This report assesses how changes in the domestic, regional, and international environments are likely to affect future Japanese security policies and defense cooperation between Japan and the U.S. The expectation that Japan will inevitably move toward major rearmament and an independent defense posture appears questionable. The authors conclude that Japan will lack both the will and the capabilities to achieve such a status for at least the rest of the decade. Given recent trends in the former Soviet Union, they conclude that the order of magnitude of Japanese capabilities is appropriate, which suggests that the U.S. should emphasize greater integration, interoperability, and sustainability rather than major quantitative increases in Japan’s force structure and military power. In addition, they suggest that both sides would gain from any progress toward achieving two-way technological exchange.