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Monetizing The Linchpin: Trump's Foreign Policy versus the U.S.-Korea Alliance's Value to Washington
Author: Kyle Ferrier
Region: Asia
Theme: Security
Location: Korea, South
Published December 5, 2019
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The Trump administration’s increased emphasis on the cost of the U.S.-South Korea alliance has called into question its appreciation of Seoul’s contributions and raised concerns about the future of the relationship. Amid this uncertainty, this paper highlights key, yet underappreciated benefits that Washington receives from a strong alliance with Seoul.

The cost-centric approach being applied to the U.S.-South Korea relationship follows an overarching trend in U.S. foreign policy under Trump, which the paper terms as “trading intangibles for tangibles.” In effect, the White House greatly underestimates the intangible value of longstanding U.S. foreign policy norms, often leveraging them—and in doing so, undermining them—in favor of short-term economic gains. Though intrinsically more difficult to quantify in dollars, intangible aspects of U.S. foreign policy have much greater financial and economic value to the United States. Consequently, and counterproductively, the Trump administration’s approach may actually prove to challenge the U.S. financially, even in areas where the economy isn’t directly involved, such as the U.S. alliance system.

In the case of South Korea, Washington is putting its alliance credibility—consisting of deterrence against Pyongyang and assurance with Seoul—on the line by attempting to extract major financial concessions from Seoul, chiefly through military burden-sharing negotiations. The annual $5 billion contribution the U.S. is reportedly asking South Korea to agree to by the end of the year is a steep jump from the just under $1 billion Seoul agreed to earlier in the year. However, this annual $5 billion is dwarfed by what strong alliance credibility with Seoul provides Washington, which is at risk from the Trump administration’s intensified focus on cost. Still, the challenge remains that the nature of these benefits makes them difficult to quantify in dollars.

To bridge this gap, the paper recontextualizes existing monetary figures across an array of areas to illustrate a baseline value of the key security benefits Washington enjoys through a strong U.S.-South Korea alliance—essentially, “tangibilizing” the intangibles. Though the actual list of benefits is far more expansive, the three explored in the paper are: preventing the return of armed conflict on the Korean Peninsula, fostering foreign policy convergence on the Korean Peninsula, and supporting common values in the Indo-Pacific.

Benefit #1: Preventing the Return of Armed Conflict on the Korean Peninsula

At the core of the alliance is its mission to defend against and deter a North Korean attack on South Korea. Should deterrence collapse, resulting in war, the cost of war would represent the forgone benefits of credible deterrence. In effect, pre-existing cost estimates of a potential war on the peninsula serve as a proxy for what effective deterrence on the Korean Peninsula helps provide to Washington in dollar terms. From the review of existing estimates, a conservative estimate of the potential cost to the U.S. from a second Korean War is $2 trillion, and thus represents the lower bound of what effective deterrence from the alliance can be said to be saving Washington. Yet, the U.S. gets much more out of the relationship than preventing war, particularly given South Korea’s successful democratic transition, as well as its embrace of market principles and internationalism.

Benefit #2: Fostering Foreign Policy Convergence the Korean Peninsula

Security assurances from Washington have helped to foster convergence between the two allies in key foreign policy areas, namely policy towards North Korea and China. Regarding North Korea, constraint exercised by Seoul to adhere to international sanctions, represented by money that would otherwise be spent, is a tangible representation of additional leverage over North Korea gained by Washington. There are certainly factors at play other than U.S. security assurances, namely the threat of retaliatory sanctions from violating current UN sanctions, that have led Seoul to not break with Washington on North Korea policy. However, they are part of the larger risk of causing an outright break in the security alliance with Washington, which Seoul has repeatedly eschewed. In this light, under the Moon administration, South Korea can be said to have contributed at least $900 million toward building leverage over North Korea. Further, this figure would greatly increase if the international environment shifted to allow for economic engagement with North Korea.

On China, the Trump administration plans to spend billions in Asia to empower countries in the region to combat Chinese coercion. However, not only does South Korea not require such assistance from the U.S.—though it remains susceptible to Chinese pressure—it has taken at least $25 billion in losses to its economy in order uphold the U.S.-supported status quo on the peninsula.

Benefit #3: Supporting Common Values in the Indo-Pacific

Moreover, though South Korea is reluctant to join U.S.- led initiatives in the Indo-Pacific for fear of provoking China, Seoul’s parallel engagement in the region amplifies Washington’s efforts, as it seeks to promote the same values. In the security realm, South Korea’s $12.5 billion of military hardware exports to the region since 2000 have helped to limit Chinese and Russian influence. The South Korean defense industry is also well suited to meet the needs of regional partners that may not be looking for the more advanced, higher cost technologies produced by the American defense industry. In the economic realm, South Korea’s at least $8 billion in official development assistance (ODA) since democratization has worked towards the same ends as corresponding U.S. efforts, promoting the rules-based order without drawing from American coffers.

As its cost-centric approach is calling the U.S. commitment to the alliance into question, the Trump administration risks trading away at least tens of billions, though more likely trillions, of dollars from these intangible benefits in favor of the few billion increase it is seeking through the military burden-sharing talks. There are innumerable other ways Washington could solicit greater South Korean financial contributions without putting American credibility on the line, but to pursue it any other way is not a risk worth taking.

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