This study describes the efforts to renew NATO in 1989-1991, the downturn of 1992, and the implications for U.S. policy toward NATO and Europe. It concludes that the United States must remain an active leader in Europe and that the Alliance must be kept vibrant. Rejecting the status quo, however, it also calls for major reforms of NATO aimed at creating a new transatlantic bargain that would help restore NATO's internal unity and give the alliance a better security policy. Under the new bargain, the West European allies would be given more satisfactory roles in the Alliance, and the United States would provide stronger support for the emergence of a WEU/EC security pillar. In exchange, the allies would cease any efforts to marginalize the United States, and would commit themselves to maintaining a credible NATO military strategy and force posture. Moreover, NATO would prepare itself for security and military roles beyond its borders, would more effectively work with CSCE, and if necessary, would be willing eventually to admit new democratic members into the fold.