[Yang Nak-gyu's Defence Club] Defense Cost-Sharing Agreement... Is the Bill Settled?

Steady Increase in US Weapon Imports Under Moon Jae-in Government
Continuous Demands Possible for Strategic Weapon Deployment Costs on the Korean Peninsula

On the 14th, the F-35A stealth fighter jet was unveiled at the 'Seoul International Aerospace and Defense Industry Exhibition 2019 Media Day' held at Seoul Airport in Seongnam, Gyeonggi Province. / Seongnam - Photo by Jinhyung Kang aymsdream@

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] As South Korea and the United States have decided to increase defense cost-sharing payments annually until 2025, concerns are emerging that adding more U.S.-made weapons or paying indirect costs for military equipment on the Korean Peninsula might economically benefit the U.S. even more.

On the 13th, a military official stated, "We have agreed with the U.S. not to include costs related to the deployment of strategic weapons requested by the Trump administration, the operation costs of the Terminal High Altitude Area Defense (THAAD) system, expenses related to the rotational deployment of U.S. Forces Korea, and the purchase costs of U.S.-made weapons in the defense cost-sharing payments."

Weapon purchases are, in principle, outside the scope of the defense cost-sharing agreement. Although South Korea and the U.S. can link weapon purchases with defense cost-sharing negotiations as a bargaining chip, officially including them in the agreement is impossible. When negotiating with the Trump administration, the South Korean government emphasized that "South Korea significantly contributes to the ROK-U.S. alliance through weapon purchases outside the framework of the Special Measures Agreement (SMA)." This is why voices have called for using this as a negotiation card before concluding the cost-sharing agreement.

▲Costs of U.S.-made weapon acquisitions under the current administration= In fact, the amount spent on acquiring U.S.-made weapons has significantly increased under the current administration. Before the Moon Jae-in government took office in 2016, the total overseas weapon acquisition amount was 745 billion KRW, of which 456.7 billion KRW (61%) was for U.S.-made weapons. In the first year of the administration, 2017, this increased to 1.5216 trillion KRW, with the U.S. share rising slightly to 68% (1.0359 trillion KRW). In 2018, out of 3.8878 trillion KRW, 3.2636 trillion KRW was for U.S.-made weapons, jumping the share to 84%.

This trend has continued to date. In 2019, overseas weapon acquisitions slightly decreased to 2.5389 trillion KRW (U.S.-made weapons 2.099 trillion KRW, 82%). Subsequently, the amount spent on U.S.-made weapons increased again, with 3.5095 trillion KRW worth of weapons purchased from the U.S. last year alone, accounting for 76% of the total. Considering this year’s U.S.-made weapons such as the GPS-guided bombs (2000 lbs class) 4th project, air combat maneuvering training system, and F-15K performance upgrades, it is projected that the amount payable to the U.S. could exceed 4 trillion KRW.

Last year, U.S.-made weapon acquisition amounted to 3.5095 trillion KRW... accounting for 76% of the total
Defense cost-sharing negotiations concluded, but continuous pressure on costs for strategic weapon deployment on the Korean Peninsula remains possible

▲Costs for deploying strategic weapons on the Korean Peninsula= Going forward, the U.S. may continuously demand sharing the costs of deploying strategic weapons on the Korean Peninsula. Representative strategic weapons deployed by U.S. forces on the peninsula include nuclear-powered aircraft carriers and submarines, B-1B (Lancer) strategic bombers, B-2 (Spirit) stealth bombers, and F-22 and F-35 stealth fighters.

Among strategic weapons, the assets with the highest maintenance costs are aircraft carriers and submarines. These assets use nuclear fuel, making it difficult to estimate the cost per sortie. However, considering that the USS Ronald Reagan, part of the U.S. 7th Fleet conducting joint exercises with the South Korean Navy in the East and West Seas and rotating deployment on the peninsula, cost about 5 trillion KRW to build, and that the annual operating and carrier fuel costs alone exceed 400 billion KRW, the cost per sortie is expected to be substantial. When an aircraft carrier is deployed as part of a carrier strike group, costs increase further. If accompanied by four Aegis destroyers, two nuclear submarines, and cruisers, the value easily exceeds 20 trillion KRW.

Strategic bombers are also costly. It is estimated that a single sortie of a B-2 bomber over the Korean Peninsula costs approximately 6 billion KRW. Stealth aircraft lose their stealth coating on the exterior after each sortie, and the stealth coating is known to be expensive. Additionally, when a B-1B bomber sorties to the peninsula, aerial refueling tankers and escort fighters must also fly, so experts estimate the total unit cost for these forces to be around 2 to 3 billion KRW per sortie. If B-2 and B-1B bombers sortie simultaneously, deployment costs reach approximately 8 to 9 billion KRW. Experts estimate that a single sortie of F-22 and F-35 stealth fighters to the peninsula costs about 100 to 200 million KRW.

▲Is there also a demand for THAAD maintenance costs? Military authorities have estimated the annual operating and maintenance cost of one THAAD battery at about 2 billion KRW. However, some U.S. research organizations claim that the X-band radar, currently in terminal mode at the Seongju base, costs at least 28.5 billion KRW and up to 44.9 billion KRW.

Additionally, on the 10th (local time), General Abrams appeared at a virtual hearing hosted by the U.S. House Armed Services Committee and responded to questions regarding North Korea’s missile capability enhancement by stating, "One of the three specific capabilities being developed by the Missile Defense Agency (MDA) has already been deployed in South Korea."

This suggests that the THAAD system in Seongju, Gyeongbuk, and the Patriot (PAC-3 MSE) interceptor systems at major bases will be upgraded in three phases, and the U.S. may pressure the South Korean government for additional costs.