Geopolitics

Iran-Azerbaijan Tensions: How Khamenei Overplayed Islamic Ties

Azerbaijan's flourishing ties with Turkey and Israel threaten Iran's regional trade and strategic security after Iranian Supreme Leader Ayatollah Ali Khamenei overestimated his ability to woo Azerbaijan leader, Ilham Aliev, because both nations are predominantly Shia Muslim.

Photo of an explosion during Iranian military exercises near the Azerbaijan border.

Iran holds military exercise in north-western of Iran

Kayhan-London

-Analysis-

Iran's Revolutionary Guards have sent armored and artillery units for maneuvers Friday close to the Islamic Republic's northern border with the Republic of Azerbaijan.

Azerbaijan deplored the move and reportedly prevented Iranian trucks from driving on Azeri roads into Armenia. Iran says the movements were a matter of internal security.

The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this week that Tehran would not tolerate the presence of "the Zionist regime near its frontiers and will take any measure needed for its national security."

In the northwestern Iranian city of Ardabil, with a population dominated by Iranian Azeris, the congregational prayer leader (and local representative of the Supreme Leader Ayatollah Ali Khamenei), Ayatollah Hasan Amoli, has said that "Israel has come to Azerbaijan to threaten Iran, and the Sepah (Revolutionary guards) are in maneuvers... sending the message, don't overstep the mark!"

Khamenei tried to play the 'Islamic geography' card

When Armenia and Azerbaijan went to war in 2020 over the Karabakh enclave, Supreme Leader Khamenei ditched all neutrality and declared that "the lands of the Republic of Azerbaijan occupied by Armenia must be freed." Ayatollah Amoli dutifully echoed him then, saying the leader's "fatwa to free Karabakh has been of great help!"

While some reports suggested the Revolutionary guards were secretly sending arms to Armenia, Khamenei believed he should publicly defend "the Islamic geography" and back Azerbaijan, which like Iran is a majority Shia Muslim nation. Perhaps Khamenei thought he could impede Azerbaijan's blossoming ties with Israel, nemesis to Iran's revolutionary regime.

He also thought he had close ties with the Azeri leader, Ilham Aliev. He must have felt it when he bantered with him in Azeri — which Khamenei speaks, being an Iranian Azeri himself — on Aliev's visit to Tehran in early 2014. But in this regard, Turkey's Recep Tayyip Erdogan has had far greater success.

At a meeting in February 2017, Khamenei warned Aliev that "the malicious Zionist regime is working harder than other enemies to weaken the brotherly ties between Iran and Azerbaijan." His recipe for Aliev was to pump the Shia ideology and ride the people's religious sentiments.

Aliev evidently wasn't moved. If this were a recipe for success and popularity, why did Iranians intermittently pour onto the streets and risk their lives to denounce the Islamic Republic?

Khamenei's diplomacy hasn't stopped Azerbaijan from repeatedly obstructing Iranian lorries driving toward Russia in recent years and hiking customs and passage fees.

Photo of Presidents of Azerbaijan and Turkey meeting in Nagorno-Karabakh

Presidents of Azerbaijan and Turkey meet in Nagorno-Karabakh

AzerbaijanPresidentPressOffice/TASS /ZUMA

Azerbaijan has bought billions worth of Israeli arms

Azerbaijan has meanwhile forged warm relations with Israel, expanding commercial, security and military ties since 2011. Tehran consequently feels threatened, as Israel has installed communications and satellite systems near Iran's 600-kilometer frontier with Azerbaijan, and is helping develop Azerbaijan's defensive and drone capabilities. Azerbaijan has bought billions of dollars worth of Israeli armaments.

Iran sent troops to the frontier after the tripartite exercises involving Azerbaijan, Pakistan and Turkey, set to continue to the end of September. The three countries say they are strengthening the security of routes set to be linked to China's Belt and Road system.

Economic benefits go to Turkey.

Some observers in Tehran suspect that in return for backing Azerbaijan's efforts to regain the Nagorno-Karabakh territory, Turkey and Israel, and more discreetly, Britain and the United States, have extracted commitments from Aliev, effectively to act against Iranian interests in fields including defense, the economy and even ethnic separatism.

A member of the Iranian parliament's National Security Committee, Fadahussein Maleki, has deplored the tripartite maneuvers, saying Iran "expected more of its Azeri neighbor." Other legislators have warned Azerbaijan to mind the "childish" positions taken by some of its legislators or ministers, whom they accuse of feeding "discord" between neighbors.

These tensions are likely to have economic, rather than military consequences, and to benefit Turkey, which already boasts a thriving trade with Baku. And the principal loser is Khamenei, who thought the Azeri language and Shia Islam were enough to bring the two states closer. Yet in geopolitical and economic calculations, and in the basic function between states, such assumptions should never be overestimated.

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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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