"Modernization or Pressure?"... The "Alliance Bill" Facing the Lee Administration [Korean Peninsula 3.0]

Burden of Increased Investment Matches the Need for the ROK-US Alliance
US Demands Sharp Defense Budget Hike to 5% of GDP
Debate Over Adjusting and Reducing USFK Role Emerges as a Variable

Editor's NoteThe international situation surrounding the Korean Peninsula is undergoing dramatic changes. North Korea, once seen as a potential partner for unification, is now preparing for a complete severance by declaring itself an "adversarial two-state" entity. The United States, a blood ally, is presenting South Korea with economic and security demands amid its strategic competition with China. The Lee Jaemyung administration was launched under the dual challenge of having to find breakthroughs in both diplomacy with the US and policy toward North Korea amid this volatility. In a three-part series, we analyze the "Korean Peninsula 3.0 Strategy" that the Lee administration must pursue, following the periods of division, war, and Cold War (1.0) since 1945, and the era of reconciliation and conflict (2.0) since the 1990s.

On March 20, 2025, during the ROK-US combined arms cooperative crossing exercise held at the Seogeunso training ground near the Imjingang River in Yeoncheon County, Gyeonggi Province, a K1E1 tank is crossing a 180-meter-long joint bridge. This exercise, conducted as part of the first half of the 2025 ROK-US combined training, involved over 600 troops from the ROK Army's 5th and 7th Engineer Brigades, the US 2nd Infantry Division, and the ROK-US Combined Division. 2025.03.20 Photo by Joint Press Corps

For the Lee Jaemyung administration, which was launched last month, "modernizing the ROK-US alliance" is essentially a bill to be paid. With North Korea's declaration of an "adversarial two-state relationship," inter-Korean relations are now in the midst of the most radical transformation in the 80 years since the division of the peninsula.

The new administration must strengthen the ROK-US alliance to counter North Korea's military buildup under the adversarial two-state framework. At the same time, it must also meet US demands for "modernizing the alliance," which include expanded investments to contain China and to enhance South Korea's own defense capabilities.

US Presents "Alliance Modernization" Bill Immediately After Lee's Election

"The United States and South Korea share an ironclad commitment to the alliance, based on our mutual defense treaty, shared values, and deep economic ties. We are also modernizing the alliance to meet today's strategic environment and to address new economic challenges."

This is part of a statement issued by US Secretary of State Marco Rubio on March 3 (local time) congratulating President Lee Jaemyung on his election. Unlike past statements that simply congratulated the new president and mentioned strengthening the alliance, Secretary Rubio's message notably emphasized "modernizing the alliance."

Diplomatic observers interpret the recent use of "alliance modernization" by Secretary Rubio and other US officials as a veiled reference to South Korea shouldering more security costs. The second Trump administration, under its "America First" policy, is demanding that allies worldwide, including South Korea, share both the military and economic burdens for regional security.

The most prominent example is the demand for a significant increase in defense spending. The Trump administration is asking not only European but also Asian allies such as South Korea to raise their defense budgets to about 5% of GDP. As of this year, South Korea's defense spending is about 61 trillion won, or 2.3% of GDP. This means the US is demanding that South Korea more than double its current defense budget or allocate an equivalent amount.

An increase in South Korea's share of the cost for stationing US troops is another item on the Trump administration's bill. It remains unclear whether this is included in the demand for higher defense spending, but President Trump stated at a cabinet meeting on the 7th, "There are 45,000 US troops (actually 28,500) stationed in South Korea, but South Korea is paying very little," adding, "They should pay $10 billion (about 13.9 trillion won) annually." This is nine times the amount of next year's cost-sharing under the 12th Special Measures Agreement (SMA), which is 1.5192 trillion won.

US Also Demands Participation in China Containment... Discussion of Adjusting USFK's Role

The US demand for alliance modernization goes beyond just increasing defense spending. It also includes adjusting the role of US Forces Korea (USFK), sharing the cost of deploying strategic assets on the peninsula, and having South Korea's military participate in US efforts to contain China?these are all considered elements of alliance modernization by the US.

In the "Interim National Defense Strategy Guidance" distributed by US Secretary of Defense Pete Hegseth in March, the US outlined a plan to focus its military capabilities on countering China, while delegating deterrence against North Korea, Russia, and others to regional allies such as South Korea, Japan, and Europe.

