Sources

Where The Geopolitical Chessboard Makes Sense Today: Asia

In the West, the era of grand, strategic pacts between nation-states seems to have come and gone. But in Asia, the trend may just be catching on.

Closer than ever, Japan's Abe and India's Modi
Closer than ever, Japan's Abe and India's Modi
Dominique Moisi

-Analysis-

PARIS — Could it be that alliances are now taken more seriously in the East — in the Indo-Pacific world — than in the transatlantic Western world?

While Donald Trump is busy firing off his trademark raging tweets against France and its president, the Indian and Japanese prime ministers, Narendra Modi and Shinzo Abe, are showing just how close their bilateral relations have become. At a time when the Western world is divided on every essential matter, the Indians and the Japanese intend to create a "united democratic front" to face China's rising imperial ambitions.

Not so long ago it was the Asians who envied the strength of the Atlantic Alliance. In their eyes, there was a reality in the concept of the West that the Asian world didn't possess. Indeed, wasn't the word "Asian" itself a Western invention? They marveled — especially the Japanese — at the reconciliation process between Europeans, especially between France and Germany. "How did you do it?" they would keep on asking us.

For the U.S., the Chinese threat now clearly prevails over the Russian threat.

They wanted to know our recipes and be inspired by them, and hopefully transpose the reconciliation process and the "geography of values' that formed the foundations of the European Union and the Atlantic Alliance to Asia. During the Cold War, the West existed all the more so because of the clear and immediate Soviet threat.

Today, however, the existence of the Russian threat and the means to deal with it divide Westerners more than bring them closer together. For the British, this is an absolute priority. For the French, it only comes after the terrorist threat. For the Italians, it doesn't exist. For the United States, the Chinese threat now clearly prevails over the Russian threat.

The same differences can be found in Eastern Europe. Poland has given such high priority to the threat from Moscow that it has asked United States to establish a military base on its territory. And this request occurred without prior consultation with the European Union. Hungary, on this issue — and this is no accident — has positions close to those of Italy. There is a pro-Russian component in Orban and Salvini's populist movements.

Confusion and division in the West, simplicity and clarity in the Far East? The description is probably exaggerated, but it reflects a trend, if not a reality. Today, India and Japan emphasize the existence of a common security, prosperity, and destiny between the two countries. The key to post-war Franco-German reconciliation was the existence of a form of balance between the two countries. The sting was the Soviet threat.

Germany's Merkel and France's Macron in Berlin on Nov. 18 — Photo: Michael Kappeler/DPA/ZUMA

The United States, driven at the time by enlightened generosity, gave birth to that rapprochement. In 1953, John Foster Dulles, the then secretary of state under President Eisenhower, threatened Paris with a "heartbreaking revision" of America's commitments to European security if it didn't make progress regarding the European Defence Community (EDC), which ultimately didn't happen. The French at the time preferred a German army within NATO over German soldiers within a European army.

The relationship between Japan and India contains major differences from the Franco-German relationship. There is no common culture, no common religion, no common dramas between the two as in the Franco-German case. Traditionally, Japan — and you can see in Mishima's novels — looked down on "humid Asia." There is, however, a fundamental common ground between these two countries, beyond the perception of the Chinese threat: a sense of balance between them.

Japan, the world's third-largest economy, is a liberal democracy, in the classic sense of the term, and with an aging population. India is a demographic giant on the verge of overtaking China in terms of population numbers. It's also an illiberal democracy that — with its high corruption rate — knows little more about the rule of law than China. And both countries are driven by a strong nationalism, although in the case of India it's of a religious nature.

But what unites them above all is a common fear of China. To counterbalance China, India and Japan can also count on the support of other democracies in the region, such as Australia and Indonesia. Above all — contrary to what seems to be the case in Europe — America is seriously getting involved in Asia.

America's position is perfectly contradictory.

Donald Trump, regardless of what he may say or do, takes the Chinese threat seriously. In Asia, he seems to accept the fact that he may need allies. The expression "America first" applies everywhere, but "America alone" is more perceptible against Western countries than against Asian countries.

Rightly or wrongly, it's as if Washington — by not taking the Russian threat fully seriously — is not taking Europe seriously either. At the same time, one could certainly come to the opposite conclusion and claim that Donald Trump's derogatory remarks about the "European army" are proof that, for the first time, America is taking our will to defend ourselves seriously and no longer considers us to be from "Venus' rather than "Mars," as Robert Kagan put it 15 years ago.

The fact is that, on this issue, America's position is perfectly contradictory. It strongly states that "Europe must pay for its defense," just like we used to say, before World War II, that "Germany will pay." But on the other hand, Washington really doesn't want Europe to become a security pillar either next to or even inside NATO. It doesn't view Europe as an equal, real or potential, unlike how the new Asian allies, Japan and India, see each other.

Respect and balance are the keys to success for any alliance … And, let's not forget, the perception of a common threat.

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Society

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

-Analysis-

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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