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Resourcing the joint mission in Korea: a new approach to meeting U.S. military budgetary needs in a volatile area.

Introduction

United States military forces are going through an historic period of transformation, constrained resources, and technological advancements in the way that the Department of Defense (DoD) and its components conduct their business. At the same time, there is growing awareness of the need to approach operations during armistice and contingency from an integrated perspective--U.S., host nation, and allied forces. Implementing this approach, however, requires creative, out-of-the-box thinking. This is especially true of the resource management community within any joint environment. In the Republic of Korea (ROK), for example, the complexities of resourcing the joint mission include not only ongoing U.S. transformation and force structure considerations but also the host country's planning and decision-making structures.

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Traditionally, resource managers have facilitated the acquisition of assets by coordinating "requirements" within the organizational structure of a specific military department. Within a unified command, however, service-focused coordination of parochial needs could obstruct the combatant commander's (COCOM) focus and full understanding of the operational environment should the need arise to commence contingency operations.

Every COCOM needs enhanced resource visibility to ensure that the joint mission is funded. The Commander, United States Forces Korea (USFK) achieved this by inserting himself into the planning and programming process. The USFK is a sub-unified command under the U.S. Pacific Command. The Commander, USFK also is the Commander, United Nations Command (UNC) and the Commander, Combined Forces Command (CFC). As UNC commander, he receives direction from the U.S. Secretary of Defense and the President; as CFC Commander, he receives direction from the bi-national ROK-US Military Committee. As the senior U.S. officer in-country, these latter two positions provide a "COCOM-like" mission should hostilities resume on the Korean peninsula.

The Programmatic Issue Letter represents the Commander, UNC/CFC/USFK's assessment of the requirements he needs in Korea. This assessment gives him both a better view of what assets are on hand to support contingency operations should hostilities resume on the Korean peninsula and a baseline for the assets needed to sustain the war effort.

This article addresses the approach we use in Korea to resource the joint mission. To begin, we provide a brief overview of the North Korean threat. Despite any perceived progress made during the Six Party Talks and through South-North dialogue over the past seven years, the North Korean threat still exists, and it is still quite formidable.

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North Korean Threat

The Korean peninsula remains one of the world's flash points--a place where the flames of the Cold War have yet to be extinguished. Technically, the Koreas remain at war since no peace treaty has ever been signed, just an Armistice Agreement that was designed to last only a couple of years. While there hasn't been a major outbreak of hostilities in the 54 years since the armistice was signed, there is no guarantee that the Democratic Peoples Republic of Korea (DPRK) will continue to honor the terms of that agreement.

Although recent diplomatic discussions with representatives from the DPRK over that nation's nuclear program have produced some agreements, permanent peace and reunification remain beyond reach. Dialogue with that country has been intermittent and usually occurs as a result of a North Korean need for resources required for regime survival.

Historically, the DPRK has reneged on international agreements with the U.S. and its allies, as well as with neighboring nations. It behaves like a rogue state, actively engaging in counterfeiting U.S. currency, drug trafficking, and other illicit activities as a means to bolster its failed economy. North Korea maintains the fourth largest military in the world--from a population of only 22 million--with over 70 percent of it forward-deployed near the border with the ROK. This offensive posture, coupled with North Korea's development of ballistic missiles; a capability to produce weapons of mass destruction; and the world's largest, highly-trained special operations force (which is capable of intruding into South Korea), causes the Korean peninsula to be highly volatile. President George W. Bush's National Security Strategy of March 2006 states:

The North Korean regime ... poses a serious nuclear proliferation challenge.... It presents a long and bleak record of duplicity and badfaith negotiations. The DPRK ... threatens the Republic of Korea with its army and its neighbors with its missiles ... we will continue to take all necessary measures to protect our national and economic security against the adverse effects of their bad conduct.

Military planners expect that a resumption of hostilities would begin with a sudden, rapid North Korean invasion of South Korea. Thus, the Commander, UNC/CFC/USFK would be faced with immediate resource challenges to ensure the timely support of U.S., ROK, and allied units in a hostile environment and the swift evacuation of noncombatants from the combat zone.

Recent initiatives have strengthened the U.S.ROK alliance, an arrangement that has greatly matured over the past 50 years. Like the alliance, the ROK has also changed dramatically since the Korean War. The ROK is a major economic and political power in northeast Asia. This prosperity has facilitated an emerging--and expanding-leadership role in the defense of the Korean peninsula. The most recent example of this came on February 23, 2007, when the ROK and U.S. agreed that, effective April 17, 2012, the ROK will retain wartime operational control of its forces instead of transferring wartime control to CFC. For the first time since 1950, the ROK will have the majority control of its wartime defense. The United States will become more air and naval-centric as it transitions from the leading to the supporting role.

Transformation in Korea

For all intents and purposes, transformation on the Korean peninsula commenced with the 34th Security Consultative Meeting in December 2002. During that meeting, Secretary of Defense Donald Rumsfeld and ROK Minister of National Defense Lee Jun established the Future of the Alliance (FOTA) Policy Initiative--a two-year dialogue to develop options for modernizing and strengthening the U.S.-ROK alliance.

The Security Policy Initiative was established in 2004 to address issues of the alliance and to monitor the successful implementation of efforts that commenced under the FOTA umbrella. These include the relocation of U.S. forces in Korea, transference of military missions and responsibilities from U.S. forces to ROK forces, enhancement of combined readiness, and the expansion of security cooperation.

Under the transformation umbrella, the core of U.S. forces Korea will move south of the Han River. The cost of transformation in Korea carries an estimated $8 billion price tag. The ROK is resourcing 80 to 90 percent of this transformation effort.

