The government has proposed a record 73.28 trillion won ($54.0 billion) defense budget for 2027, up 8.2 percent from this year, with much of the additional money directed toward missile defense, drones, artificial intelligence and capabilities needed for greater military autonomy.
The increase outpaces China's 7 percent rise in central government defense spending for 2026. Beijing allocated 1.91 trillion yuan this year and has yet to announce its 2027 budget.
Japan, meanwhile, is seeking a record 8.9 trillion yen defense budget for fiscal 2027 as it continues a five-year military buildup centered increasingly on drones, missiles and other unmanned systems.
South Korea's headline record comes with an accounting caveat. Starting in 2027, the government will include force operations, defense capability improvement and military manpower administration under a single defense-expenditure measure, making direct comparisons with previously reported totals less straightforward.
The broader direction, however, is unmistakable.
Global military expenditure rose 2.9 percent to $2.89 trillion in 2025, marking an 11th consecutive annual increase, according to the Stockholm International Peace Research Institute. Spending in Europe alone jumped 14 percent as Russia's war in Ukraine continued to drive rearmament across the continent.
Recent conflicts are also changing what militaries are spending their money on.
During the war with Iran, U.S. Admiral Brad Cooper told Congress that the United States and its allies had intercepted more than 1,500 missiles and 6,000 drones, putting heavy pressure on stocks of costly air-defense interceptors.
The Pentagon has since moved to expand production of key missile defenses including Patriot PAC-3 and THAAD interceptors.
Ukraine has demonstrated the challenge on an even larger scale. Russia launched nearly 1,500 drones at Ukraine over just four days in late August, more than half of them jet-powered, according to Ukrainian President Volodymyr Zelenskyy.
Ukraine itself is on track to produce between 6 million and 7 million small first-person-view attack drones this year, or roughly 500,000 a month.
The scale of drone warfare has created a two-sided problem for militaries: they need large quantities of inexpensive unmanned systems for surveillance and attack while developing cheaper ways to stop enemy drones without exhausting far more expensive missile inventories.
Spending on force operations will rise 5.9 percent to 50.04 trillion won, while the defense capability improvement budget, used largely to acquire and develop weapons, will jump 13.8 percent to 22.71 trillion won. The latter will increase by about 2.8 trillion won, the largest annual gain on record.
Particularly striking is the increase tied to South Korea's push for greater military autonomy and the transfer of wartime operational control, or OPCON, from the United States.
Funding designated for OPCON transition and self-reliant defense will surge 34.9 percent from 9.02 trillion won this year to 12.17 trillion won in 2027.
The government plans to accelerate deployment of medium-altitude reconnaissance drones and the L-SAM long-range missile defense system, expand production of the KF-21 fighter jet and begin work on a nuclear-powered submarine program.
The budget also incorporates lessons from drone-heavy conflicts.
Funding for artificial intelligence and manned-unmanned teaming systems will increase 55.5 percent, while spending on drone and counter-drone capabilities will rise 18.8 percent.
The military plans to develop swarm and loitering attack drones while expanding laser-based and other counter-drone defenses, reflecting the growing need to counter large numbers of relatively inexpensive aerial threats without relying exclusively on costly interceptors.
The buildup comes at an important moment for the future of the South Korea-U.S. alliance.
President Lee Jae Myung recently nominated Kang Shin-chul, a former deputy commander of the South Korea-U.S. Combined Forces Command, as defense minister. Kang said Thursday that Seoul should pursue OPCON transition in a way that strengthens the alliance.
The allies are in the second stage of a three-stage conditions-based transition process, and Seoul aims to complete the full operational capability assessment this year.
The Lee administration wants to regain wartime operational control before Lee's term ends in 2030 and is seeking to establish a target year during the allies' annual Security Consultative Meeting this fall.
The accelerating military buildup is unfolding alongside Lee's push to ease tensions with North Korea.
Lee said Wednesday that conditions should be created for renewed dialogue between Washington and Pyongyang and called for the Korean Peninsula's decades-old armistice system eventually to be replaced by a permanent peace framework based on cooperation and prosperity.
South Korean intelligence authorities have also detected signs that both North Korea and the United States may be interested in returning to dialogue, although no specific contacts have been confirmed.
Beyond external threats, however, South Korea faces another defense challenge that additional spending alone cannot solve: a rapidly shrinking pool of military-age personnel.
The 2027 proposal seeks to nearly double the number of full-time reservists from 3,700 to 7,000, expand the use of civilians for noncombat duties and invest more heavily in AI and unmanned systems to reduce reliance on manpower.
The Defense Ministry is pushing to create a unified Armed Forces Academy by integrating the Army, Navy and Air Force academies.
At a recent public hearing, Kim Hong-chul, director general for defense policy at the ministry, said South Korea's pool of available military manpower is projected to shrink from about 349,000 to roughly 204,000 by 2040, forcing the military to reduce its standing force of about 500,000 to somewhere between 350,000 and 400,000.
The prospect has intensified debate over whether a smaller military should focus as heavily on improving the quality and specialization of individual personnel as on replacing manpower with technology.
Kim Se-jin, secretary-general of defense policy group Mirae Saenggak, argued that population decline makes the capabilities of individual officers more, rather than less, important.
"As our population declines, the capabilities of each individual officer become more important in future warfare," he said, arguing for greater specialization in military education rather than consolidation.
AJP Takeaways
• Korea joins global rearmament: Seoul's proposed 2027 defense budget rises 8.2 percent to a record 73.28 trillion won as China, Japan and European countries also raise military spending.
• Drones reshape the spending race: Wars in Ukraine and Iran have exposed the need for both mass-produced attack drones and cheaper defenses against them, pushing Seoul toward drones, lasers and AI-enabled systems.
• OPCON drives military investment: Spending tied to wartime operational control transition and self-reliant defense will jump 34.9 percent as South Korea accelerates missile defense, KF-21 production and a nuclear-powered submarine program.
• Demographics become a security constraint: A shrinking military-age population is forcing Seoul to rely more heavily on reservists, civilians, AI and unmanned weapons while reopening debate over how the armed forces train future officers.
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