Tag: Cost Sharing

The Moon administration in South Korea has decided to increase funding for North Korea spending next year: 

The government has allocated 1.1 trillion won ($977 million) for inter-Korean affairs for next year, according to the unification ministry, Monday.

This is up 15 percent from the 959 billion won fund this year, reflecting the reconciliatory mood that developed between the Koreas, as the leaders held three summits and reached agreements to promote peace.

“The budget was drawn up to give an impetus to carrying out agreements reached between the South and North and develop sustainable inter-Korean ties,” a unification ministry official said.

The budget includes 5.9 billion won that was set up to enable video meetings between family members separated by the 1950-53 Korean War.

Korea Times

You can read more at the link, but what is interesting about this announcement of $977 million set aside for Kim Jong-un is that the cost sharing talks between the US and the ROK restart again this week.  The US has been asking South Korea to increase their funding for USFK from the $850 million a year it currently pays.  South Korean negotiators say that crossing the one trillion won mark is “psychologically important” to not cross.  However it was clearly not important when they decided to budget over one trillion won for North Korea spending next year. 

So as it stands now the ROK government is willing to pay Kim Jong-un more than USFK.  

This shouldn’t come as any surprise because the former Roh Moo-hyun administration that current President Moon Jae-in was the Chief of Staff for also paid then North Korean leader Kim Jong-il more money than they were willing to fund the US-ROK alliance.  I would hope US negotiators at the cost sharing talks this week would at least bring this fact up.  

I still believe that a final US-ROK cost sharing deal will be reached as part of the ongoing negotiations with North Korea.  If Washington drops sanctions like Seoul wants than I think they will give the Trump administration the deal they want on cost sharing.  I guess we will see what happens: 

South Korea and the United States will resume negotiations over military cost-sharing issues in Seoul next week. 

Seoul’s Foreign Ministry said on Friday the tenth round of negotiations concerning the bilateral Special Measures Agreement(SMA) will be held for three days from Tuesday, where the two sides will have in-depth discussions to coordinate stances based on the previous talks. 

According to the ministry, the foreign ministers of the two countries agreed during their meeting in Washington on Thursday that they will continue to encourage the negotiators to produce mutually satisfying results.   [KBS World Radio]

You can read the rest at the link.

My theory on the current US-ROK cost sharing negotiations is that this will ultimately be tied to a successful second Trump-Kim summit and US dropping sanctions on North Korea.  If the Trump administration drops sanctions I suspect that the Moon administration will cut a favorable US-ROK cost sharing deal to pay back President Trump.  If sanctions are not dropped the Moon administration will likely continue to play hardball on this issue:

Senior diplomats of the two sides had three-day talks on the Special Measures Agreement (SMA) to set the amount of Seoul’s financial contributions for the 28,500-strong U.S. Forces Korea (USFK) in Honolulu, Hawaii. It was the ninth round of bargaining, as the existing accord, which took effect in 2014, is to expire at the end of this year.

“There was some progress, but no final agreement was reached,” the foreign ministry official told reporters on the condition of anonymity.

It will be interesting to see if the ROK government gives into Trump administration demands on the cost sharing issue in return for concessions on the North Korean issue:

South Korea and the U.S. are narrowing their differences over the cost, contract period and annual increase rate in regards to sharing the cost of stationing American troops on the Korean Peninsula.

An official from the Foreign Ministry in Seoul said Monday the two sides are negotiating thorny issues and ways to improve the system as a package for the new Special Measures Agreement set to take effect next year.

Under the current five-year contract which will expire in December, Seoul’s cost-sharing for stationing the 28-thousand-500-member U.S. Forces Korea for this year is set at around 960 billion won or 856 million dollars.

As for Washington wanting Seoul to include costs for “operational support” of deploying strategic assets from outside the peninsula against North Korean threats, the official said he can not answer whether the U.S. continues to make such demands.  [KBS World Radio]

Here is another likely example of the Moon administration sending their left wing activists groups to advocate against USFK on their behalf:

South Korea is shouldering 73 percent of the cost for stationing U.S. troops here, a civic group claimed Tuesday, citing data from the governments of both nations.

Solidarity for Peace and Reunification of Korea (SPARK) said South Korea covered 72.6 percent of the costs for keeping 28,500 U.S. troops here in 2016, after analyzing defense expenditures of both South Korea and the U.S.

According to official announcements by Seoul and Washington, the total costs of the U.S. Forces Korea (USFK) presence here add up to around $2 billion (2.17 trillion won), of which South Korea pays 42 percent.

However, the civic group stated taking into account the sites South Korea provides for military bases, the percentage rises above 70 percent.

The group said South Korea paid around 3.39 trillion won in direct and indirect expenses for the USFK last year, according to data from the defense ministry.

Direct costs paid by South Korea for the USFK were 1.81 trillion won. This included 944.1 billion won in costs paid under the Special Measures Agreement (SMA), 666.7 billion won in expenses for relocating personnel to Pyeongtaek and 184.3 billion won for repairing military facilities. Also included in the expenses were managing the Korean Augmentation To the United States Army (KATUSA) and conducting environmental studies on bases.

Indirect costs totaled 1.57 trillion won ― most of which accounted for South Korea providing land for U.S. military use. The civic group said the land value exceeds 1.16 trillion won.

It also looked into expenditures of the U.S. Department of Defense to reach the conclusion the cost-bearing ratio is 72.6 to 27.4.

“The U.S. government must stop forcing South Korea to raise its portion of costs, and must immediately return accumulated funds and illegally reaped interest earnings,” the group said.

