The foreign ministry announced Wednesday that Korea will pay 1.18 trillion won ($1.03 billion) as its share of the cost of stationing American troops here this year, and increase the amount paid in subsequent years by the rise in its defense budget according to a renewed six-year defense cost-sharing deal.
The new Special Measures Agreement (SMA), however, is drawing comments from diplomatic observers that Korea’s portion of the annual cost-sharing could sharply increase year-on-year.
The Ministry of Foreign Affairs unveiled the details of the 11th SMA that Seoul and Washington agreed on earlier this week. The SMA determines Korea’s payments for the upkeep of the 28,500-strong U.S. Forces Korea (USFK) including the cost of Korean workers’ wages, military facility construction and logistics support.
Although the previous SMA expired in December 2019, the two sides could not sign a new deal due to former U.S. President Donald Trump’s demand for a fivefold funding increase from Korea, with the Moon Jae-in administration maintaining its proposal of a 13 percent rise from the previous agreement.
“The two sides agreed on a 13.9 percent increase to 1.18 trillion won for 2021,” the foreign ministry said in a statement, adding that the 2020 funding has been frozen at 1.03 trillion won paid for 2019.
The ministry said the 13.9 percent was the sum of Korea’s defense budget increase of 7.4 percent for 2020 and a 6.5 percent increase in the cost for Korean employees at the USFK.
“The annual rate of increase in Korea’s share of the defense cost from 2022 to 2025 will be in line with annual increases in its defense budget,” it said.
Korea’s defense budget for 2021 increased by 5.4 percent, which will be applied to the 2022 SMA.
The annual increase rate under previous agreements was based on the rise of the consumer price index (CPI), which included a 4-percent cap.
In response to the agreement, the Korea-U.S. Alliance Foundation and Korea Defense Veterans Association welcomed the long-awaited conclusion, describing it as a win-win for the two countries.
“The conclusion of the 11th SMA will not only contribute to the strengthening of the combined defense capabilities and stable stationing conditions for the USFK, but also deepen and develop the ROK-U.S. alliance ― a linchpin of peace, security, and prosperity in Northeast Asia ― in a mutually-reinforcing and future-oriented manner,” they said in a statement.
However, diplomatic experts said the negotiations were questionable.
“I think it is a mistake to apply the annual rate hike of its yearly defense budget to Korea’s share,” said Shin Beom-chul, the director of the Center for Diplomacy and Security at the Korea Research Institute for National Strategy.
Park Won-gon, a professor of North Korean studies at Ewha Womans University, echoed Shin’s view.
“It is a huge burden for Korea to pay its annual share based on the increase in the defense budget,” Park said.
Last year, the Ministry of National Defense unveiled its mid-term defense plan from 2021 to 2025 that proposed an average year-on-year defense spending increase of 6.1 percent.
“In addition, unlike previous SMAs, the latest version does not have a maximum 4-percent annual cap, meaning that Korea will have to pay a sizeable amount that could reach 1.5 trillion won in 2025,” Park added.
In response to the concerns over Korea’s increasing share, a senior foreign ministry official said the new SMA deal will ensure a stable stationing environment for the USFK and job security for Korean employees on U.S. military bases here.
“We have made the decision to use the rate of defense spending to show that Korea responsibly contributes to its alliance with the U.S.,” the official said.
“In addition, the rate of defense budget increases is less volatile than the CPI, so we did not introduce a maximum cap.”
Shin also said, “Given that we agreed to the sharp increase in Korea’s share, we should have improved measures to enhance the transparency of the U.S.’ SMA spending in return. However, there is nothing regarding this.”
Currently, about 75 percent of the salaries of Korean staff working in the U.S. military bases across the Korean Peninsula comes from the Korea’s SMA contribution, while about 25 percent comes from the U.S. government.
However, the new SMA stipulates that the portion will increase to 87 percent, ensuring their secure employment.
Due to the deadlocked SMA negotiations, thousands of Korean workers were put on unpaid leave for several months last year, but later, the U.S. accepted Korea’s proposal to pay their wages first before a deal was reached.
