Geopolitics

Russia Crackdown On Banned Western Goods Hits Stores

At a supermarket in Moscow
At a supermarket in Moscow
Anastasia Dulenkova and Anna Zibrova

MOSCOW â€" A new crackdown has begun on food illegally imported from Western countries that have imposed sanctions on Russia. But rather than just targeting goods brought in across the border, Russian officials now have the go-ahead to raid shops, warehouses and grocery chains throughout the country.

Although most prohibited goods are stopped at the border as transit cargo and destroyed there or sent back, the difficulty of returning products to their place of origin has led to the new proposal by the Ministry of Agriculture late last month, backed by President Vladimir Putin, to seize and destroy banned products on the spot.

Back in June, the Russian government increased its black list of products from the European Union, the United States, Canada, Norway and Australia, in response to their bans of Russian goods. The EU has extended economic sanctions against Russia until Jan. 31 2016.

Added to list were trout, oysters, mussels, as well as many dairy products. However confectionery products, canned fish and flowers are not banned.

The latest decree will allow officials from the Federal Customs Service, the agricultural watchdog Rosselkhoznadzor and the health watchdog Rospotrebnadzor to decide what they want to seize.

The goods need to be photographed, filmed and destroyed immediately after their seizure in the presence of two officials.

Vasily Itskov, a legal expert from Horizon Capital investment firm, says the decree is a significant development. “This means that if officials from the customs service, agricultural control or the federal consumer rights watchdog find banned produce during an inspection of, for example, a retail distribution center, it can be destroyed.”

A source close of the Agriculture Ministry has confirmed that they will check the warehouses of all retailers within the country. The Russian government has made a priority of its policy of import substitution to fill in for the shortfall of foreign goods no longer coming to Russia due to Western sanctions.

Vigilante raids

The youth movement “Eat Russian,” clad in t-shirts bearing the image of a knife, fork and Russian flag and aligned with the pro-Putin group Nashi, announced the start of a series of raids to find Western contraband.

Retailers themselves insist that they don't have any banned products, neither on their shelves nor in their warehouses. A spokeswoman for the Metro Cash & Carry chain, Oksana Tokarev, said that while the sale of banned European and American products continued for some time after the embargo, "now they are gone." A spokesman for the Dixie chain of stores, insisted that banned goods had stopped appearing in their markets "a long time ago."

Nevertheless, many Russian manufacturers insist that European products continue to enter the country despite the ban. In mid-July, customs officials in St. Petersburg found and seized more than 70 kinds of products from the Azbuka Vkusa chain, including lactose-free cheeses from France, Germany and the Netherlands.

Russian deputy prime minister, Arkady Dvorkovich, said there has been up to 800 violations of the embargo and the Federal Customs Service says that some 552 tons of goods, or about 10% of total goods entering the country, had been seized.

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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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