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ROK-USA - Special Measures Agreement [SMA]

After months of sometimes-contentious negotiations, South Korea agreed in February 2019 to pay $925 million to support the U.S. military presence in 2020. That representeds an 8 percent increase from the previous year — but much less than the 50 percent spike Trump had demanded.

Trump said 07 August 2019 that South Korea had agreed to “substantially” increase its share of the cost of the U.S. troop presence in South Korea. “South Korea has agreed to pay substantially more money to the United States in order to defend itself from North Korea,” Trump said. “Over the past many decades, the U.S. has been paid very little by South Korea, but last year, at the request of President Trump, South Korea paid $990,000,000." Trump added “South Korea is a very wealthy nation that now feels an obligation to contribute to the military defense provided by the United States of America. The relationship between the two countries is a very good one!”. Trump did not clarify how much more South Korea agreed to pay, but said negotiations with Seoul over cost-sharing had begun. However, South Korea said talks on the issue have yet to begin. Trump’s announcement came a day ahead of U.S. Secretary of Defense Mark Esper’s visit to Seoul. Local media had reported Esper was expected to raise the cost-sharing issue.

South Korea and the United States signed a provisional agreement on sharing the upkeep costs for stationing U.S. troops on the Korean Peninsula. The two sides held a signing ceremony at the ministry building in Seoul on 10 February 2019. Chang Won-sam, South Korea's top negotiator in defense cost sharing negotiations, and his US counterpart Timothy Betts signed the deal. Before the ceremony, Betts also met with South Korean Foreign Minister Kang Kyung-wha. The allies agreed that Seoul will pay 1.038 trillion won, or about 922 million dollars at the current exchange rate, for the US forces each year. That's an increase of more than eight percent from 960 billion won, or about 852 million dollars. This was less than the one billion dollars or 1.13 trillion won the US had proposed.

However, the contract would last only one year, leaving a burden for the allies to start negotiating the terms again in the coming months. Past agreements had been renegotiated every five years. Cost-sharing talks that started in March 2018 had been deadlocked over Washington's insistence that Seoul bear a much greater burden. The two sides failed to reach a deal by the December deadline. A US media report said US President Donald Trump had demanded during the negotiations that Seoul double its financial burden.

South Korea and the US reached a deal 04 October 2024 on sharing the costs needed for U.S. troops stationed in Korea, after holding eight rounds of negotiations. Korea's contribution will go up about 8 percent in 2026 under the new deal. For the past five months, officials from Seoul and Washington had been holding talks, to determine how much South Korea will pay for the roughly 28-thousand-500 U.S. troops stationed in South Korea. The government explained that the two sides had finally come to an agreement on the 12th Special Measures Agreement, known as the SMA, which will be effective for five years, from 2026 to 2030.

South Korea's contributions in the first year of the agreement, 2026, will be some 1-point-5-2 trillion Korean won, or around 1-point-1-4 billion U.S. dollars. That's around an 8-point-3 percent increase compared to the previous year. After that, the cost will gradually increase over the next five years, based on the consumer price index to reflect inflation. According to the Korea Development Institute, CPI in 2024 is projected to be around 2.4 percent, and 2 percent in 2025. So, if the cost increases by 2 percent every year, South Korea will be paying around 1-point-6-7 trillion Korean won, an increase of 19.5 percent compared to 2025.

Applying the consumer price index greatly benefits South Korea, as the current SMA --effective until next year --applied the Korean government's increase in defense spending when it comes to determining the increase rate which is around 4 to 5 percent. If South Korea were to increase 5 percent annually, it would be paying over 1-point-8 trillion Korean won in 2030, 26.7 percent more than the amount in 2025.

Seoul's foreign ministry said that the two sides have also agreed to set a maximum limit to the annual increase rate so that it will not go over 5 percent. "We believe the significant achievement of these negotiations is that while South Korea and the United States maintained the framework of the existing agreement, the two countries have replaced the current measure of applying the defense budget to be used as the increase rate, with the annual consumer price index, and have reintroduced a limit."

The latest decision comes amid speculation that South Korea has been seeking to reach an agreement before the U.S. presidential election, to apparently avoid tough bargaining, in case the country's former President Donald Trump returns to the White House who earlier demanded a five-fold increase, calling on Seoul to pay nearly 5 billion dollars.

Donald Trump claimed that South Korea would be paying over €9 billion a year for the US forces stationed on the Korean Peninsula if he were still president — triggering an alarm in Seoul as the Republican candidate seeks to return to the White House. Trump also claimed that Seoul pays nothing for what he said were 42,000 soldiers based in the South. In actuality, Seoul is currently paying around $1.02 billion per year for some 28,500 US personnel stationed on its territory. In the most recent Special Measures Agreement signed between Seoul and Washington earlier this month, Seoul agreed to boost its expenditure to around $1.09 billion per year from 2026.

"If I were there now, they would be paying us $10 billion a year," Trump said about the US deployment in South Korea. "And you know what? They would be happy to do it. It's a money machine, South Korea." South Koreans already signaled their distrust and dislike of the Republican candidate in a July poll by the Brookings Institute, with only 12% of South Koreans saying they were in favor of Trump's occupying the White House again and 39% who preferred then-candidate and President Joe Biden.

"This could have been expected, of course, because it was his previous position on US forces stationed here, although he has come up with a figure that is scandalous and without any basis in the reality of the cost of US troops in Korea," Rah Jong-yil, a former diplomat and senior South Korean intelligence officer, told DW. "If he is elected, then I fully expect him to demand that sort of amount from South Korea," Rah said. He added that he hopes military and diplomatic advisers in a new Trump administration might be able to explain the importance of maintaining alliances and convince the president to moderate his demands. "I do not believe they would agree to an extortionate figure like that," Rah said. "Maybe Trump believes the military presence here is exclusively to the benefit of South Korea and that others can explain why it is important for the US, as well. I hope they can get that across because I do not think he has any idea of military strategy or international relations."

Any excessive demands from the United States could weaken the alliance and foster "anti-American sentiment among the South Korean public," according to a recent article in the Korea Times. "This sentiment could be particularly dangerous in the current geopolitical climate, where North Korea is already ramping up military provocations. Recent actions by North Korea, such as dismantling roads leading to South Korea, signal an increasingly aggressive posture that could exploit any perceived weakness," the paper writes.

The Commander of U.S. Forces Korea reaffirmed that the stationing of American troops on the peninsula does not depend on any peace treaty, or lack thereof, between the parties to the Korean War. In a statement released 15 February 2019, General Robert Abrams said the Seoul-Washington millitary alliance is stronger than ever, and has been serving as a strategic deterrent to any potential crisis or provocation. The statement came a few days after the Commander remarked to the Senate Armed Services Committee that American troops need to stay here UNTIL a peace treaty is signed with the North. That prompted speculation that the U.S. might withdraw its forces if a peace deal is signed.