The Future of the South Korean-US Alliance: Insights from the New Cost-Sharing Agreement
ROK-US Cost-Sharing; Sweden in the Indo-Pacific; ROK-Philippines
Hub Story: South Korea and US Announce Cost-Sharing Agreement
Spoke Story: Sweden Releases its Indo-Pacific Strategy
Spoke Story: South Korean President Visits the Philippines
Alliance Insights: Key Articles This Week
Hub Story: South Korea and US Announce Cost-Sharing Agreement
South Korea and the United States have reached a significant defense cost-sharing agreement, known as the 12th Special Measures Agreement (SMA), which will see Korea's direct financial contributions increase by 8.3 percent in 2026. This deal marks a shift back to a consumer price index (CPI)-based system for determining annual contributions instead of being tied to South Korean defense budget growth. The agreement, finalized after extensive negotiations, is poised to address previous concerns about the financial burden on Seoul.
This new announcement comes after many rounds of cost-sharing negotiations this year. Seoul and Washington pushed to reach a settlement early to try to prevent negotiations from taking place under a second Trump Administration. The graph below shows South Korean payments since the 1st SMA in 1991.

Do these numbers actually reflect South Korean cost share? Not quite. Washington has pushed South Korea to pay 50 percent of the total US cost and obligation to the Asian ally. However, as recent reports have indicated, these payments only reflect the direct costs that South Korea pays and do not reflect the indirect costs that South Korea contributes to US Forces Korea.

Additionally, the figures accrued under the various SMA’s do not account for other projects negotiated outside SMA deals. For example, a 2021 Government Accountability Office report tracked South Korea’s direct cast payments under the SMA but also some of the costs Seoul incurred for the Yongsan Garrison relocation to Camp Humphreys, which were quite significant and projected to cost $7.4 billion in total.
Under President Trump, the alliance was strained, particularly regarding cost-sharing. Trump demanded $1.5 billion from Seoul, but in 2019, the two countries agreed on a roughly $1 billion figure. In 2021, under the 11th SMA, the cost the ROK would pay was linked to annual increases in ROK’s defense budget growth. While this was acceptable to the more dovish Moon Jae-in administration, it resulted in dramatic cost-sharing increases under the new Yoon Suk Yeol administration, mainly due to his more hawkish posture and efforts to increase South Korean defense spending.
Seoul wants to insulate direct costs from another Trump Administration by getting a settlement very early and with a more friendly Biden Administration. Trump has already criticized the amount that South Korea pays earlier this year. It is doubtful that Trump would keep to a Biden-era deal, especially since the current SMA isn’t set to lapse until 2026. Additionally, Trump foreign policy advisors like Bridge Colby have called for a re-evaluation of the American position on the peninsula. Colby does not call for the abandonment of South Korea but rather that the US force posture there be reimagined to face China rather than solely focused on the North Korean threat. Even if Trump does not decide to renegotiate the SMA, the US-South Korea alliance will come under strain as the new administration looks to determine US interests in the region. It seems unlikely that a President Kamala Harris would throw out the new SMA for her own.
Spoke Story: Sweden Releases Indo-Pacific Strategy
Last week, the Swedish government released its Indo-Pacific Strategy. Within, Sweden acknowledges the growing link between security in the Euro-Atlantic and Indo-Pacific regions, as threats from authoritarian states challenge international norms. To address these challenges, Sweden aims to strengthen defense cooperation with Indo-Pacific partners to maintain stability and protect trade. This policy outlines the government's commitment to enhancing engagement in three key areas: defense relations, military presence, and collaboration on defense technology, ultimately improving Sweden's national defense capabilities.
There is a burgeoning convergence between the European and Indo-Pacific allies, a trend that underscores the strengthening of allied relations. The Swedish government is committed to upholding international law and extends this commitment to the Indo-Pacific. This declared connection is part of a larger trend in thinking by European and Indo-Pacific governments. This is evidenced by NATO's gradual embrace of the Indo-Pacific, as seen with the inclusion of Indo-Pacific leaders at this year's NATO Summit in Washington. South Korea's recent expansion of military assistance to NATO countries and the new Japanese Prime Minister Shigeru Ishiba's statement that "today's Ukraine could be tomorrow's East Asia" all point to a deepening of security ties in the region.
