Geopolitics

Cuba: Growing Internet Access Is About Money Not Freedom

People used social media to help organize the large, anti-government protests that took place on the island last July. And yet, unlike their counterparts in China, Cuban authorities are loath to prohibit access to such sites. Do the math.

Cuba: Growing Internet Access Is About Money Not Freedom

Internet access is finally available in Cuba, albeit with some limitations

Guillermo Nova/DPA/ZUMA Press
Farid Kahhat

-Analysis-

Mobile phones, as the former Facebook executive Antonio García Martínez writes in his blog The Pull Request, were illegal in Cuba until 2008. Even after that, it took another decade before people were allowed to connect those phones to the internet. And more recently, on July 11 — when people held large protests (organized in large part online) — Cuban authorities blocked the internet for several hours.

Overall, however, internet access is finally available in Cuba, albeit with some limitations — for two reasons. The first is the expensive. An Amnesty International report titled Cuba's Internet Paradox reveals that the connection cost, as of 2017, was $1.50 per hour, a tremendous amount for people where the average monthly wage is roughly $25.


The other reason is censorship. The Open Observatory of Network Interference (OONI) reports that in Cuba, web pages that criticize the government, discuss human rights or share techniques for evading censorship are blocked. The state telecommunications firm likewise censors text messages containing the words "democracy" or "hunger strike."

In Cuba, disrupting the internet comes at a steep price


The answer may come down to money, as shown by open-source database Yugabyte, which found that by cutting off the internet in July, even for just a few hours, the Cuban government lost some $13 million.

The reason is that internet access in Cuba is controlled by a state monopoly, the Cuba Telecommunications Company (ETECSA). And as shown by the hourly access rate, the company abuses its monopoly. A good part of ETECSA's revenue comes from cellphones and internet accounts paid by Cubans abroad to keep in touch with relatives on the island, and when the connection is cut, so is the revenue stream.

Emilio Morales, the head of Havana Consulting, which provides market information on Cuba, says the Cuban government's monthly earnings from Wi-Fi and mobile data are some $80 million. The internet is also used for remittances to the island, which are an important source of hard currency used to pay for food and medicine.

Cuban government's relative tolerance of the internet and social media, when compared with China, should not therefore be construed as a liberalizing step. Instead, it's yet another, and particularly blatant, sign of the shortcomings that have characterized Cuba's economy for decades.

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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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