23.02.2019 Author: Konstantin Asmolov

US and South Korea Finally Signed an Agreement on Sharing Military Expenses


In a number of previous articles on military cooperation between the USA and South Korea we have tackled the problem of reaching agreement on Seoul’s contribution to the expenses involved in maintaining the US military presence in South Korea. These expenses include the salaries of South Korean staff working in US bases, as well as material and technical support for the US’s military facilities in the country.

With the previous five-year agreement on the financing of the US’s military presence in South Korea due to expire on December 31, 2018, the two countries started discussing the terms of the new agreement on March 7, 2018. By the end of the year there had been 10 rounds of talks, but Donald Trump’s repeated demands that the US’s ally should pay a greater share of the expenses related to its own security prevented the two sides from reaching a consensus.

Initially the USA had sought to increase South Korea’s contribution to $1.6 billion, almost double the existing amount. The demand was then reduced to $1.4 billion, and then again to approximately $1.25 billion a year, which is still almost one and a half times the previous contribution of $860 million, or 960 billion won, which amount was indexed to inflation. The negotiations involved a clash of two different “red lines”: 1 trillion won is, for South Korea, something of a psychological threshold, while $1 billion, for the US, is also more than simply a sum of money.

Washington also demanded that Seoul cover the cost of military expansion on the Korean peninsula, in the event that strategic armament became necessary.

In addition, while South Korea was aiming to conclude a new agreement for a term from three to five years, the USA insisted on a one-year term.

By the beginning of 2019 the discussions had become something of a battle of wills in which each side was sticking to its position as a matter of principle.

As independent analysts have noted, many in South Korea’s ruling coalition considered the US demands to be excessive. The amount allocated for defense spending in South Korea’s 2019 budget had already been increased by 7.5% (46.7 trillion won, or $41.7 billion) to cover the cost of the country’s military reforms. Moon Jae-in’s administration is probably worried that the leaders of the main liberal parties will object to an increase in contributions to the cost of the US military presence in the country, on top of the increase in the defense budget. The South Korean government is also faced with a number of social and economic problems, including a rise in unemployment and the low level of pensions in the country, and consequently it would not be a good idea to increase spending unless it is really necessary. Moon Jae-in has also had to publicly deny a claim made by the moderate Conservative newspaper JoongAng Ilbo that when the leaders of South Korea and the USA met in Argentina in November 2018 the US President demanded an annual payment of $1.2 billion (1.34 trillion won) from South Korea.

In contrast, the Conservative opposition, which is in favor of retaining the US military presence in the country, considers that it is not a good idea to try and bargain with the US on this issue. Lee Ha-Kyung, the senior editor of JoongAng Ilbo, describes the US presence in the country as a living proof of the union between the two nations: The United States is our most important partner in preventing an invasion by North Korea, and its strategic interests, unlike those of Russia, China or Japan, do not pose any territorial threat to Korea (sic!), and it dissuades Russia from expanding southwards and China from expanding into the Pacific Ocean region. He also considers that if the USA withdraws from the country South Korea’s investment ratings will be damaged and “our economy will suffer a fatal injury” and Japan might start thinking about a nuclear weapons programme.

On the other hand, they are aware that the US may withdraw its military presence from South Korea during Donald Trump’s presidency: for them, this possibility is “a grim reminder of the nightmare in 1979 at the end of the Park Chung Hee administration, when Jimmy Carter tried to pull the U.S. forces from South Korea.”  In their view, Donald Trump is planning to withdraw the troops in order to help reduce the US spending deficit caused by his large-scale tax cuts.  Immediately after the Singapore summit, he announced a plan to terminate the joint military exercises, which would “save us a tremendous amount of money.” Donald Trump then demanded the withdrawal of the troops because “there’s no reason to spend $3.5 billion on them.” The Defense Secretary, James Mattis, objected to this, saying that maintaining the US military presence on the Korean peninsula helps “prevent a Third World War,” and resigned his post. The present author would add, however, that, given the military potential of South Korea’s own army, the US presence there has a purely symbolic significance.

In the new year the USA set a deadline of 15 April for reaching an agreement, and stated that if the negotiations are still at a stalemate by then, the South Korean staff in the US bases will have their contracts suspended. South Korea then decided to appeal to a third party, not involved in the negotiations, for help in resolving the dispute, for example US Secretary of State Mike Pompeo. Both sides were conscious of the fact that the second summit between the US and North Korea was fast approaching.

And then, on February 3, 2019, a diplomatic source in South Korea claimed that the two sides were both of the opinion that the current situation – the fact that they had not yet reached a new agreement on this issue – should not continue, and that they were ready to sign a deal and work together to resolve their differences.

This was confirmed by a representative of the US Department of State on February 4. He said that the USA “thanks the Republic of Korea for its contribution to covering the expenses of maintaining the US military contingent, and also for the funds it has provided as part of its support for the bilateral alliance. The Republic of Korea has, for 70 years, been a model ally, partner and friend of the USA and the USA’s determination to support the people of South Korea is as strong as steel.”

On February 10, 2019, South Korea and the USA finally signed the ill-fated agreement, which sets the cost of maintaining 28,500 US troops at 1.389 trillion won, or $890 million, 8.2% more than the figure for 2018.  This exceeds the psychologically significant threshold of 1 trillion won, but is still less than $1 billion. The USA has withdrawn its demands relating to the cost of expanding strategic armaments, and South Korea has accepted that the term of the agreement will be limited to one year, after which it is likely that it will be renegotiated and the amount of the payment increased.

The agreement has not yet officially entered into force – it needs to be ratified by the South Korean parliament in April. The way the various parties in the parliament greeted the news of the agreement reflected their different political positions. The ruling Democratic party, focusing on the size of the payments, described the agreement as a “positive and wise” decision. The main opposition party, Free Korea, was concerned about the limited term of the agreement, which meant that South Korea and the USA would soon have to start on a new round of negotiations, which, in all likelihood, would risk causing the tensions in the alliance to worsen.

Both sides have thus departed somewhat from their initial positions. The USA gave ground on the amount of South Korea’s contribution, but refused to shift on the term of the agreement. That refusal has led observers in South Korea to qualify the compromise as only a partial success. On the positive side, there is no longer any reason to fear that the tensions in the relationship between the USA and South Korea caused by the disagreement over money will have a negative effect on the talks with North Korea about its nuclear program. But on the other hand, the USA and South Korea will soon have to return to the negotiating table.

Konstantin Asmolov, PhD in History, Leading Research Fellow at the Centre for Korean Studies of the Institute of Far Eastern Studies of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook.”