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TO RUEHC/SECSTATE WASHDC IMMEDIATE 5822
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UNCLAS SEOUL 000410 
 
SIPDIS 
 
SIPDIS 
 
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E.O. 12958: N/A 
TAGS: MCAP PREL PGOV PARM MARR ECON KS
SUBJECT: 2005/2006 REPORT TO CONGRESS ON ROK CONTRIBUTIONS 
TO THE COMMON DEFENSE 
 
REF: STATE 223383 
 
SUMMARY 
------- 
 
¶1. (U) The Republic of Korea made significant contributions 
to the common defense of the Korean peninsula in 2004 and 
¶2005.  The ROKG demonstrated a strong commitment to the 
U.S.-ROK alliance, working closely with the U.S. to address 
the DPRK nuclear issue and making important contributions to 
the war on terror and coalition efforts in Afghanistan and 
Iraq.  Most notably, in 2004, the ROK deployed approximately 
3,000 troops to Iraq, becoming the third largest foreign 
troop contingent.  In December 2005, the ROK National 
Assembly renewed the dispatch of ROK troops to Iraq for 
another year.  Under the Security Policy Initiative (SPI), 
and its predecessor the Future of the Alliance (FOTA) Policy 
Initiative, the U.S. and the ROK undertook a number of 
important projects to enhance the combined deterrent 
capability and made solid progress on realignment and 
modernization of U.S. Forces Korea and the alliance, 
including base relocation and mission transfers.  In another 
positive development, the ROK Ministry of Defense (MND) 
unveiled a comprehensive plan to reform its military from the 
top down in the next 15 years.  However, the ROK Special 
Measures Agreement contribution for 2005 decreased by nine 
percent from the previous year.  END SUMMARY. 
 
USFK REALIGNMENT 
---------------- 
 
¶2. (U) In 2004 and 2005, the two governments continued to 
implement a number of initiatives to realign U.S. Forces 
Korea (USFK) and modernize the alliance.  These important 
measures include troop reduction, base consolidation, and 
mission transfers.  Total U.S. troops on the peninsula will 
be reduced by 12,500 to 25,000 by the end of 2008.  In the 
most significant realignment in 50 years, USFK will close 
dozens of facilities and consolidate its presence into two 
major hubs-- one in the Osan and Pyongtaek region 
approximately 40 miles south of Seoul and another in the 
Busan-Daegu region in the southeastern part of the peninsula. 
 During this process, approximately two thirds of the land 
currently occupied by USFK will be returned to the ROK.  Also 
during 2005, the ROK military assumed responsibility for 
several significant military missions previously the 
responsibility of USFK.  Plans also are underway to jointly 
identify additional missions for transfer to the ROK 
military. 
 
SUPPORT FOR OEF/OIF, PKO 
------------------------ 
 
¶3. (U) The ROK currently has over 3,500 military personnel 
deployed to 14 locations in 12 countries in support of the 
Global War on Terror and ongoing Peace Keeping Operations. 
In October 2004, the ROKG dispatched approximately 3,000 
troops (Zaytun Unit) to Irbil in support of Operation Iraqi 
Freedom.  That number reached 3,300 by the end of 2005.  The 
ROK also has a brigade in Swarashi, located 30 km from the 
Irbil Airport, to help rebuild nearby rural areas.  The South 
Korean Air Force 58th Airlift Group (173 personnel) also 
operates C-130's from Kuwait, in support of the Zaytun unit. 
At the end of 2005, the South Korean National Assembly voted 
to extend its troop deployment for one year, with a plan for 
a phased reduction of troops.  The ROK also has been a 
willing partner in Operation Enduring Freedom, and has 
dispatched five liaison officers to CENTCOM, three to 
Afghanistan and one to Djibouti.  In addition, one ROK 
medical support unit, consisting of 58 military personnel (14 
officers and 44 enlisted), has been station in Bagram since 
February 2002 to assist in the treatment of allied personnel, 
Afghan trainees, and civilian patients.  The ROK has also 
dispatched an engineering construction battalion, consisting 
of 14 officers and 133 enlisted troops, in February 2003 to 
take responsibilities for runway and facility construction. 
 
