Agreement on Defense Cost Sharing Between the U.S. and South Korea

SEOUL (Reuters) – The United States and South Korea agreed on a new five-year plan for sharing the costs of American troops stationed in South Korea, as reported by both South Korea’s foreign ministry and the U.S. Department of State.

Key Details

• For 2026, the defense cost will be raised by 8.3% to 1.52 trillion won ($1.13 billion).
• Seoul and Washington initiated the talks earlier than usual to conclude negotiations before the U.S. election in November.
• The negotiations involved Lee Tae-woo, South Korea’s chief negotiator, and Linda Specht, the top U.S. negotiator, finalizing the deal after eight rounds of discussions since April.

Background

Approximately 28,500 American troops are stationed in South Korea to deter the nuclear threat from North Korea.
– South Korea began contributing to the costs of U.S. deployments in the early 1990s, funding local labor, military installations, and logistics support.
– Donald Trump, during his presidency, accused South Korea of benefitting from U.S. military presence without paying enough, demanding up to $5 billion annually, while progress stalled until an agreement was reached with President Joe Biden for a 13.9% increase in contributions, the most significant annual rise in two decades.

Future Projections

• The cost increase for 2026 marks an average rise of 6.2% over the past five years to accommodate rising maintenance costs and additional local staff.
• For the years 2027-2030, they agreed to use the Consumer Price Index to ensure annual increases do not exceed 5%.

Note: ($1 = 1,339.6400 won)