Will Macedonia Scuttle Gazprom's New Mega Pipeline?

Building pipelines in Russia
Building pipelines in Russia
Yuri Barsukov
​SKOPJE â€" Macedonia’s prime minister announced last week that his country would participate in Gazprom’s "Turkish Stream" pipeline, which is meant to allow gas deliveries from Russia to Europe to bypass Ukraine, under one condition: that the European Union sign off on the project.

Opposition groups in Macedonia have been lobbying for Prime Minister Nikola Gruevski to resign. Meanwhile, Russian Foreign Minister Sergei Lavrov has declared that the opposition protests are being organized by foreign forces, who are angry that the prime minister didn’t join the rest of Europe in instituting sanctions against Russia.

In an interview with a local newspaper, Gruevski tried to distance himself from pro-Russian positions. When asked about people who came to his demonstration wearing T-shirts with Putin’s photo on them, he responded that there were 100,000 people at the demonstration, and perhaps three or four were showing off pro-Russian paraphernalia.

The “Turkish Stream” is intended to go through the Black Sea to Turkey, and then through Greece, Macedonia, Serbia, Hungary before reaching one of Europe's largest gas hubs in Austria. The pipeline would be equipped to carry about 60 billion cubic meters per year (500 billion barrels), and would be able to replace the pipeline through Ukraine â€" which Gazprom says it will abandon in 2020.

But the project is still in its very beginning stages, and Gazprom hasn’t signed a single necessary agreement, nor clarified where the funding would come from.

Macedonian Prime Minister Nikola Gruevski â€" Photo: European People's Party

Under the current plan, it would be impossible to avoid Macedonia, yet the project isn’t very attractive to the Balkan country of just 2.1 million people. Macedonia only uses 150 million cubic meters of gas per year, which it currently gets from Russia. But as Gruevski correctly noted, Russian gas is expensive (at more than $500 for 1,000 cubic meters, it is one one Europe’s most expensive gas sources). Macedonia is planning to access another pipeline that would give it access to cheaper Azerbaijani gas.

As a result, this small country, whose opinion on the project no one has really bothered to investigate, might end up playing the same role as Bulgaria played in the planning of another Gazprom pipeline, South Stream. That is, completely blocking the project.

Merging pipelines

In fact, both Russian and European energy experts told Kommersant that it is unlikely any pipeline will be built beyond Turkey. In the most ambitious scenario, experts say Gazprom would limit the project to two lines through the Black Sea to Turkey, since the company already has contracts with European companies to work on those lines. Moreover, getting additional contracts will be difficult, given the current sanctions against working with Russian companies. Therefore, unless the political climate changes, there is slim chance that Gazprom will be able to sign a contract for the construction of a third line.

Nonetheless, the goal of bypassing Ukraine by 2020 might still be feasible, by combining the shortened Turkish Stream with the "Eaststring" pipeline, which would send gas to the Balkans, and the Nord Stream, which would supply gas to Central Europe. Taken together, all of these pipelines would only have a capacity of 50 billion cubic meters per year, but that would likely be enough since European demand for Russian gas continues to drop.

The bigger picture reminds us that in all of these possibilities Gazprom would have to find a way to work with Brussels, which ultimately has the broadest authority to control the delivery of Russian gas to the European Union.

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Debt Trap: Why South Korean Economics Explains Squid Game

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.

In the Netflix series, losers of the game face death

Yip Wing Sum


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

Simon Shin/SOPA Images/ZUMA

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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