Unfair Share of Defense Costs after Tying Them to the National Defense Budget. But Why?

[경향신문]

On March 10, when the Ministry of Foreign Affairs announced that South Korea and the United States had reached an agreement in its negotiations on the Special Measures Agreement, helicopters were lined up at Camp Humphreys, a U.S. base in Pyeongtaek-si, Gyeonggi. Lee Suck-woo, Pyeongtaek

The negotiations for the eleventh Special Measures Agreement (SMA) on the defense costs of the United States Forces Korea (USFK), which had continued a tug-of-war for over a year and a half under the Donald Trump administration, finally reached an agreement 46 days after the launch of the Joe Biden administration. The agreement is expected to be a major turning point in restoring trust between the two countries. But a closer look at the details shows that the latest agreement, with a drastically increased amount and new standards for increasing the amount, is far from a reasonable and fair sharing of costs.

According to the eleventh Special Measures Agreement released by the government on March 10, this agreement will be applied for six years from 2020 until 2025. In the case of the year 2020, which passed without an agreement, the two countries will apply the existing agreement, so the latest agreement is a 1+5 multiple year agreement. This year, South Korea will shoulder over 1.18 trillion won, a 13.9% increase from the total amount the previous year. From the following year, the two countries will raise South Korea’s contribution every year after reflecting the increase in the defense budget. The government also announced, “The agreement also stipulates that in case of an absence of an agreement, Korean employees of the USFK will receive wages on par with the previous year’s wages,” and said, “It is important that we prevented a recurrence of the massive furloughs forced on South Korean employees last year.”

But the defense costs shouldered by South Korea jumped the steepest in the latest agreement since it was increased by 25.7% in the fifth agreement in 2002, and the agreement also stated that the amount would increase at a high rate every year. So compared to previous negotiations, the latest agreement ended up working against South Korea. The biggest problem is that by promising to increase our contribution every year by applying the rate at which the defense budget is increased during the negotiation period, South Korea will leave a precedent, which is likely to be applied in future negotiations.

According to the Medium-Term National Defense Plan for reforms in national defense, the government decided to increase the defense budget every year. So if we link the defense costs of the USFK with our defense budget, we will have to shoulder a significantly larger amount every year. In 2022, this year’s increase in the defense budget of 5.4% will be reflected, pushing our burden up to nearly 1.25 trillion won. If we continue to increase our contribution by nearly 6% every year after that, by 2025, the last year of the agreement, South Korea will have to spend nearly 1.5 trillion won. Last year, former U.S. President Trump refused the South Korean government’s proposal of a 13% increase and demanded a 50% increase. South Korea will eventually pay the amount that President Trump asked for in 2025. This is the first time that the two countries have linked the annual increase in defense spending with the increase in the defense budget during the agreement period. Until now, the two countries had applied the yearly inflation rate during the agreement period and restricted it so as not to exceed 4%. So the amount actually increased by 1-2% every year. The problem is that there is no reason to link the defense costs of the USFK with the increase in the defense budget.

A senior government official explained, “The defense budget is an objective indicator finalized after a review by the National Assembly, and can be seen as an indicator representing the country’s power,” and said, “It will be an opportunity to strengthen reciprocity in the alliance.” But defense spending cannot be an objective indicator symbolizing a nation’s power. This also goes against the basic philosophy of the Special Measures Agreement, which first began as a way for South Korea to share the costs of the USFK in line with its economic growth. One diplomatic source pointed out, “If it were the GDP, maybe, but the explanation that defense spending is an indicator representing a country’s power is absurd.”

The latest agreement is not much different from the one South Korea proposed and Trump refused last year. The Biden administration appears to have taken full advantage of the frame established by Trump and pressed South Korea in the negotiations. A diplomatic source familiar with the SMA negotiations said, “There are no grounds to drastically increase defense spending when there are no changes to the environment or size of the U.S. Forces stationed in Korea,” and added, “If the goal is to increase our contribution to the ROK-US alliance, then it would be right to seek ways in other areas instead of defense costs.”