[Yang Nak-gyu's Defense Club] Will the US Also Demand Costs for THAAD Upgrade?

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu Reporter] As the final negotiations for the 11th Special Measures Agreement (SMA) on defense cost-sharing between South Korea and the United States are underway, attention is focused on whether the cost issue of the Terminal High Altitude Area Defense (THAAD) system deployed in Seongju, Gyeongbuk, will be included. Although the Ministry of National Defense denies it for now,

there are speculations that U.S. President Donald Trump is demanding the THAAD costs from our government as a case of 'security free-riding,' which could mean the THAAD costs are being passed on to South Korea.

The Ministry of National Defense stated, "After the environmental impact assessment of the THAAD base is completed, consultations between South Korea and the U.S. must take place. As of now, we understand that no discussions related to defense cost-sharing regarding site development have been conducted," showing a reserved response.

The amount of defense cost-sharing requested by the U.S. is five times higher than last year. It is approximately 4.8 billion dollars, which is about 5.9116 trillion won in Korean currency. The U.S. negotiation team claims that the main reason for this amount is the rotational deployment of U.S. forces in Korea. However, the U.S. side has consistently demanded costs related to the THAAD deployment.

In 2016, when Kim Kwan-jin, then Director of the National Security Office at the Blue House, appeared before the National Assembly's Steering Committee, former Justice Party lawmaker Roh Hoe-chan asked, "Who pays for the (THAAD) operating costs?" Kim replied, "The U.S. side pays for the operating costs." When Roh further pressed, "The U.S. side pays these costs, but from 2018, when defense cost-sharing negotiations resume, there is a possibility that the costs might be included in the defense cost burden we share from 2019," Kim answered ambiguously, "In a broad sense, the defense cost-sharing amount is divided into categories such as personnel costs and facility costs for U.S. forces in Korea, so if the category is included, it could be incorporated," implying that defense cost-sharing funds might be used for THAAD operating costs.

Under the current Moon Jae-in administration, the Ministry of National Defense emphasizes that its position on THAAD operating costs differs from Kim Kwan-jin's previous response. A Ministry official stressed regarding the operating cost burden, "After the environmental impact assessment of the THAAD base is completed, consultations between South Korea and the U.S. must take place. As of now, we understand that no discussions related to defense cost-sharing regarding site development have been conducted." This means that the use of defense cost-sharing funds could be a matter for bilateral consultation.

Inclusion of THAAD Costs in Defense Cost-Sharing
Former Director Kim Kwan-jin: "If the category is included, payment will be made"
Former Minister Song Young-moo: "There is a possibility"

However, ambiguous answers from defense chiefs continue. In February 2018, former Minister of National Defense Song Young-moo responded to a question from Liberty Korea Party lawmaker Kyung Dae-soo during a National Defense Committee plenary session, asking, "Is there a possibility that the U.S. might demand that THAAD base costs also be borne as part of defense cost-sharing?" Song replied, "Because there is such a possibility, we are devising a strategy on whether to adopt a lump-sum or cost-based agreement."

Song's answer was interpreted as a flexible willingness to pay defense cost-sharing funds in case the U.S. demands an increase. Defense cost-sharing agreements are divided into lump-sum and cost-based types. Currently, South Korea chooses the lump-sum type. This method has the advantage of suppressing sudden increases in contributions but lacks transparency in the execution process. On the other hand, the cost-based type, adopted by Japan, guarantees transparency in execution but may lead to an increase in the total amount. While many evaluate the cost-based type as more rational and transparent, there are concerns that it could increase South Korea's burden if demands are high.

The Ministry of National Defense is considering switching to the cost-based type for transparency reasons. The U.S. military requires that defense cost-sharing funds be used only for three categories: Korean personnel costs working for U.S. forces in Korea, construction costs within U.S. bases, and logistics support costs. Among these, construction costs have been criticized for lack of transparency both inside and outside the military. There are allegations that military construction funds paid in cash are not executed but deposited in banks to earn substantial interest. Due to these ongoing criticisms, the Ministry is reportedly reviewing a plan to switch to the cost-based system.

There are concerns that switching to the cost-based system could disadvantage negotiations immediately. If President Trump demands additional contributions for THAAD deployment, suppressing increases would become practically impossible. Some argue that U.S. resistance to institutional changes and the potential negative aspects of the cost-based system should be considered. Ultimately, a compromise approach is suggested to maintain the current system while enhancing transparency through institutional measures.

This is because, in the event of a sudden change in security situations due to North Korean threats, the burden of rapid increases in contributions must be considered. Therefore, opinions have been raised that the next negotiations should proceed with converting the contribution system to the cost-based type but include mechanisms to prevent the total amount from increasing beyond a certain limit.

Within and outside the military, there are indications that the U.S. might also demand costs for THAAD upgrades. The U.S. Missile Defense Agency (MDA) recently announced that it allocated 1 billion dollars (about 1.2533 trillion won) for performance upgrades of seven THAAD batteries deployed in the U.S. mainland, Guam, and the Seongju base.

According to Kim Yeol-soo, Director of the Security Strategy Office at the Korea Institute for Military Affairs, in his article "THAAD Performance Upgrade Plan and Security Implications" published in the institute's March monthly magazine, the U.S. plans to change the THAAD launch system from a short-range wired type to a long-range wireless type to integrate missile defense capabilities on the Korean Peninsula. Currently, wired command is conducted via fiber optic cables, requiring the launcher and fire control center to be close. The U.S. military aims to overcome distance limitations by switching to remote wireless control.

Subsequently, the THAAD radar will be used for Patriot missile launches. Currently, the detection range of the Patriot radar is only 100 km, but the THAAD radar has a wider detection range. The AN/TPY-2 radar has a maximum detection range of 1800 to 2000 km. Utilizing the THAAD radar in the Patriot missile system will enable earlier detection of enemy missiles.

After completing this phase, the Patriot missile system and THAAD system can be fully integrated and operated together. Integration of the two missile systems will allow more efficient defense against incoming missiles during the terminal phase. The U.S. already tested the capability to launch intercept missiles remotely by deploying radar, mobile launch vehicles, and operation control centers in different locations near the Marshall Islands in the Pacific last August. Further remote launch tests for THAAD are scheduled for the fourth quarter of this year and next year.

Kim stated, "If additional THAAD launchers are introduced or deployed forward to the north, such as Pyeongtaek, there could be Chinese backlash. However, since this is neither additional deployment of THAAD batteries nor deployment of new THAAD radars, there is no reason for China to raise objections."

This content was produced with the assistance of AI translation services.