[Yang Nak-gyu's Defence Club] Will the Defense Cost-Sharing Payment Decrease with the Dispatch Decision?

[Image source=Yonhap News]

[Asia Economy Reporter Yang Nak-gyu] At the time when our government decided to dispatch troops solely to the Strait of Hormuz, South Korea and the United States are discussing defense cost-sharing payments, drawing attention to how much this will affect the determination of the cost-sharing amount. There is growing hope that the troop dispatch decision might allow for a slight increase in the defense cost-sharing payments.

On the 21st, South Korea and the U.S. appear to be reaching a consensus toward a slight increase in the defense cost-sharing payments for the U.S. Forces Korea. Especially with the April parliamentary elections approaching, in order to obtain parliamentary ratification from the 20th National Assembly, practical negotiations must be concluded within the next month, so the pace of negotiations is expected to accelerate. Considering parliamentary ratification, our government’s position is that it cannot accept anything less than maintaining the existing Special Measures Agreement (SMA) framework with a slight increase in the cost-sharing payments. In other words, "a negotiated agreement means a slight increase."

South Korea and the U.S. held the 6th meeting for concluding the 11th SMA in Washington, U.S., on the 14th and 15th. After the meeting, Ambassador Jung met with reporters at Washington Dulles Airport on his way back and said, "We persuaded the U.S. side to receive a fair evaluation for our contributions as an alliance, and both sides expanded their understanding."

It is known that through negotiations so far, South Korea and the U.S. have narrowed their opinions to a single-digit percentage increase in the defense cost-sharing payments. Considering that last year’s defense cost-sharing payment was about 1.0389 trillion won, the government is setting a ceiling at a level not exceeding approximately 1.15 trillion won. Last year’s defense cost-sharing payment was 1.0389 trillion won, an 8.2% increase from the previous year.

The contract duration is also a negotiation topic. Initially, the cost-sharing negotiations were conducted on a five-year basis, but in February last year, South Korea and the U.S. concluded a cost-sharing agreement of about 1.0389 trillion won with a one-year validity period. However, in this negotiation, both sides proposed a multi-year validity period, and it is reported that they agreed on three years.

However, variables remain. U.S. President Donald Trump is one. Even if the negotiation team reaches a consensus, as was the case during the 10th SMA negotiations at the end of 2018, if President Trump does not approve, the negotiations could instantly return to square one. Ambassador Jung Eun-bo, South Korea’s chief negotiator for the defense cost-sharing talks, has recently frequently mentioned "creative alternatives," which is interpreted as meaning that while the negotiations will practically conclude with a slight increase, they are seeking a way for President Trump to explain it domestically.

There is also the issue of whether to include costs for the U.S. military’s rotational deployment on the Korean Peninsula or off-site training costs, which were not included in the SMA, in the cost-sharing payments. When the U.S. demands that South Korea share these costs as part of the defense of the Korean Peninsula, South Korea counters by emphasizing contributions to the Korea-U.S. alliance not included in the SMA, such as purchasing U.S.-made weapons, constructing the Pyeongtaek U.S. military base, and supporting U.S. forces in international conflicts.

After the 6th meeting, the Ministry of Foreign Affairs stated, "Both sides expanded mutual understanding and consensus but confirmed that differences in positions still remain," leading to analysis that South Korea’s explanations had some effect.