomy, but how can they really separate their interests?
Environmental concerns have been grafted onto this debate about oil policy. “If Norway can plan a smooth transition to an era of renewable energies, it can truly claim to be ethical,” says Arild Hermstadt, head of the NGO The Future In Our Hands. “But the country continues to invest huge sums to discover new deposits.”
Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.
SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.
The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.
It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.
Seoul housing prices top London and New York
In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.
According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.
Average home loans are equivalent to 270% of annual income.
One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.
According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.
Playing the stock market
At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.
A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."
In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.
42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s
Game of survival
In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.
But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.
This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.
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