¶4. (U) The ROK continues to support Peace Keeping Operations 
 
(PKO) around the globe.  A medical support team of 20 
military personnel, 18 officers and two enlisted, has been in 
the Western Sahara since August 2004.  Nine ROK personnel 
have been in Islamabad, Pakistan since October 1994 as part 
of the India-Pakistan Armistice observer group.  Under the 
authority of the UN Observer Missions, the ROK deployed seven 
military personnel to Georgia in November 1994, two to 
Liberia in October 1993, two to Burundi in September 1994, 
and eight personnel were recently sent to Sudan in November 
¶2005.  In addition, under UN authority, the ROK dispatched 
one person to Kabul in July 2003.  In December 2005, the ROK 
committed to sending two observers to the Initial Planning 
Conference (IPC) for the Khaan Quest IV PKO training 
exercise.  However, the ROK is still undecided about its full 
participation in the exercise. 
 
¶5. (U) In the area of humanitarian relief, the ROK has 
quickly responded to international needs in the face of 
natural disasters.  During 2005, the ROK contributed almost 
USD 45 million in cash support of Hurricane Katrina relief 
efforts, the Pakistan Earthquake Relief Operation, and the 
Tsunami Relief Operations. 
 
SIPDIS 
 
ROK DEFENSE REFORM 
------------------ 
 
¶6. (U) In September 2005, the ROKG announced a plan to 
drastically transform and modernize its military by 2020, 
including an initiative to downsize its total troop level to 
500,000 from the current 681,000.  In conjunction with the 
reductions, the plan calls for dramatically streamlining the 
military's combat organization, with numerous units being 
consolidated or eliminated.  To maintain combat 
effectiveness, the ROKG plans for significant modernization 
of its military's combat weaponry and support systems. 
 
¶7. (U) The reform plan calls for annual increases of 11 
percent in the defense budget until 2015.  From 2016 to 2020, 
the military budget would then be increased 7 percent 
annually.  However, it is not clear whether the National 
Assembly would appropriate sufficient funds for the major 
undertaking. For 2006, NA allotted 22.5 trillion won (USD 
22.84 billion) for defense in the new year, representing a 
6.7 percent increase over the 2005 defense spending. 
Moreover, spending on The Force Investment Program, which 
includes Force Improvement, Research and Development, and 
support activities, was only raised 2.7 percent from the 
previous year (to 7.4 trillion won (USD 7.51 billion)).  The 
bulk of the 6.7 percent increase was in Operations and 
Maintenance (O&M) activities, which as a category increased 
8.8 percent (to 15 trillion won (USD 15.23 billion)). 
Expenses for salary, pension, meals and clothing accounts for 
over 70 percent of the O&M budget, but the majority of the 
increase was centered around quality-of-life-expenditures 
such as housing improvements and personnel welfare programs. 
O&M makes up approximately two-thirds of the defense budget. 
 
 
DEVELOPMENTS IN DEFENSE PROCUREMENT 
----------------------------------- 
 
¶8. (U) The United States remains the principal offshore 
source of defense articles and services for the ROK. 
However, U.S. market share is shrinking as we lose influence 
over ROK purchases.  In the past decade, 78 percent of 
Korea's offshore procurement came from the United States.  In 
2004 the share shrank to approximately 70 percent.  That 
said, in FY2005 Korea's FMS purchases were the third largest 
in the region, behind Japan and Taiwan, and sixth worldwide, 
with an open FMS case value of over USD 10.01 billion as of 
December 2005.  Korea continues to view Foreign Military 
Sales (FMS) as an important method for acquiring U.S.- origin 
defense articles and services.  In FY2005, over 81 percent of 
all U.S.- origin defense articles and services were acquired 
through FMS.  Since 1996, there has only been one year in 
which the FMS share of the total U.S. sales to Korea was less 
than 50 percent (in 2002 when Korea purchased the F-15K 
through DCS).  Although U.S.-ROK interoperability is still 
 
considered, cost, offsets, and technology transfers have 
become increasingly important considerations. 
 
