South Korea will pay the USA 1.04 trillion won ($924 million) as a contribution for maintaining 28,500 American troops in the region for a year, after a deal was signed in Seoul on Sunday. But with US President Donald Trump calling for his allies to pay an increased share of their defense costs, South Korea was under pressure to pay almost double the current amount, equivalent to nearly $1.4 billion a year.
Unlike past agreements, which lasted for five years, this one is expected to expire in a year, potentially forcing both sides back to the bargaining table within months.
United States Soldiers, Airmen, Sailors, and Marines have been stationed in South Korea for over half a century, and the requirement for a robust alliance has never been greater.
The new arrangement, pending ratification by the South Korean parliament in April, would increase Seoul's share of the cost by a little over 8 percent to $924 million in USA dollars. Washington's top negotiator, Betts, also met with South Korea's Foreign Minister, Kang Kyung-wha, before signing the agreement.
About 70 percent of South Korea's payment funds the salaries of some 8,700 South Korean workers who provide administrative, technical, and other services for the USA military. The SMA will take effect after National Assembly ratifies it around April.
But both sides worked to hammer out a deal to minimise the impact of the lapse on South Korean workers on US military bases, and focus on nuclear talks ahead of a second US-North Korea summit, Seoul officials said.
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South Korean President Moon Jae-in plans to discuss the upcoming summit with Trump soon, according to a spokesman from the Blue House. "We are very pleased our consultations resulted in agreement that will strengthen transparency and deepen our cooperation and the alliance". During his election campaign, Trump suggested he could pull back troops from South Korea and Japan unless they took on greater a share of the financial burdens of supporting USA soldiers deployed there.
Trump, who has been a vocal critic of other nations failing to contribute for US military presence around the world, highlighted the cost of keeping troops in South Korea during an interview earlier this month.
Trump has complained that maintaining troops in South Korea is too expensive and said in the past that he would like to bring them home.
Mr Trump said in his annual State of the Union address to the US Congress last Tuesday that he would meet North Korean leader Kim Jong Un on Feb 27 and 28 in Vietnam, following their unprecedented meeting in Singapore last June. The big US military presence in South Korea is a symbol of the countries' alliance, forged in blood during the war, but also a source of long-running anti-American sentiments.
The new deal must still be approved by South Korea's parliament, but it would boost its contribution to 1.03 trillion won (687.68 million pounds) from 960 billion won in 2018.
Late previous year, the USA military had warned South Korean workers on its bases they might be put on leave from mid-April if no deal was agreed. The two nations inked a short-term deal on February 10 increasing South Korea's annual bill by 6.75 percent to $890 million.