This report examines 3 sets of problems believed to constitute the major obstacle to successful negotiation of international limitations on military expenditure (ME) (1) The measurement of ME; (2) The effect of a ME limitation (MEL) on national and international security; and (3) The verification of compliance. Discussion of the measurement problem considers in turn: the scope and content of ME through delimitation and structuring of the military sector; the valuation of resources used in the military sector; deflation of ME for price change; and international comparison of ME. A taxonomy of MEL distinguishes eight different characteristics, with two major 'packages' of these characteristics used to analyze the effect of MEL on force posture and security. Discussion of the latter problem as well as that of verification stresses the tradeoff between the stringency required of a MEL and the amount and quality of information provided by participants on their military forces and outlays.