SEOUL/WASHINGTON (Reuters) – South Korea has agreed to a 13.9% increase in its contribution to the cost of hosting some 28,500 U.S. troops for 2021, the biggest annual rise in nearly two decades after U.S. calls for greater funding.
The increase under the multi-year pact takes South Korea’s contribution for 2021 to 1.18 trillion won ($1.03 billion) and settles a long-running dispute that had strained ties between Seoul and Washington during Donald Trump’s presidency.
Even as he warmed to North Korea’s leader, Trump had accused ally South Korea of “free-riding” on U.S. military might and demanded that it pay as much as $5 billion a year. Trump had rejected a similar first-year increase offered by Seoul during failed talks under his administration.
“The agreement resolved the longest-ever vacuum that had lasted about a year and three months,” South Korea’s chief negotiator, Jeong Eun-bo, told a televised briefing.
“It provided a chance to reaffirm the importance of the alliance and the need for stable stationing of U.S. Forces Korea.”
A U.S. State Department official portrayed the agreement as in line with new President Joe Biden’s calls “to reinvigorate our alliances”.
“In that spirit, one of friendship and seriousness about the challenges that we face ahead, we found a fair and equitable cost-sharing arrangement,” the official said, describing late night sessions in Washington to finalise the accord. The official spoke on the condition of anonymity.
American troops are deployed to South Korea in what is seen as a deterrent to Pyongyang that also sends a message to China about U.S. influence and capability in Asia.
South Korea began paying towards the costs of U.S. deployments – things like local labour and military construction – in the early 1990s after rebuilding its war-devastated economy.
The new, six-year Special Measures Agreement with the United States came after drawn-out negotiations and will boost South Korea’s annual contribution to the bill for 2022 to 2025 in line with its annual defence budget increase, which was 5.4% this year, the foreign ministry said in a statement.
The pact replaces an arrangement that expired at the end of 2019, under which South Korea paid about $920 million a year. Both sides agreed to freeze South Korea’s contribution for 2020, the ministry said.
In the last big increase in its contribution, South Korea in 2003 paid 17% more than the previous year, according to data from a defence ministry white paper.
On the decision to link cost-sharing to the defence budget, the ministry said the increase in the defence budget was a “reasonable, verifiable indicator” that reflected financial and security capabilities.
But Shin Beom-chul, a security expert at the Research Institute for Economy and Society in Seoul, said aligning the two issues was a “mistake” for South Korea, one of the world’s largest defence spenders, and it could bring budget pressure.
With negotiations making little headway after the last pact expired, about half of some 9,000 South Koreans working for the U.S. military were placed on unpaid leave, prompting the two sides to scramble for a stopgap deal to bring them back to work.
Jeong said the accord stipulated that in future, workers can get their existing salaries in the absence of a new deal.
The workers’ union welcomed the agreement, saying it would help ensure stable work conditions. Without it, thousands more workers would have been forced to take unpaid leave next month, the union said.
(Reporting by Hyonhee Shin and Phil Stewart; Editing by Robert Birsel and Alex Richardson)