— The next few months will be crucial for Japan's defense and security policies. The National Defense Program Guidelines (NDPG), which outline the framework for national security policy, are due by yearend. This in turn provides the foundation for the Mid-Term Defense Program, which translates that outline into specific programs and purchases.

The NDPG is being prepared at a particularly sensitive time as Japan (like the rest of the world) reels under the threat of North Korea's nuclear and missile tests and tries to make sense of China's military modernization effort. Hanging over all these deliberations are increasingly strained relations with the United States and the prospect of a historic change in government after the country holds general elections, probably this summer.

Little discussed is an even more powerful influence on security policy: Japan's demographic transformation. The country's population has started to decline and is projected to shrink nearly 30 percent by 2055. By then, Japan will have 89 million people, ranking it 18th among nations (it is No. 10 today). Blame a plunging fertility rate as the population lives longer. The portion of elderly people (age 65 and above) in Japan's population is 21.5 percent and is projected to reach 38.9 percent by 2050, making Japan the grayest nation in the world.