¶9. (U) The ROK procurement strategy is to promote indigenous 
production first and buy offshore only when ROK production is 
prohibitively expensive or technically unfeasible. 
Government agencies and companies from both nations continue 
close coordination to mutually develop defense related 
systems.  One recent example is the ROK's interest in a 
cooperative venture with the U.S. Navy to develop the LOGIR 
missile.  The ROK proposed to invest USD 5 million, and 
several man-years into the project.  Other discussions 
currently underway include proposed cooperation on Airborne 
Warning Surveillance System (AWSS) and Broad Area Maritime 
Surveillance (BAMS). 
 
¶10. (U) Another example of efforts to improve 
interoperability with the U.S. is the ROK's enthusiastic 
participation in U.S. training programs.  There are currently 
numerous programs in place whereby military officers from 
both the ROK and U.S. attend training and professional 
schools hosted by the counterpart nation.  For example, the 
ROK has a total of 61 FMS students studying in military 
schools in the U.S.  There are also four ROK military 
officers studying in the U.S. under the Professional Military 
Education (PME) exchange program. 
 
COST SHARING 
------------ 
 
¶11. (U) FY 2004 and FY 2005 USFK Cost Sharing Report 
 
Table 1 summarizes USFK Non-Personnel Stationing Costs 
(NPSC).  Total NPSC are the criteria used to compute the ROK 
cost sharing contributions 
 
Table 1 - USFK NPSC Summary (FY 2004 & 2005) 
 
All Data in billions of Korean Won 
 
CATEGORY                     FY04         FY05 
--------                     ----         ---- 
US NON-PERSONNEL 
STATIONING COSTS* 
 
Total O&M (w/civ pay)        1,579.8      1,483.9 
Ttl Family Housing Operation    53.1         49.3 
Ttl Family Housing Construction  5.1         10.3 
Total MILCON                   140.8         82.4 
USFK Direct Logistics Costs    179.3        167.8 
USFK Direct KN Personnel Costs 130.0        171.7 
--------------------------------------------- ---- 
USFK SUBTOTAL                2,088.1      1,965.4 
 
ROK Direct Cost Sharing 
Contribution                   789.4        713.2 
ROK Indirect Cost Sharing 
Contribution                   657.3        568.0 
--------------------------------------------- ---- 
ROK Subtotal                 1,446.7      1,281.2 
--------------------------------------------- ---- 
TOTAL NPSC COSTS             3,534.8      3,246.6 
--------------------------------------------- ---- 
 
* USFK NPSC costs computed at average expenditure rates of 
1,050 Won:1 Dollar for 2004 and 1,000:1 for 2005. 
 
Table 1 report covers ROKG cost-sharing contributions for the 
periods 2004 and 2005.  These two years fell into the 
provisions of two different SMA's, one covering the 2002-2004 
period, and another the 2005-2006 period.  The 2004 ROK SMA 
contribution was 747.7 billion Won.  This amount, while short 
of Congressional and SECDEF mandate, constituted the highest 
level of ROKG cost-sharing to date.  However, the ROK SMA 
contribution for 2005 was 680.4 billion Won, representing a 9 
percent decrease from 2004.  Table 2 and 3 show the summary 
of ROK's direct and indirect cost sharing contributions. 
 
