This chapter explains the paradox between the avowed foreign policy of neutrality and the reality of active if quiet defense cooperation with the Association of Southeast Asian Nations (ASEAN) and, with Western powers. This paradox, is rooted in domestic politics. Malaysia, together with China and Indonesia, is among a handful of Asia-Pacific countries that does not have explicit defense or security pacts with another country. Malaysia's apparent lack of enthusiasm for such pacts is reflected in its staunchly nonaligned foreign policy stance. Domestic politics, specifically the goal-rational legitimacy of the dominant coalition party, the United Malays National Organization (UMNO), which is based on a balance between preserving and perpetuating Malay dominance and building a multinational Malay nation, has defined the country's threat perceptions and approach to defense and security. This goal-rational legitimacy has made Malaysia highly susceptible to conflicting demands at the domestic level, with the ruling regime subject to challenges from both within and without the ruling UMNO.