Six months of talks between Seoul and Washington over sharing the cost of maintaining the U.S. Forces Korea ended on Sunday. They agreed to increase Seoul's share of the upkeep by 5.8 percent from last year to W920 billion (US$1=W1,063). South Korea will have to pay that amount each year until 2018 adjusted for inflation.
When Seoul and Washington began talks in 1991, South Korea's share of the total cost was W107.3 billion. Twenty-three years later that has increased around nine-fold. At this rate, South Korea's share of the upkeep will surpass W1 trillion by 2017 or 2018.
The U.S. said Japan, which also shares the cost of maintaining American troops there, insisted that South Korea should shoulder a greater portion since it has grown to the world's eighth-largest trading country. South Korea currently bears 42 percent of the upkeep.
Maintaining the USFK serves as the strongest symbol of the Seoul-Washington alliance and is a potent warning against a provocation from North Korea. According to a 2011 study by the Korea Institute for Defense Analyses, the equipment of the USFK including tanks and fighter jets is worth W20-30 trillion, and it would cost South Korea an additional W23-26 trillion in defense spending if American forces were not here.
Saddled with a huge fiscal deficit, the U.S. is trying to cut spending while focusing its strategy in Asia on Japan. If South Korea resists any calls to take on a greater share of the cost at a time like this, it may end up sidelined in policies involving Northeast Asian security and North Korea. It must therefore approach the issue from a diplomatic rather than fiscal perspective.
But an important point is whether there will be increased transparency in how the money is being spent. Washington has agreed to provide more information, but it remains to be seen just how much, since there is no legally binding clause in the agreement to ensure this.
The U.S. did not spend around W710 billion it received from South Korea as part of upkeep, but Seoul had no idea of this for some time. If this happens again, the South Korean public will only become more opposed to any rise in Seoul's share of the cost. Both the U.S. and South Korea must be careful not to let the cost issue damage their alliance.