Accumulated Defense Cost-Sharing Funds in US Banks... Why?

Republican Donald Trump, the elected president, has consistently demanded an increase in South Korea's defense cost-sharing contributions.

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] The United States is holding 970 billion won of unspent funds from South Korea's defense cost-sharing contributions in its own banks, raising concerns that the U.S. government needs to establish a system to verify whether these defense funds are being spent according to designated categories.

According to the government on the 11th, the defense cost-sharing funds are used for the wages of Korean workers employed by the U.S. Forces Korea (USFK), military construction costs, and logistics support costs related to USFK operations. Military construction costs are supported 88% in-kind and 12% in cash. These funds are used for barracks, warehouses, training grounds, and operational and intelligence facilities of USFK bases.

Logistics support costs are used for ammunition storage, maintenance, transportation, and facility upkeep, and are supported 100% in-kind. When the U.S. side contracts supplies from its domestic companies, the Korean side reviews and approves the contract details to ensure appropriateness.

Cash funds must be spent solely on design and supervision fees. The U.S. is holding 970 billion won of unspent cash from South Korea's defense cost-sharing contributions in its banks.

The Ministry of National Defense states that it receives cash expenditure data from the U.S. side for verification. According to the defense cost-sharing agreement, the U.S. side must submit a 'cash expenditure report' and copies of 'contracts' to the Korean Ministry of National Defense to ensure transparency of cash spending, and based on these documents, the ministry verifies whether the funds were properly spent.

Some critics point out that the method of defense cost-sharing payments differs from that of Japan, leading to claims of discriminatory treatment. The U.S.-Japan defense cost-sharing involves 'fixed costs' related to U.S. forces in Japan (such as personnel wages, public utility fees, and training ground expenses) plus a 'plus alpha (+α)' amount adjusted according to circumstances.

Because of this, the Japanese government separately budgets and executes costs related to U.S. forces in Japan that are not stipulated in the U.S.-Japan Status of Forces Agreement (SOFA) or the Special Measures Agreement (SMA) after bilateral consultations. This is why Japan's defense cost-sharing execution is not limited to the Ministry of Defense.

In particular, Japan directly pays the salaries of its nationals working at U.S. military bases, allowing it to pay wages to U.S. military base workers even if the defense cost-sharing negotiation deadline with the U.S. is missed.

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