June 2, 2007: South Korea is increasing its defense spending nearly 20 percent ($8.5 billion) next year. That means a total defense budget of nearly $33 billion. Adjusted for inflation, that more than twice what was spent ten years ago. While South Korea has been practicing very conciliatory diplomacy towards North Korea, it has also been upgrading its military capabilities. This means the South Korean armed forces have equipment that is often several generations ahead of what is used up north. But what has hurt the northerners the most has been a shortage of fuel, and money for spare parts, to allow their troops to train realistically. The North Korean infantry are drilled constantly, but there is little money for ammunition, so few of these troops are very good shots. Morale is very low in the north as well, and there's no money to deal with that either. But South Korea wants to limit its casualties if there is a war, and has spent a lot of money on well protected tanks, smart bombs and protective vests and high tech gear for their infantry.

But there's another reason for the heavy investments in defense. South Korea is trying to develop a domestic arms industry that can become another source of lucrative exports. After two decades of efforts, South Korea has acquired the skills, but it having a hard time competing in the crowded international arms market.