South Korea Increases Payment for U.S. Troop Presence

The U.S. and South Korea successfully avoided the continued absence of a cost-sharing agreement for the American troop presence. (Flickr)

South Korea has agreed to increase its cost-share for American troops on the Korean Peninsula by 13.9 percent, the Korean Foreign Ministry announced on March 10. This agreement, if approved by the National Assembly, will represent the largest annual increase of South Korea’s payment in nearly two decades, taking Korea’s annual share up to 1.18 trillion won ($1.03 billion).

This six-year agreement is expected to settle a prolonged dispute over the cost-sharing issue that has strained the alliance. This dispute started in 2020 when former U.S. President Donald Trump demanded Seoul pay as much as $5 billion for American troop presence, nearly five times more compared to previous years. This resulted in a deadlock with both sides failing to reach an agreement in 2020 even after the previous cost-sharing agreement expired at the end of 2019. The absence of an agreement led to the unpaid leave of thousands of Korean workers employed by the U.S. military.

This cost-sharing agreement signifies the transition of the U.S. foreign policy as the Biden-Harris administration tries to show its commitment to its allies. “By smoothly addressing the key pending alliance issue early on after the launch of the Biden administration, South Korea and the United States demonstrated the robustness of the firm alliance,” the South Korean Foreign Ministry remarked in a statement. Both sides show attempts to further their ties by planning a visit to South Korea by Secretary of State Antony Blinken and Defense Secretary Lloyd Austin in March.

The South Korean Foreign Ministry explained that the 13.9 percent increase was the sum of a 7.4 percent increase of South Korea’s defense budget in 2020 and a 6.5 percent increase in the cost for Korean employees in the U.S. Forces Korea (USFK). According to the statement, from 2022 to 2025, the amount will be determined based on the rate of the annual increase in South Korea’s defense budget.

Despite the large payment hike, Seoul expressed relief following the agreement due to a year-long absence of the cost-sharing agreement. “The agreement resolved the longest-ever vacuum that had lasted about a year and three months,” expressed Jeong Eun-bo, South Korea’s chief negotiator.

However, this agreement triggered questions and concerns from diplomatic experts. "It is a huge burden for Korea to pay its annual share based on the increase in the defense budget," said Won-gon Park, a professor of North Korean studies at Ewha Womans University. “Korea will have to pay a sizable amount that could reach 1.5 trillion won ($1.33 billion) in 2025.”