The taking of Japanese hostages by ISIS this week is a reminder of what a dangerous place the world is, even for a nation as committed to peace as Japan has been for the past 70 years.

Since taking office in 2012, Prime Minister Shinzo Abe has implemented several improvements to Japan’s defense, including a budget increase last Wednesday for defense spending for the third year in a row. The increase in defense expenditures will be a boost to U.S.–Japanese security objectives in the Asia–Pacific, thereby strengthening Japan’s global alliance with the United States.

America’s allies help give Japan the global reach necessary to protect mutual interests, whether directly with joint operations in the Pacific or indirectly by helping deter trouble there so the U.S. can focus attention on allied interests elsewhere.

Japan’s new defense budget will allocate roughly 5 trillion yen ($42 billion) of the 96 trillion yen budget for FY 2015. Though the media are reporting it as Japan’s “record high defense budget,” next year’s budget is only slightly higher than that of a decade ago. The FY 2015 defense budget includes over 30 billion yen in missile defense expenditures, with space (satellite, C4ISR) and cyber expenditures running at roughly 38 billion yen.

Many of the budget requests for FY 2015 were made to better protect Japanese islands due to ongoing territorial conflicts with China, South Korea, and Russia. Earlier this month, Prime Minister Abe hailed a new policy that shifts Japan’s space program toward more defense-oriented and export-oriented tasks in response to rising fears about China’s anti-access/area-denial (A2/AD) strategy. The 2015 “Basic Space Plan” highlights an increased role by Japan’s own industrial base for space production and an increased cooperation with the U.S.

Tokyo, Seoul, and Washington signed a limited General Security of Military Information Agreement last December to enable sharing of intelligence data on North Korea’s military forces. The accord is more constrained than that originally planned in 2012 due to South Korean public protests over an agreement with its former colonial occupier. With the recent Sony hack, and a cyber attack on a South Korean nuclear power company—which could have implications for Japan as it attempts to restart its shut down nuclear power program—cybersecurity will likely be a bigger issue on everyone’s mind. Chief Cabinet Secretary Yoshihide Suga announced last week the creation of a cybersecurity task force that may operate similar to the U.S. National Cybersecurity and Communications Integrations Center.

This year will likely see legislative movement on Japan’s right to collective self-defense, which is the ability to provide assistance to allies under attack—often referencing Japanese Forces’ inability to defend allied partners in past conflicts in the Middle East. Prime Minister Abe recently noted that he intends to prepare legislation on the matter.

The increase in Japan’s defense spending for FY 2015 will benefit allied security objectives but will require deft diplomacy to overcome long-standing South Korean concerns over a perceived resurgence of Japanese militarism. Meanwhile, U.S. and Japanese officials can address similar concerns over cybersecurity and space security, particularly when it comes to China’s A2/AD and the ongoing threat of North Korean nuclear armament. Even for a country with Japan’s 70-year record of pacifism, terrorism is a threat. With Japan’s help in maintaining stability in the Pacific, the U.S. is better disposed to deal with its global obligations. Those obligations include helping Japan with its current brush with Islamist terrorism.