There is already discussion in the US about reducing the size of USFK. The argument is that, since the US military's role in East Asia should shift toward containing China, there is no longer a need to maintain a large ground force in South Korea. Although the House Armed Services Committee passed an amendment to the 2026 National Defense Authorization Act (NDAA) stipulating that USFK should remain at its current level (28,500 troops), the issue is still ongoing.

Dan Caldwell, a former senior advisor to Secretary Hegseth, recently argued in a report that USFK should be reduced to about 10,000 troops to better focus on containing China. He also cited the possibility that, in the event of a conflict in another regional area such as Taiwan, USFK forces might not be able to be deployed due to opposition from South Korea.

However, these US demands are difficult for South Korea to accept. If USFK's role shifts from deterring and defending against North Korea to containing China, South Korea would be left to directly face North Korea's increasingly sophisticated nuclear and missile threats without effective means of countering them.

North Korea has been focused on building up its military capabilities around the time of its two-state declaration. Its nuclear and missile forces are particularly notable. According to a report released on the 17th by Lee Sangkyu, Director of the Nuclear Security Office at the Korea Institute for Defense Analyses (KIDA), North Korea's nuclear arsenal is estimated at 127 to 150 warheads this year, projected to increase to 201 to 243 by 2030, and to 344 to 429 by 2040. This reflects the "exponential" expansion that Kim Jong Un pledged in 2023.

North Korea's conventional forces, once considered inferior to South Korea's, are also being rapidly modernized. North Korea has concentrated the economic and technological rewards it gained by dispatching about 15,000 troops to the Russia-Ukraine war on modernizing its conventional military. KIDA estimates that the economic benefit North Korea has derived from the Russia-Ukraine war amounts to about 28.7 trillion won.

As the strategic alliance among North Korea, China, and Russia grows stronger, South Korea risks facing greater difficulties in managing its relationship with North Korea if it leans too far toward containing China. Kim Jong Un has already strengthened his strategic alliance with Russia, even using the term "blood alliance" to describe the relationship.

Ahn Kyubaek, the nominee for Minister of National Defense, is responding to questions from lawmakers at the confirmation hearing held by the National Defense Committee of the National Assembly on the 15th. Photo by Yonhap News

Transfer of Wartime Operational Control Back on the Table... Experts: "Prioritize and Respond Strategically"

Some observers believe that the issue of transferring wartime operational control (OPCON) could be used as a bargaining chip in response to US demands for alliance modernization. The idea is to accelerate OPCON transfer or revise the ROK-US Nuclear Cooperation Agreement to secure South Korea's nuclear technology, in exchange for agreeing to higher defense spending or cost-sharing. Since the second Trump administration is also negative about stationing US troops overseas, negotiations could move quickly.

However, the main drawback of early OPCON transfer is the significant burden it would place on South Korea. Lim Cheolkyun, a senior research fellow at the Korea Institute for National Strategy, estimated at a policy seminar hosted by the People Power Party at the National Assembly in Yeouido, Seoul on the 17th, that the future South Korean military would need a budget of 34.999 trillion won to lead combined operations after OPCON transfer. This is about 60% of this year's South Korean defense budget.

In addition, the intangible benefits of USFK retaining OPCON?such as deterrence against North Korea and nuclear deterrence?are also significant, according to military analysts. The Joint Chiefs of Staff reportedly conveyed to Defense Minister nominee Ahn Kyubaek during a briefing on the 9th of last month that OPCON transfer during the Lee administration's term would be difficult.

Experts advise that the Lee administration should "manage" the ROK-US alliance by conceding to some of the Trump administration's demands while firmly protecting South Korea's core interests. Since it is now difficult to secure both security and economic benefits from the US as in the past, they recommend setting clear priorities based on South Korea's own standards.

Shin Beomchul, former Vice Minister of National Defense, said, "In economic areas such as tariff negotiations, the goal should be to secure a relative advantage over competitors such as Europe, Japan, and China. When it comes to increasing defense spending, a flexible approach is needed, such as including budgets related to relocating military airports." He added, "Regarding the strategic flexibility of USFK, we should accept some aspects, but the main goal should be to ensure that US ground forces continue to be stationed in South Korea."

Um Hyosik, Secretary-General of the Korea Defense and Security Forum, also commented, "The US demands are twofold: to allow strategic flexibility for USFK, such as redeploying troops to other regions as the US sees fit, and to have South Korean forces play a similar role in contingency situations (such as in Taiwan). While it may be necessary to accept some degree of strategic flexibility for USFK as long as it does not directly affect South Korea's security, expanding the role of South Korean forces in such contingencies should be considered only as a last resort."