South Korea and the United States failed Thursday to narrow differences over the sharing of the cost for stationing American troops here as Seoul rebutted Washington’s call for additional financial backing, a government source said.

During their latest two-day meeting in Seoul, the allies were split over how much each side would contribute to the cost of maintaining the 28,500 U.S. troops here, said the source at Seoul’s foreign ministry.

The countries may meet again in late August possibly in Seoul to resume their negotiations as both sides hope to wrap up the negotiations by October, according to the source.

In early July, negotiators from the two countries met in Washington to kick off their negotiations on the costs sharing.

Both countries first signed the Special Measure Agreement in 1991, setting up legal grounds for South Korea to help finance the United States Forces Korea. The Seoul-Washington Mutual Defense Treaty, signed after the 1950-53 Korean War, had put the burden of bankrolling U.S. defense activities here on the U.S. side.

Under the latest SMA renewed in 2008, South Korea agreed to pay 4.07 trillion won ($3.6 billion) for the five-year period ending in 2013. In 2013 alone, the South paid 869.5 billion won, which accounted for more than 40 percent of the USFK defense costs.

Amid budgetary difficulties at home and increased security threats from North Korea, the U.S. is reportedly trying to bring the South’s annual contribution up to 1 trillion won.

Seoul, however, is facing public pressure as Washington’s reported intention to raise South Korean contributions raised criticism from taxpayers here.

In a forum held in Seoul earlier on Thursday, senior presidential secretary Ju Chul-ki said Seoul may have proposed an annual contribution smaller than what it paid last year, indicating that the allies have a broad gap to bridge.

Sharing defense costs is a prickly issue facing the two allies.

A group of South Korean activists held protests in front of the ministry building in central Seoul during the two-day talks. They denounced the U.S. attempts to increase South Korea’s payment, saying that the U.S. is already sitting on an amount of unused funds given by the South.

According to a report by Seoul’s Ministry of National Defense, submitted to Unified Progressive Party lawmaker Lee Seok-ki, more than 500 billion won paid by the South to the U.S. military over the past five years remains unused as of recently.

A lack of transparency about how the U.S. military uses the South Korea-contributed funds also raised local criticism of a potential hike.

The U.S. troops are stationed in South Korea under a mutual defense treaty aimed at deterring potential aggression from North Korea. It is a legacy of the Korean War, which ended in a cease-fire, not a peace treaty, leaving the two Koreas technically in a state of war. (Yonhap News)