According to the Potsdam Declaration, Japan was to be occupied until all of its war-making potential was destroyed and peace and security were established. Japan was to be divested of its overseas empire. Japan's industry was to be restricted sufficiently to prevent rearmament. All obstacles to the development of democratic tendencies were to be removed. "Freedom of speech, of religion, and of thought, as well as respect for the fundamental human rights" were to be established. And the leaders meeting at Potsdam declared:
We do not intend that the Japanese shall be enslaved as a race or destroyed as a nation, but stern justice shall be meted out to all war criminals, including those who have visited cruelties upon our prisoners.
Japan was obliged to give up Formosa (Taiwan) -- its first colony, gained in 1895. According to the Allied agreement, the southern half of Sakhalin Island and the Kurile Islands went to the Russians.
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