U.S. and ROK Sign Cost-Sharing Agreement

After more than a year of acrimonious negotiations — a year that should be seen as part of a perpetual, multi-year negotiation — the United States and South Korea have signed another cost-sharing agreement. So is it a good deal? The question isn’t easily answered, with all of the bullshit you have to squeegie away to get down to the facts of it:

Korea has signed an agreement with the United States to provide W760 billion to keep American troops stationed here (US$1=W1,384). Foreign Minister Yu Myung-hwan signed the deal with U.S. Ambassador to Korea Kathleen Stephens at the ministry.

Seoul paid over $500 million in cash in 2007, but within three years from now this will be gradually replaced by material goods such as facilities and equipment. [Chosun Ilbo]

South Korea essentially won the right to pay for its share of the USFK’s upkeep in in-kind goods and services, such as construction and the salaries of Korean employees. All of that money goes straight back into the Korean economy, a sort of Keynesian “stimulus” that Korea would probably still pay if the same construction and salaries were supporting Korean instead of American troops. Korea will increase the share of the cost it pays each year, but at a rate that could easily be overtaken by inflation:

Seoul will increase its share each year in line with the consumer price index but annual hikes will be capped at 4 percent. The agreement also allows the USFK to use part of the host-nation funds to relocate its infantry units stationed north of Seoul to south of the Han River.

Under the deal, South Korea will help construct U.S. military facilities instead of providing cash under the deal in a bid to help ensure transparency in the U.S. use of South Korean taxpayers’ money.

Stop laughing. This is serious.

The host-nation funds cover U.S. Forces Korea’s non-personnel stationing costs, which include the salaries of Korean employees on bases, logistics procurement and maintenance and military construction.

Under the pact, Seoul will construct 30 percent of U.S. facilities this year and the ratio will increase to 60 percent in 2010 and 100 percent in 2011.
For example, if the United States asks Korea to construct facilities, the two sides are to conduct a feasibility study. Once agreed upon, the United States will be in charge of construction, design and supervision, while South Korea will manage a related contract with local firms and overall construction. [Korea Times]

So how did we go from South Korea committing to a 6.6% annual increase for the last two years to just 4% for the next five years years? Isn’t it enough that we have to subsidize the banks and Detroit?

`With the Republic of Korea’s tremendous economic capacity and prominence in the international community, a balanced defense burden-sharing arrangement in support of the United States forces in (South) Korea is fundamental to the strength of the alliance,” Bell told the Senate Armed Services Committee of the U.S. Congress. [Gen. B.B. Bell, April 2007]

Thank you Ambassador Stephens! Hey, it’s not like I didn’t warn you.

The agreement will now go to the National Assembly for renegotiation and hopefully, a nice brawl, and then the entire process will start all over again.

What is still lost on me is why a wealthy and relatively stable nation needs the support of a straining U.S. Treasury to defend itself at all.