Tag: Cost Sharing

This is probably a smart move by the ROK to complete cost sharing negotations before any potential of Donald Trump being elected President. During his prior presidency he put enormous pressure on the ROK to pay more for the upkeep of USFK:

Korea and the United States have agreed to begin talks on their next deal on defense cost sharing earlier than planned, sources said, Jan. 16. Yonhap

Korea and the United States have agreed to begin talks on their next deal on defense cost sharing earlier than planned, sources said Tuesday, a move that appears to consider the possible reelection of former U.S. President Donald Trump, known for his tough bargaining on such deals.

The allies have reached an understanding to start the negotiations on sharing the costs for the upkeep of the 28,500-strong U.S. Forces Korea (USFK), this year, according to diplomatic sources familiar with the matter.

The early talks, if launched, will come nearly two years ahead of the original schedule for the deal, known as the Special Measures Agreement (SMA), currently in effect until the end of 2025 under a six-year term.

Seoul and Washington signed the SMA for 2020-26 in April 2021 after 1 1/2 years of tough haggling over how much Seoul should pay for the stationing of the USFK on its soil, as the then Trump administration had called for a sharp increase in Seoul’s share.

The early launch of the defense cost-sharing talks appear to have taken into account the possibility of Trump returning to the White House if he wins the November presidential vote.

During his term in office, Trump accused the allies of relying on the U.S. for their defense and called them “free riders” who “rip off” America. Some media had reported that Trump demanded Seoul pay $5 billion for its share, more than a fivefold increase from 2019.

Korea Times

You can read more at the link.

This claim has long been hinted by Trump himself due to the cost sharing issue with South Korea. Trump wanted the ROK to pay more for USFK which the Moon administration declined to do. The media now is trying to sell this as a new story when it is actually an old one:

Mark Esper, the former secretary of Defense under President Trump, says that the former president proposed a number of “outlandish” foreign policy proposals while he was in the White House, including pulling troops out of South Korea and shutting down embassies in Africa, according to an excerpt from Esper’s upcoming memoir.

In a new excerpt, shared by Politico, Esper wrote that shortly after he was hired to be the new Pentagon chief in 2019, Trump was railing against NATO and corruption in Ukraine, two personal issues that the rest of the national security and foreign policy team tried to tamp down because they weren’t considered leading concerns at the time.

Trump also said he wanted a “complete withdrawal” of forces from South Korea and that he wished to “bring our people home” from embassies in Africa, according to Esper.

The Hill

You can read more at the link.

The long negotiated USFK Cost Sharing Agreement has been implemented:

South Korea will spend nearly $125 million more this year to station American troops on the peninsula, according to a new cost-sharing deal that took effect Wednesday.

The Special Measures Agreement between South Korea and the United States determines the cost split for keeping roughly 28,500 U.S. troops in the country and employing South Korean civilians on U.S. military bases.

Seoul is expected to contribute $1.02 billion for 2021, a 13.9% increase to the $896.62 million it spent the previous year. The renewed agreement will retroactively apply to South Korea’s contribution from last year, which was carried over from 2019 after negotiations for the agreement’s renewal became deadlocked during President Donald Trump’s administration.

Stars & Stripes

You can read more at the link.

Like I said before signing a new cost sharing deal would be a simple win for the Biden administration. The reported 13% rise allows the administration to say they were able to get the ROK to pay more when the Trump administration with their hardline tactics could not:

The United States and South Korea are just weeks away from coming together on a new cost-sharing deal for stationing 28,500 U.S. troops on the peninsula, CNN reported Wednesday.

The report, which cited five anonymous sources familiar with the discussions, said the contract taking shape is a multiyear deal that increases Seoul’s contribution by about 13%.

Stars & Stripes

You can read more at the link.

This shouldn’t be surprising news to anyone following the US-ROK cost sharing negotiations:

The Pentagon has offered the White House options to reduce American troop levels in South Korea, the Wall Street Journal reported Friday.

Citing unnamed U.S. officials, the paper said the options were presented in March following a broader review of options for withdrawing troops from around the world, including in the Middle East, Africa, Europe and Asia.

The White House requested the review last fall, and by December, the Pentagon had come up with broad ideas, it said.

No decision has yet been made to reduce the number of U.S. forces stationed in South Korea from the current 28,500, according to the WSJ.

Yonhap

You can read more at link, but President Trump has already reduced U.S. troop levels in Germany over cost sharing issues and he has been having the same monetary disagreements with South Korea. This report I suspect was leaked to the Wall Street Journal in order to pressure the Korean side that Trump is serious about USFK troop withdrawals.

However, this all may be playing out as Korean President Moon Jae-in wants it to play out. Moon is a very skilled politician that needs to keep the Korean right at bay and public anxiety down.  If he openly advocated for a USFK withdrawal, that would give the South Korean right an issue to strongly attack him with and cause much public anxiety after decades of security guarantees provided by US forces.  

This is why President Moon has been saying all the right things that USFK should remain, to include claiming Kim Jong-un understands this as well. However, if troop withdrawals do happen he has political cover to not be blamed for it by claiming President Trump’s monetary demands were unreasonable which is a position likely a majority of Koreans believe.

