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Ministry of Foreign Affairs defense cost sharing negotiation representative Jang Won-sam shakes hands with his State Department counterpart Timothy Betts during senior-level meetings on the SMA to discuss a cost sharing agreement for the THAAD missile defense system in Honolulu on Mar. 7. (provided by Foreign Ministry)

A first senior-level meeting was held in Hawaii on Mar. 7–9 for the signing of the 10th South Korea-US Special Measures Agreement (SMA) on defense cost-sharing. It effectively marked the opening of negotiations on the sharing of US Forces Korea (USFK) costs as of next year. When the 9th SMA passed the National Assembly in Apr. 2014, it was accompanied by a supplementary opinion requesting that all future agreements be submitted to the National Assembly ahead of the government’s budget plan. For this request to be honored, talks between South Korea and the US would have to finish no later than September.

Speaking to the press after returning from the first meeting, members of Seoul’s delegation predicted tough talks ahead. The predictions that the US will ratchet up its calls for a greater share of defense costs from South Korea are not a surprise. US President Donald Trump has pressured for a larger share from early on, characterizing South Korea as a free rider in security terms. Only a few days ago, he was again publicly targeting South Korea, declaring, “We lose money on trade, and we lose money on the military.” At the same time, defense cost-sharing talks have never been easy. US pressures for a large share have been a constant – and can’t be used as an excuse.

Evidence has surfaced of a behind-the-scenes agreement during the ninth SMA talks that violated the principle of in-kind support. That principle, which holds that support for USFK military construction is to be provided in kind through the building of facilities rather than in cash, was introduced as a preventive measure after a growing public backlash to the USFK holding on to South Korea’s share of defense costs and using it for lending and its Pyeongtaek military base relocation effort. During the last negotiations, however, the principle was violated by an exception allowing cash support for construction of US Sensitive Compartmented Information Facilities (SCIFs) – which was handled under a veil of secrecy. With the current negotiation team pledging transparency, I would like to believe such a thing will not happen again.

One of the things South Korea will have to see through in the talks is the return of interest earnings from the US military’s amassing of unspent defense contributions. USFK began accumulating contributions in 2002, with a fund totaling more than 1 trillion won (US$930 million) by the late ’00s. As of late 2016, the balance stood at 333.1 billion won (US$307.8 million). USFK deposited the funds into Community Bank, which entrusted them in turn to Bank of America – drawing accusations of using South Korean taxpayer money for moneylending.

Amid growing calls for the earnings on interest to be returned, the South Korean government sent a questionnaire to the US Defense Department in June 2014 inquiring into Community Bank’s legal status and the amount of interest earned. The Pentagon’s reply, which came 15 months later in Sept. 2015, absurdly claimed that the interest earnings went toward Community Bank operation costs rather than USFK and should just be forgotten.

This was reported to the National Assembly by the Park Geun-hye administration, which said it would give up trying to recover the interest earnings and pledged to “examine ways of reasonably reflecting them in the total amount of defense contributions in future negotiations.” It smacked strongly of an attempt to dodge responsibility, but a promise is a promise. Any attempt by Seoul to pass this off as a past administration’s actions will just plant the seeds of distrust in another administration. While the Pentagon maintains that the amount of interest cannot be calculated, data obtained from courts and other sources by the group Solidarity for Peace and Reunification of Korea put interest earnings at 56.6 billion won (US$52.6 million) for the two years from 2006 to 2007 alone.

Cost-sharing negotiations always include a lot of talk and end up riddled with flaws. With two parties involved, South Korea is not going to always get its way. But matters of principle are different. The practice of equivocating on these matters without assigning blame where it is due is a matter of national dignity. I look forward to seeing different negotiations this time around.

By Park Byong-su, senior staff writer

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