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Jang Won-sam of the South Korean Ministry of Foreign Affairs and Timothy Betts of the US State Department initial a draft of the Special Measures Agreement (SMA) on defense cost-sharing on Feb. 10. (provided by MOFA)

The share of US Forces Korea (USFK) defense costs to be borne by South Korea this year was set at 1.04 trillion won (US$925.28 million), or 78.7 billion won (US$70.02 million, or 8.2%) more than last year. While the amount was lower than the US$1 billion initially “declared” by the US as the minimum acceptable, the agreement period was set at just one year – which immediately leaves South Korea facing renewed pressure for an increase.

At 2:30 pm on Feb. 10 at the Ministry of Foreign Affairs (MOFA) building in Seoul’s Doryeom neighborhood, a draft of the 10th Special Measures Agreement (SMA) on defense cost-sharing was initialed by Jang Won-sam and Timothy Betts, the respective representatives of MOFA and US State Department’s to the defense cost-sharing talks. The agreement came 11 months after the two sides began negotiations in March 2018. The total amount in the agreement was set at 1.04 trillion won, which reflected South Korea’s 2018 share of 960.2 billion won (US$854.3 million) with an additional 8.2% increase in the 2019 national defense budget. While it was lower than the US$1 billion that the US has been demanding, the Moon Jae-in administration also backtracked on its insistence of a 1 trillion won limit as a “psychological Maginot line” for the South Korean public.

The administration additionally agreed to demands to have the agreement valid for one year, a demand the US suddenly made around late December as a command from the highest echelon. After initially demanding a reduction from the 2018 share of 960.2 billion won, the South Korean government moved in the late stages to suggest an amount of 999.9 billion won (US$889.6 million) with an agreement period of three to five years; the US, for its part, backed off from its demands for 1.44 trillion won (US$1.28 billion) and an agreement period of 10 years.

With the US’ late-stage insistence on a one-year agreement duration being based on President Donald Trump’s aims to reworking the standards for its defense cost-sharing with allies, observers predicted US pressure for a larger share was poised to intensify when talks toward the 11th SMA begin during the first half of 2019. Washington’s aims of touting increased defense shares from allies as a diplomatic achievement by the Trump administration ahead of the Nov. 2020 presidential election suggest a strong likelihood that the issue will weigh heavily on the next negotiations.

A MOFA official described the US position as one of “developing integrated standards and guidelines for its defense cost-sharing arguments with allies,” adding that “efforts to establish those principles are under way.” But with those guidelines apparently not decided until late November or early December of last year, it remains to be seen what kind of “new principles” the US will present and when, the ministry said.

“Aside from South Korea and Japan [which fall under the Special Measures Agreement], the cases have all been different for the NATO nations and the countries of the Middle East, so we’re also curious to see how [the US] plans to increase its allies’ shares,” a senior administration official said. The two sides’ decision on Feb. 10 to extend the current agreement’s terms “upon mutual consent” if no new agreement can be reached by the end of this year also appeared to reflect concerns about the “uncertainty” on the US side.

US pressure to add a new “operational support” provision for costs related to the Korean Peninsula deployment of US strategic weaponry – which has been one of the main points of contention in the negotiation – was withdrawn in response to the South Korean side’s claims that it did not accord with the agreement’s intent and goals in terms of sharing USFK stationing costs. In its place, expenses for the operation of USFK bases, including electricity, gas, and water charges, were reflected in part in specific provisions for logistical support in kind.

Measures were also established for promoting transparency and responsibility in defense share spending. Exceptional cases of cash support for military construction were abolished, and the percentage of cash support for design and supervision costs, which had been restricted to 12% of the construction allotment, was made eligible for reduction based on the results of disbursement. The automatic rollover of unspent logistical support funds was limited, and the 75% ceiling on the percentage of personnel cost support for South Korean employees of USFK was eliminated.

Following Ministry of Government Legislation review and passage at a vice minister-level meeting and Cabinet meeting, the agreement initialed on Feb. 10 is to go into effect after it has been officially signed by both sides and ratified by the National Assembly.

By Kim Ji-eun, staff reporter

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