Programmatic Issues Letter

United States Forces Korea comprises military service component commands (Eighth U.S. Army, Seventh Air Force, Combined Naval Forces-Korea, Marine Forces-Korea), Special Operations Command-Korea, and Direct Reporting Units, such as the Army's Installation Management Command-Korea. Each DoD component uses its own chain of command and process to communicate specific resource requirements. Consequently, the established Planning, Programming, Budgeting, and Execution System (PPBES), which is used to secure, distribute, and execute resources within each of the DoD components, has the effect of limiting the Commander UNC/CFC/USFK's ability to view fully a common operational picture of the battle space. The traditional resourcing mechanisms have hindered his understanding of what assets he has on hand to "fight tonight," as well as equipment, supplies, personnel and materiel that would be needed to sustain in the fight should there be a resumption of hostiles. This situation validates a needed within DoD standardize the way in which the components support the Commander, UNC/ CFC/USFK (and the geographic COCOMs) in the resource decision-making process.

Enhanced resource visibility would allow funding to support each COCOM's mission. In Korea, the Commander, UNC/CEC/USFK has placed himself directly into the resourcing loop. The revised process enumerates those assets currently available; synchronizes and harmonizes the varied practices of the in-country DoD component organizations; and outlines those additional resources and requirements needed to sustain contingency operations. This common baseline, which is captured in the Programmatic Issues Letter, improves the Commander, UNC/CFC/USFK's ability to direct the flow of resources to support U.S., ROK, and allied military forces.

Extensive coordination with the DoD components helps to identify available assets and specify resource requirements. But unlike the past practice of working within each specific component, resource requirements to sustain joint operations in Korea now are forwarded to the National Command Authority through a Programmatic Issues Letter. This process basically is equivalent to developing a USFK Program Objective Memorandum (POM).

Funding the Joint Mission in Korea

The USFK funding environment is unique, frequently providing a technical culture shock to commanders and resource managers newly assigned to Korea. The USFK budget deals with a "mixed-pot" funding situation. Unlike continental U.S.-based commands, the budget for USFK has two sources: U.S. appropriated funds and ROK host nation support. The mixed pot involves inter-governmental agreements, and it frequently causes uncertainties in the budgeting process.

The ROK government supports in-country U.S. forces through monetary payments in local currency (the Korean won) and in-kind contributions. Working these resources into the U.S. budget and accounting system is far more complex than it sounds. The won-based budget is an integral part of the overall USFK budget. Funding eventually is disbursed and liquidated in won, even though the obligations are recorded in U.S. dollars. Consequently, the USFK budget is sensitive to foreign currency exchange rates, which produce fluctuations in won-budget purchasing power. Currency fluctuations are correlated to buying power, which in turn could have a significant impact on resourcing the joint mission.

Complicating matters, the ROK's own funding process is not synchronized with DoD's PPBES cycle. Those in the Executive Agency (EA, that is, Eighth U.S. Army) who formulate the budget have to estimate as best they can the value in U.S. dollars that the won budget will buy in the year of execution. The purchasing power varies because of daily fluctuations in foreign (market) exchange rates. The standard finance system records the face value of Korea's cash contributions--converted to U.S. dollars at the market exchange rate posted on the date of transaction, regardless of its purchasing power.

The difference between the official budget rate and the market exchange rate is captured in the Foreign Currency Fluctuation Account (FCFA). U.S. budgeteers attempt to develop an accurate projection during the budget formulation process using the most logical economic assumptions and factors available at the time of budget formulation. The Department of the Army (supporting the EA) provides an FCFA target prior to or at the beginning of each fiscal year. Determining the accuracy--or adequacy--of the target is impractical without making a defensible projection of economic factors.

We share these details to help Armed Forces Comptroller readers understand that USFK resources are budgeted in a highly volatile funding environment. Each year, USFK resource managers apply a bit of ingenuity to tie the volatile mixed-pot joint budget to the requirements of the Commander, UNC/CFC/ USFK in order to sustain and maintain in-theater operations. An accurate estimate of host nation (ROK) support usually is not available during the initial funding distribution, necessitating a best-guess estimate consistent with the local economic situation. For instance, in 1999 the ROK experienced economic turmoil. That fiscal crisis had an adverse impact to the USFK funding situation.

Summary

The DPRK remains a threat to the regional stability surrounding the Korean peninsula. In response, the Commander, UNC/CFC/USFK must be fully aware of the capabilities available to support operations should there be a resumption of hostilities in Korea. There are, however, several challenges in accomplishing th is objective.

Budgeting within the UNC/CFC/USFK environment is one of those challenges. Resource managers must be aware that the joint mixed-pot budget comprises appropriated funds and contributions from the ROK government. Furthermore, budget formulation must consider economic projections and estimates, as well as the variations caused by fluctuating market exchange rates between the U.S. dollar and the Korean won. The service component commands and direct reporting units in Korea also traditionally have their own structures and reporting mechanisms to secure resources. This process has limited the Commander, UNC/CFC/USFK's visibility of the capabilities on hand to sustain and maintain operations.

To permit a full assessment of the requirements that he has available, the Commander, UNC/ CFC/USFK developed a Programmatic Issues Letter--a "USFK POM." This new approach has improved management by increasing resource visibility and providing more ability to address capability gaps.

Colonel Kevin C. Hawkins and John Di Genio
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Author:Hawkins, Kevin C.; Di Genio, John
Publication:Armed Forces Comptroller
Geographic Code:1USA
Date:Sep 22, 2007
Words:2088
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