Unfortunately, Eurasia's authoritarian countries have come to similar conclusions. Russia and North Korea have grown worryingly close, and China has expanded wartime assistance to Moscow.
Sweden intensities three thrust areas that it plans to focus on for its Indo-Pacific posture: defense relations, military presence, and cooperation on defense materiel. The white paper identifies several measures Sweden plans to take:
Expanding bilateral defense and security dialogues
Participating in regional forums
Increasing the presence of defense attachés in prioritized Indo-Pacific countries
Strengthening both the Government Offices’ and public authorities’ analytical skills in the defense and security sectors
Continue to monitor the maritime security situation and evaluate contributions for future efforts and regional initiatives for maritime security in the region
Assigning liaison officers to staff in the region
Taking part in regional defense exercises and operations for maritime security
Enhancing bilateral collaboration to develop specific military operational concepts may be valuable to Sweden’s national defense capacity development
Increasing cooperation on defense technology and innovation with high-tech countries to increase Swedish capacity development in the short or long term
Sweden concludes its strategy with a strong note.
Since the Government is now launching, and prioritising, enhanced cooperation with partner countries in the Indo-Pacific region, the conditions for collaborating internationally and strengthening the transatlantic link are good. EU and NATO activities are an important part of developing and promoting Sweden’s defence relations with countries in the Indo-Pacific region. At the same time, a number of measures can be implemented nationally and by individual actors in Sweden to develop and promote the ambitions outlined in this document.
Spoke Story: South Korean President Visits the Philippines
For nearly a year, the Philippines and China have been in heightened tensions over China's excessive claims and actions in the South China Sea. Chinese aggression has resulted in notably closer collaboration between the Philippines and the United States, as well as other Indo-Pacific countries like Japan and Australia. Last week marked the first state visit of a South Korean president to the Philippines since 2011.
President Yoon Suk Yeol's visit to Manila was not just a visit but a strategic move that upgraded Korean and Filipino relations to a "strategic partnership." This shift in status, along with Yoon's announcement of $1.9 billion of low-interest loans for two infrastructure projects in the Philippines, signifies the importance of this development.
On the security front, the two leaders announced deeper cooperation on maritime security between their coast guards, a clear signal to China. A more significant takeaway is that the joint statement emphasized defense-industrial cooperation.
Closer cooperation between defense industries and logistical acquisition symbolizes mutual trust between the two countries. The ROK’s support in this area is essential to the Modernization Program of the Armed Forces of the Philippines. Building on the progress made thus far, the two countries will continue to deepen their special partnership in this area.
Yoon’s trip to Manila is just the first leg of a broader Southeast Asian tour, which includes Singapore and Laos. Yoon has set a path for South Korea to become one of the world’s leading defense exporters. In 2023, South Korea was in the top 10 for arms exports, and the government is striving to reach fourth place by 2027. Yoon and the ROK Defense Ministry have done an impressive job engaging with Europe, Latin America, and the Middle East, resulting in tens of billions of dollars in defense sales. South East Asia is another great opportunity for Seoul to increase its domestic industrial capacity through arms exports. Yoon’s push falls within his vision of South Korea as a Global Pivotal State. The Philippines is a good target as Manila is desperate to rapidly modernize its armed forces.
Alliance Insights: Key Articles This Week
Australia:
Defense News: New Zealand, Australia Swap Senior Military Commanders
Defense News: House Leaders Urge White House to Share More Tech with Australia, UK
India:
The Diplomat: AI and Indian Defense: Enhancing National Security Through Innovation
US State Department: Secretary Blinken’s Meeting with Indian External Affairs Minister Jaishankar
Japan:
Naval News: Japan MoD Signs Contracts to Build Two ASEVs with MHI and JMU
Japan Times: Ishiba Looks to 'Defense Tribe' to Fill Key Cabinet Positions
Nikkei Asia: Japan's Chip Revival is on Track. The Real Challenge Begins Now
South Korea:
Yonhap News Agency: S. Korean, U.S. Navies Hold Joint Drill in East Sea
Nikkei Asia: South Korea Unveils Most Powerful Ballistic Missile
Yonhap News Agency: S. Korea to attend NATO defense ministers' meeting for 1st time
Yonhap News Agency: Int'l Defense Exhibition Opens at Gyeryongdae Military Headquarters