It also demanded the U.S. stop calling for Korea to cover more costs of deploying U.S. strategic assets and maintaining a THAAD battery here.  [Korea Times]

By not including the cost of deploying US strategic assets to the peninsula this totally discredits what this group is claiming.  They are more than happy to include indirect costs for Korea in their analysis, but not indirect costs for the US military.  Imagine how much their analysis would change if the cost of an aircraft carrier or stealth bombers when they are deployed to the peninsula is included.  Better yet what about the cost of all the space based assets that USFK uses to protect South Korea that they get the benefit of and don’t have to pay for?

Someone at the Pentagon involved in the cost sharing talks should run all these numbers to counter what the left wing group SPARK is putting out.

I have to wonder if the Moon administration is going to try and tie how much the ROK is willing to pay for the upkeep of USFK to the outcome of the Kim-Trump Summit?:

South Korea and the United States are expected to hold a new round of talks next week in their ongoing negotiations over the costs for U.S. troops stationed here, a source close to the matter said Monday.

According to the source, both countries are currently discussing details about schedules and location after they decided to hold the talks next week. The source added that Washington D.C. could be the venue for the meeting.

The talks are led by Chang Won-sam, a career diplomat who was appointed in mid-November to head the negotiation team, and Timothy Betts, deputy assistant secretary for plans, programs and operations at the U.S. State Department.

It will be the third round of negotiations. The two sides previously met in Honolulu, Hawaii, in March and in Seogwipo on Jeju Island last month.

The latest meeting comes after the New York Times reported that U.S. President Donald Trump ordered the Pentagon to consider reducing American troops in South Korea. Although the U.S. government denied the report, some speculated that it could be a move to put more pressure on South Korea to shoulder more of the costs.  [Yonhap]

You can read more at the link.

The way I look at it, as long as the ROK government continues to allow the protesters to block the road and artificially make sustainment costs for THAAD more expensive they should pay for it:

South Korea’s defense ministry said Friday that the cost of operating a U.S. missile defense system installed in the South may be covered using part of Seoul’s new share of upkeep costs for U.S. forces stationed here.

The U.S. could demand South Korea shoulder some costs needed to run and keep the Terminal High Altitude Area Defense (THAAD) system as the allies are in discussion to renew their five-year deal on defense cost-sharing.

“If the U.S. side hopes to use Seoul’s share of the U.S. forces upkeep costs to cover THAAD’s operation, it may be possible to use it within the total amount of the South’s share in accordance with sectoral needs and regulations,” the ministry said in a statement.

It could potentially spark a row as it marks a sharp difference from the government’s stance that South Korea will not bear any of the costs associated with THAAD.  [Yonhap]

You can read more at the link.

Here is the latest on the US-ROK cost sharing talks:

The United States has demanded South Korea share the cost of deploying U.S. strategic assets around the Korean Peninsula during recent talks to renew their cost-sharing agreement for American troops stationed here, a foreign ministry official said Friday.

Seoul rejected the request saying the issue should not be part of the negotiation.

“Our basic stance on this matter is that the agreement deals with how to share the upkeep cost of stationing the U.S. troops,” the official told a group of reporters on condition of anonymity.

The two sides held their second round of the talks on the southern island of Jeju earlier this week. The first round was held in Hawaii last month.

The official said that there are “big differences” to be ironed out in the amount of money proposed by each side, which he said requires more discussion going forward. He didn’t provide specific numbers.

With regard to another potential issue of how to share the cost of operating the U.S. THAAD anti-missile system that was installed here last year, he said it was not mentioned in the meeting.

He noted, however, that the matter could be discussed as the cost of the THAAD operation could be dealt with in line with the “logistical support” part stipulated in the agreement.  [Yonhap]

You can read more at the link.

It looks like President Trump’s steel tariff may force the South Koreans to agree to ultimately pay more for the upkeep of the US-ROK alliance:

South Korea may agree to shoulder a larger burden of the cost of stationing U.S. troops on its soil as part of the two nations’ deal on trade, a former White House official said Monday.

Victor Cha, who served as Asian affairs director on the National Security Council of George W. Bush, raised the possibility shortly after Seoul announced a tentative deal with Washington on amending their free trade agreement and exempting the Asian nation from new U.S. steel tariffs.

“If there is any tacit issue linkage with this agreement, we might expect to see South Korea agreeing to a higher burden sharing obligation in ongoing negotiations on a new Special Measures Agreement where the U.S. is pushing for South Korea to pay larger share of costs for stationing U.S. forces on the Korean peninsula,” he wrote in a commentary for the Center for Strategic and International Studies, where he is currently senior adviser and Korea chair.  [Yonhap]

You can read more at the link.

I would not put too much stock in this statement which I think could be interpreted as rhetoric for the friendly audience and part of a negotiating strategy for US-ROK cost sharing and trade talks.  With that said the ROK would probably be wise to not totally dismiss his comments:

President Donald Trump hinted he may withdraw American troops from South Korea if the U.S. ally doesn’t concede more in trade negotiations, a newspaper reported.

The Washington Post quoted Trump as saying Wednesday in a fundraising speech that the United States was losing money on trade with South Korea as well as the military presence that is meant as protection against aggression from the North.

“We have a very big trade deficit with them, and we protect them,” Trump said Wednesday in audio obtained by the Post. “We lose money on trade, and we lose money on the military. We have right now 32,000 soldiers between North and South Korea. Let’s see what happens.”

“Our allies care about themselves,” he said in the 30-minute speech to donors in Missouri. “They don’t care about us.”  [Stars & Stripes]

You can read more at the link.