Geopolitics

Australia’s Submarine Slap To France Exposes Brutal Truth About Europe

The military pact between Australia, the United States and the United Kingdom is further proof that Europe's influence is eroding. To make up for the absence of a collective defense from the bloc's 27, it is urgent to establish alliances with different countries.

Australia’s Submarine Slap To France Exposes Brutal Truth About Europe

France's Suffren submarine in Cherbourg

Lucie Robequain

The slap that Australia, along with the United States and the United Kingdom, has just inflicted on us is a reminder of some disturbing truths — which happen to be opposed to the values we cherish. First of all, it reminds us that in international relations, friends don't exist. There are just allies who share common interests. Europeans have long lived with the illusion that the United States, a brotherly country, would only want the best for us and that Joe Biden had a special bond with the land of his ancestors.

The fact that President Biden convinced Canberra to break its commitments with France's Naval Group shows his determination to follow only one course: that of Washington's economic and commercial interests. From this point of view, Biden's actions are much more damaging than Donald Trump's, because they are more thoughtful and effective. This is actually the second time since the beginning of the summer that the French defense has been snubbed: last June, Americans had managed to impose their fighter planes on Switzerland, to the detriment of France's Rafale.

UK Prime Minister Boris Johnson, U.S. President Joe Biden and Australia Prime Minister Scott Morrison during a G7 meeting in Cornwall on June 12 — Photo: Andrew Parsons/Avalon/ZUMAAvalon/ZUMA

The Australian fiasco teaches us something else: our allies are less scrupulous than us in transferring their technologies. France has always refrained from exporting its nuclear-powered ships, because it sees them as the key to its independence and expertise. By agreeing to share theirs with the Australians, the Americans are breaking a major taboo.

History provides only one precedent, when Washington had offered its atomic expertise to the British. It was 1958, at the height of the Cold War — which says a lot about the anti-China front that is building up today. Will the American-Australian cooperation encourage other countries to develop their nuclear, civilian or military arsenals? Many fear so.

What's most cruel about this whole affair is to realize how much Europe's influence is eroding. Our hesitation vis-à-vis China is pushing the United States to forge alliances elsewhere, and without us. At the same time, they give Boris Johnson a great opportunity to achieve his ambitions to create a "Global Britain."

By contrast, Europe doesn't give any real weight to the common defense it calls for. The resistance of many countries, especially Poland, should push us to establish mini-alliances, as the United States is doing right now. We can only hope that the German election next week will choose a more proactive chancellor than Angela Merkel to actively support this strategic autonomy.

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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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