Geopolitics

What's Driving Pro-Russian Separatists In Donetsk

As the risk of war hovers over the eastern Ukrainian city of Donetsk, one local explains why he looks to Moscow rather than Kiev.

Pro-Russian activists in Donetsk don't trust Kiev.
Pro-Russian activists in Donetsk don't trust Kiev.
Piotr Smolar

DONETSK — Iegor Velychko is driving between piles of tires and other barricades, avoiding people traveling in the opposite direction. Accustomed to performing in a difficult environment, he is normally in charge of leading 35 people 1,100 meters underground, where he works in a mine on the outskirts of Donetsk, Ukraine.

But on April 10, he joined a few colleagues to help activists seize the administrative building in Donetsk, which has since become the symbol of anti-Kiev, pro-Russian protests in the eastern region of Donbass.

The 30-year-old Velychko has been working underground for six years. Though his father is a head mechanic in a mine and his mother works as an accountant for another, he never wanted or planned to follow in their footsteps. The strong young man spent many years studying to be a surgeon, until the demands of daily life crushed his dreams.

“I had to feed the family,” he says. “I would’ve had to wait years to earn good money as a doctor.” Miners are indeed pretty well pampered in Donetsk. The 9,000 hryvnias ($680) a month he earns are enough to make the monthly loan payments on his car and flat, despite the insanely high but common interest rate of 45% over 20 years.

These figures are crucial to understanding the miners’ support for the separatists. Their employers haven’t encouraged them. In fact, the workers even say they’ve been threatened with their jobs. But the memory of their ancestors, who fought against the Nazis, and fear for their children’s future have persuaded them to act.

The economic situation, with currency in free-fall, worries them. “My buying power was divided by three in just six months,” Velychko explains. “I can’t make any plans for the future more than one month ahead. I can live with little money, but only if the situation is stable.” The radical reforms demanded by Ukraine’s Western lenders could have dramatic effects on the country’s coal basin.

It doesn’t matter to the miners that the roots of this economic disaster go deeper, that they existed even before the Maidan protests that led to upheaval in Ukraine. For Velychko, the revolution that ousted President Viktor Yanukovych in late February was a rude awakening.

Misrepresented by Kiev

Until Maidan, I didn’t care which country I lived in,” he says. “But I hate that other people speak in my name. When I hear on Ukrainian television that 80% of us are being manipulated by Russia’s Federal Security Service, it drives me mad! When I hear that I’m a stupid little miner, that I don’t understand anything, it pushes me to go on.”

Velychko says he is ready to defend the occupied building in Donetsk against any attack from the police. “If they give the order, the authorities will regret it. I’ll take whatever I can get my hands on, and I’ll fight.”

When asked about the possibility of joining Russia, he avoids a direct answer, sensing a trap. “I want to live in a country that respects me,” he says. “Kiev won’t be able to reunite the whole population, that’s for sure. At least in Russia, there are people like us. Our lives wouldn’t be better with them but not worse either.”

The large Russian city of Rostov-on-Don is only a two-hour drive away, and Velychko also has family living in the south, near Sochi. But he has never been to Western Ukraine. The “federalization” of Ukraine, demanded by Moscow to weaken Kiev, is a prospect he supports. “People in the Western part, who unlike us have no industry, claim that we live off the benefits they give us. Why should I be working for them?”

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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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