Of all the excerpts given to the media there is hardly anything new he is disclosing because it has been widely reported President Trump has threatened to pull out USFK if South Korea does pay more for US-ROK cost sharing:

 U.S. President Donald Trump threatened to pull American troops from South Korea if Seoul did not pay US$5 billion under a defense cost-sharing deal, his former National Security Adviser John Bolton said in his memoir.

In “The Room Where It Happened,” set to be published Tuesday, Bolton recalled an Afghanistan-related meeting that took place last August ahead of the start of Special Measures Agreement negotiations between South Korea and the United States.

“Get out of there if we don’t get the five billion-dollar deal (for South Korean support of U.S. bases),” Trump was quoted as saying. “We lose $38 billion in trade in Korea. Let’s get out.”

Trump’s initial demand for $5 billion has been widely reported as the two countries remain deadlocked over how much Seoul should pay for the upkeep of 28,500 American troops stationed on the peninsula.

Yonhap

Here is something new that hasn’t been heard before, that President Trump allegedly call Kim Jong-un a “psycho”:

At the meeting, Trump also called the “war games” with South Korea a “big mistake,” referring to the allies’ combined military exercises.

“You shouldn’t have let them go on,” Bolton quoted Trump as telling him. “I’m trying to make peace with a psycho,” he added of North Korean leader Kim Jong-un.

You can read more at the link.

Here is the latest on the US-ROK cost sharing issue straight from the U.S. President himself:

U.S. President Donald Trump said Monday that he “rejected” Seoul’s defense cost-sharing offer and pressed Korea “to pay for a big percentage of what we’re doing.”  

“Now, they’ve offered us a certain amount of money, and I’ve rejected it,” Trump said at a White House coronavirus task force press briefing Monday, as Seoul and Washington struggle to sign a new bilateral Special Measures Agreement (SMA) on the upkeep of some 28,500 U.S. troops stationed in Korea. 

After months of negotiations, Korean officials at the end of last month indicated that the two sides were on the brink of signing a new deal after negotiators neared a tentative agreement which had Seoul paying a higher contribution than their previous accord but not anywhere near the amount demanded by Washington.  

U.S. officials told Reuters earlier this month that Trump decided to turn down Seoul’s offer to raise its contribution by at least 13 percent compared to the previous agreement.

“Look, you know, we’re doing a tremendous service,” said Trump in the briefing. “We have a wonderful feeling and a wonderful relationship with each other, but we have to be treated equitably and fairly.”

However, Trump appeared to deny a report that he was personally negotiating with President Moon Jae-in terms for a reduction of U.S. troops in Korea with four possible scenarios.  

“It’s not a question of reduction,” Trump said. “It’s a question of: Will they contribute toward the defense of their own nation?”

Joong Ang Ilbo

You can read more at the link, but I think what is going on is that President Trump wants a larger cash payment from the ROK while in the past the ROK has used a lot of goods and services to offset cash payments.

For example they pay the salaries of the Korean employees that work for USFK. That is money that is going back into the Korean economy. They also pay for new buildings and renovations which once again is done by Korean workers putting that money back into the economy. The ROK will also purchase civilian vehicles and give them to USFK for official use as well. The vehicles purchased is also money going back into the Korean economy.

I don’t know, but I would not be surprised that President Trump being a business man is pushing for more cash payments to USFK instead of goods and services. With the ROK parliamentary elections over I think the real negotiating can actually begin.

As I have long said, I did not expect a cost sharing deal to get done before the April 15th Korean parliamentary elections and it appears that will be the case:

U.S. President Donald Trump has rejected South Korea’s offer to raise its contribution to shared defense costs by at least 13 percent, a news report said Friday.

Trump made the decision last week after consultations with Secretary of State Mike Pompeo and Secretary of Defense Mark Esper, Reuters said, quoting unidentified current and former U.S. officials.

Esper made a phone call to South Korean Defense Minister Jeong Kyeong-doo earlier this week to press Seoul to quickly agree to much higher contributions, it said.

Yonhap

You can read more at the link, but politically there was no way the ruling party would agree to a major increase in defense spending. By the Trump administration turning down the modest increase, the Moon administration can go into the election saying they tried, but the Trump administration is too greedy and that is why all you Korean employees that work on U.S. bases are laid off.

The next decision by the Moon administration will be if they want to wait until after the U.S. Presidential election to make a deal.

Previous reporting has said the US and the ROK are close to a new cost sharing deal, but it has not been reached soon enough to stop the furlough of thousands of Korean employees:

Following months of warnings, the U.S. military put 4,500 South Korean base employees — about half its local workforce — on unpaid leave indefinitely Wednesday after the allies failed to agree on a new defense cost-sharing deal.

The furlough — the first of its kind — was a blow to the alliance and joint military readiness to fight on the divided peninsula, which commanders say already has been jeopardized by restrictions on movement aimed at preventing the spread of the coronavirus.

Stars & Stripes

You can read more at the link.