hankyoreh

South Korea and the United States announced a final agreement on Jan. 12 for the ninth Special Measures Agreement (SMA) on their shares of USFK defense costs. Based on the agreement, South Korea is earmarking a total of 920 billion won (US$867 million) for USFK costs this year, an increase of 5.8% from 2013. The amount is 50.5 billion won (US$47.6 million) more than the 869.5 billion won (US$819.1 million) total for last year. The agreement is to remain in effect until 2018, with the annual rate of increase not to exceed 4% after adjustments for inflation. The countries also agreed on some systemic improvements, including more transparency on defense contributions that aren’t used.

Perhaps the biggest story with the agreement was the relatively large 5.8% increase in the amount paid by South Korea. Before the agreement, many had said it would be better to cut our contribution, given how carelessly previous agreements have been treated in terms of the total amount paid. In the five years of the eighth Special Measures Agreement, 1,352.3 billion won (US$1.27 billion) went unused by USFK for one reason or another. The US reportedly insisted on an increase during the talks because of cuts to its own defense budget. But given the poor state of South Korea’s own national economy, one gets the sense Seoul yielded too much ground. It didn’t help matters that we asked for another postponement of the transfer of wartime operation control while the negotiations were going on.

The talks basically left in place the current framework, leaving the US with discretionary authority on how to spend the money once a total amount is agreed on. Many had called for a system more along the lines of the Japanese one, where spending is decided on an item-by-item basis as needed. It would have been worth the headaches to find a way of adopting an itemized standard while working to minimize the financial costs. It’s also unfortunate that they failed to produce any real answers on how to use the 1,352.3 billion won in previous defense contributions that haven’t been used.

The five-year term of the agreement is another issue. Under the Roh Moo-hyun administration (2003-08), two or three-year agreements were generally signed; it was only after Lee Myung-bak took office in 2008 that we began signing longer five-year agreements. A better way would have been to set the agreement for something like three years, giving the National Assembly stronger budget review authority and increasing the chances of improving things through further discussions.

The improvements that were made in the interests of greater transparency and accountability - new annual spending reports, appropriate reports from the government to the National Assembly - are laudable. But these are systems that any sovereign country should rightly have in place anyway. Our error has been to simply hand money over the USFK over the years without even keeping track of how it’s used. What we need now is the management skill to make sure these steps for greater transparency produce real results in their execution.

Please direct questions or comments to [english@hani.co.kr]