Tag: Cost Sharing

At some point I would not be surprised if the Moon administration plays the anti-US card at some point to get the American negotiators to back down on increased cost sharing demands. In the past the usual suspects would already be out there protesting like crazy about something like this, but clearly the Moon administration has them in check for now:

Alarm has started to spread in Seoul over reported demands by the United States that Korea contribute to the upkeep of U.S. military forces beyond the Korean Peninsula. 

According to Rep. Yoon Sang-hyun, chairman of the National Assembly’s Foreign Affairs and Unification Committee on Thursday, Washington’s chief negotiator in negotiations with Seoul over the Special Measures Agreement (SMA), James DeHart, told Korean lawmakers and government officials in a meeting that Korea should pay approximately $4.7 billion in alliance upkeep costs – around five times the amount it currently pays to keep U.S. forces stationed on its soil. 

Yoon told a local broadcaster that this amount includes labor and logistics costs for the U.S. Forces Korea (USFK) – which Seoul is already paying – but also maintenance and deployment costs for U.S. strategic assets on Korean soil and at U.S. military bases abroad, possibly in Guam, Hawaii and around the Indian Ocean. 

Other expenses demanded from Korea include the costs of conducting combined military exercises and upkeep for civilian attaches to the USFK.

Joong Ang Ilbo

You can read more at the link.

I think President Trump has a far different definition of what “reasonable” means than President Moon:

NEW YORK, Sept. 23 (Yonhap) — South Korean President Moon Jae-in told U.S. President Donald Trump on Monday that his government is open to sharing the cost of the U.S. Forces Korea (USFK) on a “reasonable and fair” level, a Cheong Wa Dae official said after their summit here.

Yonhap

You can read more at the link, but it will be interesting to see if President Moon tries to raise anti-US sentiment like he has done with Japan if he can’t get Trump to back down on significantly increasing the ROK’s cost sharing amount each year.

The Moon administration is sending their Foreign Minister to try and lobby the USFK commander on the USFK cost sharing issue:

Foreign Minister Kang Kyung-wha will meet with United States Forces Korea (USFK) commander Robert Abrams, Friday, at the new USFK headquarters in Camp Humphreys, to discuss pending security affairs here.

Kang’s visit to Camp Humphreys in Pyeongtaek, located about 70 kilometers south of Seoul, is the first since 2017. The visit to the U.S. military base comes at a crucial time when the allies are on the verge of starting their defense cost-sharing negotiations, known as the Special Measures Agreement (SMA).

Korea Times

You can read more at the link.

I don’t think a technocrat is going to change President Trump’s mind that the ROK needs to pay much more for the upkeep of the US-ROK alliance, but I guess we will see what happens:

The government is considering naming a non-diplomat official, such as a financial technocrat, to head negotiations with the U.S. on sharing the cost for the upkeep of American troops, sources said Friday.

That would mark a departure from the tradition that officials from either the foreign or defense ministries have led the Special Measures Agreement (SMA) aimed at determining how much South Korea should shoulder the cost of U.S. troop presence in the country.

The two sides expected to launch the negotiations around mid-September amid widespread indications that the United States could ask for a massive raise in Seoul’s share of the cost of the stationing of the 28,500-strong U.S. Forces Korea (USFK).

Yonhap

You can read more at the link.

In the Japan Times they have an op-ed published in response to the White House’s Cost Plus 50 strategy for paying for the stationing of US troops.

The “Cost Plus 50” formula means the White House is aiming for allies to pay 100 percent of U.S. stationing costs plus a premium of 50 percent on top of that. While there are arguments to be made about whether such a goal is even achievable (spoiler alert: it is not), it is important to highlight some of the bad assumptions that underwrite the belief that “allies don’t pay enough.” (……..)

