S. Korea, U.S. strike deal on defense cost-sharing

SEOUL, Dec. 23 (Yonhap) -- South Korea said Tuesday that it has struck a deal with the United States on how much it will contribute to the stationing of American troops here over the next five years.

Under the agreement reached after five rounds of talks since July, South Korea
will increase its share each year in accordance with the consumer price index,
the foreign ministry said.
"But the annual hike rate will be capped at 4 percent," it said in a press release.
Seoul provided the U.S. with 725.5 billion won (US$542.65 million) in cash last
year and is expected to pay the same amount this year with an adjustment for
inflation under the Special Measures Agreement (SMA). When the deal was reached
in late 2006, one dollar was worth about 950 won. The exchange rate now hovers at
around 1,300 won against the greenback.
Given the domestic inflation rate of 2.5 percent in 2007, South Korea will have
to pay about 760 billion won next year, far below Washington's initial demand for
a 14.5 percent hike for South Korea, according to South Korean officials.
They added that South Korea has instead agreed to allow the U.S. to use the SMA
funds to relocate the U.S. Second Infantry Division to a consolidated base in
Pyeongtaek, 70 km south of Seoul, which would drastically increase South Korea's
financial contributions to the overall base relocation program.
Under the 2004 Land Partnership Plan (LPP) deal, the U.S. promised to pay all
costs for the relocation of the frontline division, while South Korea said it
would shoulder the cost of transferring the Yongsan Garrison in central Seoul to
Pyeongtaek.
"The agreement this time reflects the South Korean government's position to share
the burden in an appropriate and rational way to meet our financial capability,
as well as the U.S. position to secure stable assistance for its troops in South
Korea," the ministry said.
lcd@yna.co.kr