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"Largely, the money that we need to move the 2nd Infantry Division from north of Seoul to Pyeongtaek, about 50 percent of that money, we intend to be SMA money." This remark was made by Burwell B. Bell, commander of U.S. Forces Korea, during a speech to foreign correspondents in Seoul on January 18. The SMA, or Special Measures Agreement, last updated in December, is the contract under which South Korea makes contributions toward the cost of stationing U.S. troops in Korea.

General Bell’s remarks sparked a controversy regarding how much South Korea will have to shoulder in the ongoing move of several U.S. military bases. Two large concentrations of soldiers - one at Yongsan Garrison in Seoul and the other comprising the 2nd Infantry Division, spread along the border with North Korea - will be moved to Pyeongtaek, south of Seoul, as part of the U.S.’s move to increase mobility in its troops stationed worldwide.

Under a 2004 agreement for the U.S. base relocation, Washington agreed to pay for the move of the 2nd Infantry Division and Seoul agreed to cover the relocation costs for the Yongsan troops. So, given the roughly US$10 billion total estimated cost - which includes the Pyeongtaek base construction and troop relocation but which does not include the $1 billion land purchase - and given that the cost of moving the Yongsan and 2nd Infantry troops is estimated to be nearly equal, South Korea had said it would pay around $5 billion, while the U.S. would shoulder the remainder. However, General Bell’s remarks seemed to confirm that half of the costs that were slated to be paid by the U.S. will in fact be paid by the South Korean government.

In short, Bell’s comments would mean that half of the $5 billion previously thought to be paid by Washington will come from SMA funds, meaning that Seoul will in effect pay an additional $2.5 billion for the relocation of the U.S. bases, or 75 percent of the $10 billion cost, rather than the 50 percent previously stated by South Korean officials.

Bell’s remark also seemed to uncover the reason why the U.S. and Korean sides have been giving seemingly contradictory accounts regarding the base relocation cost. So far, the U.S. Department of Defense has told Congress that the U.S. will pay much less than will South Korea, while South Korea has never mentioned the possibility that its money would be part of the "U.S. share" of the cost. Another example of these conflicting accounts occurred when William J. Fallon, commander of U.S. Pacific Command, told the U.S. House Appropriations Committee in March 2006 that the South Korean government would pay $6.8 billion, including $1.68 billion from Korea’s contributed SMA funds, for the relocation of the U.S. bases, which contrasts with South Korea’s version of a 50/50 split of the cost.

Korean officials reason that their failure to mention the additional shared amount is that South Korea’s annual contribution to U.S. Forces Korea was already agreed upon in the SMA, which it says is an issue separate from the base relocation. But civic groups are crying foul over what they call a pointed omission by the South Korean government.

Yu Yeong-jae of the civic group Solidarity for Peace and Reunification of Korea said, "Given the information, South Korea will shoulder about 75 percent of the total cost of relocating the U.S. base." He added, "The Korean government may have hidden this fact due to possible public outcry."

In response, Kim Gye-hyeon, an official at South Korea’s defense ministry, said that "the money given by South Korea to the U.S. for its troops in Korea is now officially the U.S.’s money. Therefore, the money can be viewed as coming from the U.S.’s account."

In addition to Bell’s remark casting doubt on the Korean government’s account of cost sharing, questions linger over precisely how the U.S. should be spending South Korea’s contribution under the SMA. The money contributed by Seoul to the fund is slated for four expense categories: wages for South Korean employees working at U.S. bases, military-related construction projects, combined defense buildup, and the purchase of logistics equipment. When asked about General Bell’s comments that SMA money was to be used for the base relocations, an official at South Korea’s defense ministry said that the categories of military construction and combined defense buildup can be the ones earmarked for this purpose.

In 2006, spending for military construction and defense buildup accounted for about 40 percent of the total South Korean contribution. U.S. Forces Korea is required to give to the South Korean defense ministry reports of how the money has been spent, but the reports are not detailed enough to specify how the money has been spent, sources say.

"We are not in a position to know that many details regarding how they spend the money," a senior government official said.

Regarding the use of the two categories to help fund the base relocations, Kim of the defense ministry said, "Negotiators did not outline such specifics when they reached an agreement [over the cost of hosting U.S. troops in South Korea], so there is no foundation to the argument that South Korea’s contribution should not be used to pay for the base relocation."

However, Yu of the civic group said that Korea’s contribution to the SMA should not be handed over to the U.S. to spend on its whim without some measure of control in place. Yu said that Korea’s contribution increased in 2007, while the number of U.S. troops stationed in South Korea continued to decrease. Yu said he was also concerned that the U.S. may continue to demand that South Korea increase its contribution to the cost of relocating the U.S. bases.

The problem of how Korea pays into the SMA is another issue surrounding the U.S.-Korea accord. When Seoul and Washington agreed to increase South Korea’s contribution under the SMA in December, South Korean officials announced that the additional 45.1 billion won (US$48.3 million) added to the 2007 budget would be used toward wages for South Korean workers at the bases. However, General Bell said soon after that he would fire South Korean workers or cut programs that employ such workers if the construction of the Pyeongtaek base fails to be completed on schedule because South Korea’s contribution proves inadequate to cover the budget, comments which sparked additional controversy. This situation stems from the fact that South Korea cannot decide on its contribution to the SMA based on specific spending category, but instead pays into it on a lump sum basis. Seoul is currently seeking a change to this payment plan in order to increase transparency in how the money is used.

South Korea pays the U.S. in the hundreds of millions yearly for the stationing of about 30,000 U.S. troops in South Korea; as of December, Seoul under the SMA agreed on a 2007 payment of 725.5 billion won (US$776.4 million) and to pay the same amount in 2008 with an adjustment for inflation. With the 1950-53 Korean War ending with an armistice rather than a peace treaty, the two Koreas are still technically at war.

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