As the United States and its allies increasingly turn their focus to the global war on terrorism and on stanching WMD proliferation, strategic interest has risen significantly in parts of the so-called “new Europe” close to areas of potential terrorist and proliferation activities (such as Central Asia and the Middle East). This, in turn, highlights the importance of new and potential NATO members in Southeastern Europe, who can play a more important role both as contributors to future coalition operations and as base areas closer to U.S. and NATO operations. The seven states examined in this study, therefore, have an opportunity not only to consolidate their own progress toward integration into the Euro-Atlantic community, but to contribute in a very concrete way to the new missions of NATO, if their defense reform and modernization efforts are successful. The study details current developments in security policy formulation, military restructuring, defense industrial adjustment, and regional defense cooperation in Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, Romania, and Slovenia. A perspective from Greece on these issues is provided as well, given the key role of that country as a long-standing NATO member within the region and as an increasingly important security partner with a number of the countries examined.