The Ministry of Foreign Affairs announced on the 7th (local time) that it reached a principle agreement as a result of the Korea-US defense cost sharing negotiations. The photo shows Korea-US Defense Cost Sharing Negotiation Ambassador Eun-bo Jung (left) and Donna Welton, US State Department Defense Cost Sharing Negotiation Representative, at a meeting in Washington, DC, to sign a Special Agreement on Defense Cost Sharing (SMA). Provided by the Ministry of Foreign Affairs
On the 10th, the contents of the 11th Special Agreement on Sharing of Defense Expenses (SMA) for US Forces in Korea were released on the 10th. ① Last year’s contribution, which was in the blank of the agreement, is frozen at 1.38.9 billion won, the level in 2019. ② This year, the US will pay 1,183.3 billion won, an increase of 13.9% compared to the previous year. ③ The amount of contributions will be raised every year for four years from 2022, and the rate of increase in defense expenditures in Korea is linked.
Compared to the Donald Trump administration’s request for a 50% increase in defense cost contributions, 13.9% appears to be a good figure. However, there is a’trap’ in ③. Due to the linkage of the increase rate of defense expenditures rather than the rate of inflation, the increase in the amount of increase every year rises sharply. The total contribution to Korea in 2025 will exceed 1.5 trillion won. In four years, it will approach the ‘50% increase’ that former President Trump initially requested.
The government explained on the 10th that it was “the best result of a confident negotiation,” but it is pointed out that the actual content is close to the’Cho Sammosa (朝三暮四)’.
Switching to’Defense Expenditure’ Linked System…Inevitable to increase 6% annually
Although former President Donald Trump was kicked at the last minute, last year, the ROK-US negotiating team came up with a provisional agreement with a 13.6% increase as the main point. There was an expectation that the inauguration of Joe Biden’s administration, which emphasizes the ROK-US alliance, could reduce the extent of the increase somewhat, but it resulted in a ‘0.3% increase’. 13.9% is the third highest increase rate after the 5th agreement in 2002 (25.7%) and the second agreement in 1994 (18.2%).
The Ministry of Foreign Affairs explained, “The increase in the labor cost of Korean workers in the USFK facility has increased by an exception of 6.5% (about 66.5 billion won).” As the contributions were frozen last year, there must have been pressure from the United States to raise the contributions this year.
The problem is that the burden on Korea is getting bigger and bigger. In the mid-term defense plan announced last year (2021-2025), the government decided to raise defense expenditures by an annual average of 6.1%. If this is applied, the total amount of contributions that Korea will share in 2025 will exceed 1.5 trillion won. Last year, Korea’s inflation rate was 0.5%. It also did not include a rule that puts an upper limit on the increase in case of unexpected variables such as a surge in defense spending.
There is no precedent for applying the rate of increase in defense expenditures to multi-year agreements. In the 9th agreement, which ended in 2018 from the 7th agreement in 2007, the US and Korea calculated defense costs in a way that reflects the rate of inflation in the previous year’s contributions. The government did not come up with a convincing explanation as to why defense spending is the norm. A high-ranking official from the Ministry of Foreign Affairs said, “It is true that the amount of the increase in the share is not small, but we must pursue an alliance relationship that is suitable for our national strength.”
Peace Network CEO Jeong Wook-sik pointed out, “If we raise it to the 6% level every year, our contributions will inevitably increase like a snowball.” Ewha Womans University professor Park Won-gon also said, “It is to give the United States a large sum that is difficult to say that it is reasonable, and we have to consider what the Korean government has obtained as a counter-payment.”
Total amount and rate of increase in Korea-US defense cost negotiations. Graphic = Reporter Shin Dong-jun
“I have a lot of contributions already accumulated.”
The diplomatic authorities explained, “In the first place, our government’s luck was not great.” In last year’s negotiations, the government proposed a 13.6% increase and stressed that “this is the maximum.” It was a figure to deter the 50% increase, but 13.6% had a side that caught the ankle as a result. In terms of the negotiating physiology, the US would have requested an additional increase with 13.6% as the default, because it would have been difficult for the Korean negotiating team to find a justification for fulfilling the request, asking for a further increase from 13.6%.
An official from a state-run research institute who requested anonymity evaluated that “the Biden administration freely boarded the negotiations made by the Trump administration.”
As the Korean burden increases, the controversy over the unused amount accumulated by the USFK is expected to reignite. It is known that the total amount of unused amount incurred during the 9th (2014-2018) and 10th (2019) agreements amounted to 67.8 billion won. Of the share of defense expenses, personnel expenses are generally used in full, but military facilities improvement expenses are often not executed.
Former British Ambassador Hwang Joon-guk, who served as the negotiating representative at the time of the 9th agreement, said, “The nature of the defense cost share is the administrative cost incurred for the presence of US forces in Korea.” It is correct to go toward reducing the defense cost again,” he pointed out.
The government has put the greatest achievement on strengthening the employment security of Korean workers. The ROK and the United States raised the lower limit of the labor cost allocation ratio (the ratio of the total labor cost of workers to the Korean side) from 75% to 87%. At a briefing, Eun-bo Chung, the ambassador of the Korean-US defense sharing negotiations, stressed that “the first priority was placed on the stability of the employment of Korean workers.”
It is an achievement that the share of the Korean contribution eventually increased to the Korean people. However, there are more objections that it is insufficient performance to make up for the’loss’ incurred in the total amount of contributions, which is the’core’ of the SMA agreement.
Youngbin Jo reporter [email protected]
Kang Yoobin reporter [email protected]
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