Table 2 - ROK Direct Cost Sharing Contributions Summary 
 
In billions of Korean Won 
 
CATEGORY     CASH           In-Kind        Total    Remarks 
            2004  2005     2004   2005   2004  2005 
--------------------------------------------- -------------- 
Labor (KN)  324.1 287.4                  324.1 287.4    1 
ROKFC       224.7 236.9    11.8   12.5   236.5 249.4    2 
CDIP                       87.1   43.0    87.1  43.0    3 
Logistics                 100.0  100.6   100.0 100.6    4 
Rents        12.0   1.4                   12.0   1.4    5 
KATUSA        9.4   8.8                    9.4   8.8    6 
Relocation 
Construction 20.4  22.6                   20.4  22.6    7 
Vicinity 
Improvements  0.0   0.0                    0.0   0.0    8 
--------------------------------------------- -------------- 
TOTAL       590.6 557.1   198.9   156.1  789.4 713.2 
 
Notes: 
¶1. Labor (Korean National) - SMA category; the ROKG provided 
three equal cash deposits in April, June, and August. 
¶2. Republic of Korea Funded Construction - SMA category; 95 
percent cash, 5 percent in-kind 
¶3. Combined Defense Improvement Projects - SMA category 
¶4. Logistics Cost Sharing - SMA category; in-kind 
projects/services provided by ROK MND 
¶5. The cost of leases and rents of privately owned land and 
facilities occupied or used by U.S.; ROK MND budgeted and 
paid to applicable landowners 
¶6. Korean Augmentees to the U.S. Army; KATUSA salaries 
budgeted by ROK MND. 
¶7. Costs of the functional transfer of a structure and 
function from a facility being released by U.S. forces to a 
facility being retained 
¶8. Improvements to the vicinity of facilities and areas 
occupied by U.S. forces, e.g., projects aimed at disaster 
prevention and noise abatement 
 
Table 3 - ROK Indirect Cost Sharing Contribution Summary 
 
In billions of Korean Won 
 
CATEGORY         2004     2005     REMARKS 
--------         ----     ----     ------- 
Foregone Rents   512.4    430.0       1 
Tax Exemptions   144.9    138.0       2 
------------------------------------------ 
TOTAL            675.3    568.0 
 
Notes: 
¶1. Estimated; foregone rents include leases and fair-market 
value of rent of government-owned land used by U.S. forces 
¶2. Estimated; tax exemptions include tax concessions and 
customs duties that are waived by the host nation 
 
COMMENT: The Republic of Korea (ROK) total 2004 cost sharing 
contribution of 1.45 trillion Won paid for approximately 40.9 
percent of USFK's Non-Personnel Stationing Costs (NPSC) of 
3.53 trillion Won.  The ROK's total 2005 cost sharing 
contribution of 1.28 trillion WON paid for approximately 39.5 
percent of USFK's NPSC of 3.25 trillion Won.  END COMMENT. 
 
CONTINGENCY OPERATIONS, MILITARY ASSISTANCE, 
HUMANITARIAN ASSISTANCE 
-------------------------------------------- 
 
¶A. Recent Contingency Operations: 
   ----------------------------- 
 
NONE 
 
 
¶B. Military Assistance (as provided by ROK MOFAT): 
   ------------------- 
 
In number of personnel 
 
 
Iraq - a. Zaytun Unit   3,265 
       b. MNF-I            14 
 
Afghanistan - a. 100th Construction Battalion   147 
              b. 924th Medical Support Group     58 
              c. CJTF-76                          2 
              d. CFC-A                            1 
 
CENTCOMM - 5 
 
CJTF-HOA - 1 
 
United Nations Activities 
 
   a. Sub-Sahara Medical Support Team    20 
   b. India-Pakistan Armistice Observer   9 
   c. Georgia Observer Group              7 
   d. Liberia Observer Group              2 
   e. UN-Afghan Group                     1 
   f. Brundi Observer Group               2 
 
¶C. Humanitarian Relief Operations: 
   ------------------------------ 
   Pakistan Earthquake Relief Operation - USD 4.2 million 
   Hurricane Katrina - USD 30 million 
   Tsunami Relief Operations - USD 20 million 
 