Bad assumption 4: It is easy to tally up the cost of stationing forces overseas.
Reality: For the administration to demand Cost Plus 50, it must first assess how much it actually costs to station forces overseas. Take it from a former alliance manager who has run the “cost drill,” there are simply too many inputs to produce a figure without arbitrarily making decisions on what to include or exclude.
Do you include the salaries of overseas service members? What about costs for moving personnel and their families? How about rotational units who are only in a host nation for a few months out of the year? Do you add the cost of running overseas schools for dependent family members? Commissaries? Recreation areas? Uniform clothing sales stores?
How about research and development for the equipment that is stationed there? Should a country pay more if it has F-35s instead of F-16s or ballistic missile defense-capable destroyers instead of non-BMD capable ones?
The list goes on and on, and even then, the list ignores things like sunk costs and the fact those forces are overseas for U.S. interests.

Japan Times

You can read more at the link.

The next US-ROK cost sharing negotiations will be very interesting if this demand is made:

For years, President Donald Trump has complained that countries hosting American troops aren’t paying enough. Now he wants to get even, and then some.

Under White House direction, the administration is drawing up demands that Germany, Japan and eventually any other country hosting U.S. troops pay the full price of American soldiers deployed on their soil — plus 50 percent or more for the privilege of hosting them, according to a dozen administration officials and people briefed on the matter. (…….)

Victor Cha, a senior adviser at the Center for Strategic and International Studies in Washington, said the administration was sending a deliberate message by demanding “Cost Plus 50” from South Korea first, even though that effort fell short.
“We have a more integrated military with South Korea than with any other ally,” Cha said. “To send this message to a front-line Cold War ally is trying to say very clearly that they want a paradigm shift with the way they do host-nation support.” [Bloomberg]

You can read more at the link.

As I have been saying, I think these cost sharing talks are linked to the North Korean nuclear negotiations.  If the Trump administration drops sanctions for little to nothing in return from North Korea, the Moon administration will likely give them the cost sharing deal they prefer: 

Korea and the United States failed to strike an agreement on how much Seoul will pay to station American troops on the peninsula, a government official here said Friday. Senior diplomats from the allies held three-day talks in Seoul to set the amount of Seoul’s financial contributions for the 28,500-strong U.S. Forces Korea (USFK). 

It marked the 10th round of bargaining, as the current five-year accord expires at the end of this month.

The two sides remain divided over the total amount of Seoul’s financial contributions, a contract period and some other contentious issues, according to the official. “Again, nothing is agreed until everything is agreed,” he told reporters on condition of anonymity. “The two sides will continue consultations through diplomatic channels.” He ruled out the possibility of another round of formal talks within this month.

In case no deal is reached in the coming two weeks, he agreed, it’s expected to cause a problem when the USFK has to pay wages for Korean civilian workers. About a third of Seoul’s payment is used for the wages of around 8,000 workers. 

Joong Ang Ilbo

You can read more at the link.

It seems to me that if there is no money designated to pay the employees than of course they will need to be put on leave: 

The U.S. Forces Korea (USFK) has sent a letter to the union of its Korean employees stating that it will place them on unpaid leave from mid-April 2019, if the ongoing defense-cost sharing negotiations between Seoul and Washington are not settled by the end of this year.

In the letter to USFK Korean Employees Union President Choe Ung-sik, USFK headquarters’ Chief of Staff Maj. Gen. Michael Minihan said, “Unfortunately, unless the ongoing SMA negotiations can be completed in a timely manner to avoid a lapse in labor funding, we will be required to issue a general furlough notice.”

“Unless a new SMA is agreed to, it will be necessary to implement the furlough effective April 15, 2019,” Minihan said.

This is viewed by some observers as an attempt to gain concessions from Korea as the negotiations over sharing the cost of stationing American troops here are making little headway. They say that the U.S. is “taking Korean workers hostage” to demand a bigger payment from the government.

Time has been running out in the negotiations in relation to the Special Measures Agreement (SMA), a five-year defense contract between Seoul and Washington. It will expire Dec. 31.

The notice may possibly affect as many as 8,700 whose wages are co-paid by both the government and the USFK.

Korea Times

You can read more at the link.