[Yang Nak-gyu's Defense Club] Will the THAAD Cost Ultimately Come Out of Our Pockets?

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu Reporter] As conflicts between the United States and China erupt simultaneously across military, economic, and diplomatic fronts, speculation has arisen that performance upgrade work has begun at the Terminal High Altitude Area Defense (THAAD) base in Seongju, Gyeongbuk, which is managed by the US military, raising expectations that the controversy will intensify. In particular, attention is focused on the possibility that the cost issues related to the THAAD deployment could be linked to defense cost-sharing.

The background is drawing attention as the US mentioned the possibility that South Korea might bear the construction costs of $49 million (approximately 58 billion KRW) for operating the THAAD base in Seongju, Gyeongbuk, in next year's defense budget. According to the US Department of Defense’s fiscal year 2021 budget proposal submitted to Congress, the US Army allocated $49 million for "Seongju area development costs." Of this, $37 million was assigned for armory, security lighting, and cybersecurity, and about $7 million for electricity, sewage, road paving, and drainage. This is the first time that costs related to the construction of the THAAD base in Seongju have been included in the US Army budget.

Controversy over the costs of THAAD deployment has continued since before. In 2016, when Kim Kwan-jin, then Director of the National Security Office at the Blue House, appeared before the National Assembly’s Steering Committee, former Justice Party lawmaker Roh Hoe-chan asked, "Who pays for the (THAAD) operating costs?" Kim replied, "The US side pays for the operating costs." When Roh further pressed, "The US side’s costs will be renegotiated in the defense cost-sharing talks starting in 2018, so there is a possibility that from 2019 onward, it could be included in the defense cost-sharing burden we bear for the US Forces Korea," Kim gave a vague answer, saying, "In a broad sense, the defense cost-sharing amount is divided into categories such as personnel costs, facility costs, and other expenses for the US Forces Korea, so if the item is included, it could be incorporated," implying that defense cost-sharing funds might be used for THAAD operating costs.

In February 2018, former Minister of National Defense Song Young-moo responded to a question from Kyung Dae-soo, a member of the Liberty Korea Party, during a National Assembly National Defense Committee plenary session asking, "Is there a possibility that the US will demand that THAAD base costs also be borne as part of defense cost-sharing?" Song replied, "Because there is such a possibility, we are strategizing whether to adopt a lump-sum or cost-based approach for the defense cost-sharing agreement." Song’s response was interpreted as a flexible stance to pay defense cost-sharing fees in preparation for a possible US demand for an increase in defense cost-sharing contributions.