¶D. Capacity Building: 
   ----------------- 
 
¶12. (U) The ROK has been active in educating and training 
Iraqis and Afghanis on law enforcement, judicial assistance, 
and public administration.  The ROK invited 475 Iraqis to 
educate them on public administration and development and 
dispatched 10 ROK personnel to teach irrigation and sewage 
treatment methods.  Two ROK personnel have been dispatched to 
Afghanistan, and 60 Afghans were invited to Korea for law 
enforcement training.  The ROK also hosts an unspecified 
number of officials from sundry African countries to teach 
economic policies. 
 
¶E. Counterproliferation Contributions: 
   ---------------------------------- 
 
¶13. (U) ROK continued to be a strong supporter of USG 
nonproliferation efforts and participated actively in 
international nonoproliferation reforms.  The ROK was a key 
participant in the Six Party process on the North Korean 
nuclear problem, and recently decided to participate as an 
observer in  some aspects of the Proliferation Security 
Initiative (PSI).  The ROK also contributed USD 90 Million 
and USD 28 Million, respectively in 2004 and 2005 to the 
Korea Energy Development Organization (KEDO).  KEDO is now 
defunct, the ROK, in addition to Japan, the U.S., and the EU, 
are finalizing plans to settle all outstanding obligations by 
the organization. 
 
 
ROK DEFENSE BUDGET 
------------------ 
 
¶14. (U) ROK Defense Expenditures for FY2004 in billion Won 
units: 
 
CLASSIFICATION                     FY2004     Percentage 
--------------                     ------     ---------- 
Operation & Maintenance            12,648     66.8 
 
Personnel Expenses                  7,988     42.2 
------------------ 
¶1. Wages/Pension                    6,655     35.1 
¶2. Other                            1,333      7.0 
 
Operational Expenses                4,660     24.6 
-------------------- 
¶1. Meals/Clothes                    1,310      6.9 
¶2. Troop Activities                   475      2.5 
 
¶3. Education & Training               168      0.9 
¶4. Equipment & Facility               779      4.1 
     Maintenance 
¶5. Resource Procurement               100      0.5 
¶6. Military Construction              818      4.3 
¶7. Reserve Forces                      71      0.4 
¶8. Research/Subsidiary                159      0.8 
     Organization 
¶9. USFK Support                       334      1.8 
¶10. Basic Project Expenses            428      2.3 
¶11. Other                              18      0.1 
 
Force Investment                    6,293     33.2 
---------------- 
Force Improvement                   3,376     17.8 
Research & Development                651      3.4 
Support Activities                  2,267     12.0 
 
Total                              18,941    100.0 
 
 
ROK Defense Budget under Medium-Term Expenditure Framework 
(MTEF) for 2005-2008 in trillion Won units 
 
                   FY2005 FY2006 FY2007 FY2008 Growth 
                   ------ ------ ------ ------ ------ 
Operations & 
Maintenance        13,738 14,861 15,560 16,711    7.2 
------------ 
Personnel 
Expenses            8,595  9,032  9,582 10,165    6.2 
Operational 
Expenses            5,143  5,828  5,978  6,546    8.9 
 
Force Investment    7,085  7,849  9,345 11,095   15.2 
---------------- 
Force Improvement   4,034  4,347  5,033  6,548   18.3 
Research & 
Development           754       895  1,022  1,114   14.9 
Support Activities  2,298  2,607  3,290  3,432   11.3 
 
Total              20,823 22,709 24,905 27,806   10.1 
----- 
 
¶15. (U) The Embassy point of contact (POC) for this report is 
PolMilOff Hyun S, Kim, TEL 82-2-397-4215, e-mail: 
kimhs@state.sgov.gov 
 
¶16. (U) This cable was coordinated with USFK. 
 
 
 
 
VERSHBOW