Murphy's Law: South Korea Pays More For Their Americans

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February 5, 2014: South Korea has agreed to again increase the amount it pays the United States each year to offset the costs of stationing American troops in South Korea. This year the payment will be $866 million, an increase of 5.8 percent over 2013. This arrangement is not unique and has been, for decades in some cases, pretty standard for nations hosting American troops. Thus stationing American forces overseas has not always been as expensive for the United States as it appeared to be.

The payments are made largely because most of those forces are stationed in countries that became very wealthy as the Cold War went on. Thus, as the economies in West Germany and Japan recovered after World War II, they reached a point where the United States demanded, and got, payments from those countries to cover part of the expense of keeping American troops there. Since then, Japan and Germany have paid over a hundred billion dollars.

South Korea has made similar payments since 1991. In the case of South Korea nearly all the money they contributed went to pay South Koreans working on American bases and for supplies bought locally. The South Koreans protest the U.S. policy of constantly reducing troop strength there because the presence of American troops helps reduce the possibility of North Korean aggression. It’s a form of peacekeeping that American troops overseas don’t get enough credit for. Meanwhile, the contributions from host countries have declined as American forces are withdrawn.

Despite U.S. troop strength overseas sharply reduced and hundreds of overseas bases closed since 1991, the savings have not been as large as some expected, in part because the local country contributions disappeared as the American troops left. It still costs the United States over $10 billion a year to maintain overseas bases. This does not include the cost of paying American troops in these bases but rather the expense of maintaining the bases and paying the thousands of local civilians. Some 70 percent of these base expenses are incurred in Germany, Japan, and South Korea.

While the cost of maintaining troops overseas is high, it’s not as high as stated. The American troops would be paid and maintained wherever they were, as would the base employees, and duty in Europe was always seen as a recruiting tool. The tours there were three years and you could bring your family.

Perhaps the biggest loss to American taxpayers was that American troops overseas spent most of their pay overseas. This cost a lot of American jobs, and a vibrant example of that could be seen when American units were sent to Afghanistan or Iraq for a year, and the businesses around their U.S. bases suffered economically for as long as the troops were away. Fortunately, the troops in Afghanistan and Iraq could not do much shopping while overseas and spent most of their pay when they got home.

But for most American troops overseas, the main additional cost to the government is travel. The troops are moved inexpensively, usually on chartered aircraft, but it is still expensive to move them back and forth. There’s also the additional expense of shipping ammunition and new equipment. Although in places like Europe and East Asia, a lot of equipment can be purchased locally.

As several hundred thousand American troops left since the end of the Cold War, the host countries, especially Germany, complained about the lost (local civilian) jobs. This apparently led the U.S. to not demand fair compensation for the improvements to the bases returned to German ownership. U.S. officials were accustomed to complaints like this in the United States but had to be reminded that Germans don’t vote in the U.S. and to think of American taxpayers who do. The U.S. lost over a billion dollars just in undervalued property given back without fair compensation. In addition, U.S. Department of Defense officials did not demand inflation and other cost increases in running remaining bases. The U.S. apparently felt it was best not to haggle and just get the troops back to the U.S. as quickly and painlessly as possible.

 

 


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