Korea and the US Gain Practical Benefits with Defense Cost-Sharing Agreement

[Asia Economy Reporters Inho Yoo and Jieun Lee] An analysis suggests that South Korea and the United States secured all their practical benefits as they concluded the 11th Special Measures Agreement (SMA) negotiations on defense cost-sharing, which had been deadlocked for over a year.

South Korea gained not only the practical benefits of a freeze in the first year and a six-year multi-year contract, and the U.S. secured an impressive double-digit increase rate, but both also obtained the justification of ‘strengthening the ROK-US alliance.’

The U.S. State Department announced on the 8th (local time) that the defense cost-sharing negotiation teams of both South Korea and the U.S. reached an agreement valid for six years.

Ned Price, spokesperson for the State Department, said in a press briefing that day, "The negotiation teams of the U.S. and South Korea have reached an agreement on the text of a new six-year SMA," adding, "This will strengthen our alliance and joint defense."

When asked whether the U.S. demands were less stringent than those of previous administrations, Price responded, "Given the context of a close ally like South Korea, a treaty ally, I do not believe the U.S. would make unreasonable demands, nor do I think that would help fundamentally strengthen the alliance." He added, "I think you will soon see that this is an agreement beneficial to both sides."

However, Price did not comment on specific details such as the duration or the rate of increase of the agreement.

Diplomatic circles, based on the State Department’s announcement of a six-year SMA draft agreement, expect the detailed terms of the ROK-US agreement to be ‘contract period 2020?2025, increase rate 13%.’

It is analyzed that the Biden administration’s intention to quickly remove obstacles to alliance restoration to counter China and the Moon Jae-in administration’s desire to expedite North Korea cooperation for the reactivation of the Korean Peninsula peace process aligned with each other.

Shin Beom-chul, head of the Foreign and Security Center at the Korea Institute for Industrial Economics and Trade, said, "If it is set at 13% as expected, it is somewhat high," and analyzed, "(South Korea’s acceptance of this) seems to reflect our government’s intention to ask the U.S. to make concessions regarding North Korea issues."

The U.S. State Department also evaluated the day before that "the agreement includes a significant increase in South Korea’s contribution."

If the two countries formally sign an agreement to raise defense costs by 13% this year, it will be the first double-digit increase since 2002’s 25.7%. The increase amount is expected to be about 1.174 trillion won.

[Image source=Yonhap News]

This is much less than the $5 billion (5.67 trillion won) initially demanded by former President Trump, who insisted on a one-year contract, but the increase is larger than in previous years. The increase amount in the 10th agreement, concluded as a one-year contract in 2019, was 8.2% compared to the previous year.

Song Young-gil, chairman of the National Assembly’s Foreign Affairs and Unification Committee and a member of the Democratic Party of Korea, analyzed on CBS Radio’s ‘Kim Hyun-jung’s News Show,’ "President Biden criticized former President Trump during his candidacy for ‘stealing the alliance,’ but he is not denying what was done during Trump’s administration," adding, "It looks like he is first appropriating those benefits."

On the other hand, last year’s defense cost freeze and multi-year contract reflected South Korea’s intentions. It is known that in this negotiation, the 2020 contribution was frozen at the 2019 level (1.0389 trillion won), and a six-year multi-year contract through 2025 was agreed upon.

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