WE ARE ENTERING a novel period in our history–one in which the United States will be both fiscally constrained and also unable to call the shots in many places around the globe. Let me try to set the stage for your discussions by raising some difficult questions for you to ponder.

In 1941, as the United States sat out the wars then raging in both the Atlantic and Pacific, Henry Luce argued that our destiny demanded that we, “the most powerful and vital nation in the world,” step up to the international stage and assume the position of global leader. “The 20th Century must be to a significant degree an American Century,” he declared.

And so it proved to be, as America entered the war and led the world to victory over fascism, then created a new world order that promoted the rule of law and parliamentary institutions as the basis of global governance. Americans altered the human condition with a dazzling array of new technologies, fostered global opening and reform, contained and outlasted communism, and saw the apparent triumph of democratic ideals over their alternatives. But that era came to an end in 1989, with the fall of the Berlin Wall, the end of the Cold War, and the establishment of the United States as the only global power.

Americans then indulged in a dozen intercalary years of narcissistic confusion. We celebrated our unrivaled military power and proclaimed ourselves “the indispensable nation,” but failed to define a coherent vision of a post-Cold War order or an inspiring role for our country within it. These essential tasks were deferred to the 21st Century, which finally began eleven years ago, with the shock and awe of 9/11. In the panic and rage of that moment, we made the choices about our world role we had earlier declined to make.

Since 9/11, Americans have chosen to stake our domestic tranquility on our ability—under our commander-in-chief—to rule the world by force of arms rather than to lead, as we had in the past, by the force of our example or our arguments. And we appear to have decided in the process that it is necessary to destroy our civil liberties in order to save them and that abandoning the checks and balances of our Constitution will make us more secure. Meanwhile, our military-industrial complex and its flourishing antiterrorist sidekick have been working hard to invent a credible existential challenge to match that of the Cold War. This has produced constantly escalating spending on military and anti-terrorist projects, but it has not overcome the reality that Americans now face no threat from abroad comparable to Nazi Germany, Imperial Japan, or the USSR. The only real menace to our freedoms is our own willingness to supplant the rule of law with ever more elements of a garrison state.

The so-called “global war on terror” or “militant Islam,” as so many now openly describe it, has become an endless run in a military squirrel cage that is generating no light but a lot of future anti-American terrorism. It turns out that all that is required to be hated is to do hateful things. Ironically, as we “search abroad for monsters to destroy,” we are creating them—transforming our foreign detractors into terrorists, multiplying their numbers, intensifying their militancy, and fortifying their hatred of us. The sons and brothers of those we have slain know where we are. They do not forget. No quarter is given in wars of religion. We are generating the very menace that entered our imaginations on 9/11.

On that day, the world felt our pain and stood with us. Le Monde famously proclaimed: “Nous sommes tous Américains!” The world’s solidarity with us reflected decades of goodwill for America, accumulated over the course of “the American Century” that Henry Luce had foreseen. But does anyone here imagine that a second 9/11 would draw the same global reaction today? By surrendering the aspirations for a higher standard of behavior that once endeared us to the world, we have lost much of our international followership. We have thereby compromised our capacity to lead. To regain our influence, we must rediscover our values and return to the practice of them.

We remain the mightiest military power on the planet, but our multiple misadventures in West Asia have convincingly demonstrated the limitations of the use of force as a means to shape the world to our liking. We are engaged in proliferating wars of attrition with no war termination strategies in mind. Such wars kill and wound lots of people, do a lot of battle damage, and cost a lot. They produce no acceptable outcomes.

No one has been more outspoken about our national strategy deficit and the inadequacies of our diplomatic capabilities than our senior military leadership. This is to be expected. After all, as a nation, we look to our soldiers, sailors, airmen and marines to repair the failures and deficiencies of our diplomacy. In recent times, we have asked them to double as diplomats where we’ve had none or too few to deploy.

By now it is widely accepted that our diplomatic establishment is understaffed, undertrained, overstretched, and generally inadequate for 21st Century missions. Twenty-eight percent of Foreign Service positions overseas are currently vacant or filled by officers serving above their grade. Former Secretary of Defense Bob Gates claimed that: “the United States has more musicians in its military bands than it has diplomats.” He was too tactful to point out that, if the State Department also had bands, they would in many cases be led by people without prior exposure to music. Alone among great powers, we retain the pre-modern habit of appointing a lot of our top diplomats through the spoils system rather than insisting upon rigorous training and proven experience in the field.

Auctioning off positions to the highest political bidder has never been a sound approach to staffing key national security functions like diplomacy. As the New York Herald Tribune put it in 1857: “Diplomacy is the sewer through which flows the scum and refuse of the political puddle. A man not fit to stay at home is just the man to send abroad.” We didn’t need much of a foreign policy back in 1857. We do now. No one would now allow campaign contributors to buy their way into military command. Diplomacy is skilled work that requires seasoned direction and execution. As our challenges mount, we will pay a rising price for a venal system that places affluent amateurs on point in one-third or more of our embassies abroad.

Lack of professionalism is, of course, far from the only shortcoming of our diplomacy. Under-funding is a big problem too. It will be an even bigger one if our national experiment with bungee jumping off a fiscal cliff doesn’t work out, or if our politicians stick to the Evel Knievel school of budget planning they appear to have embraced. But the successful conduct of foreign affairs, like war, is less a matter of money and kit than of situational awareness, strategy, doctrine, professionally competent leadership, mentoring, training and esprit. If we can no longer live entirely by our wallet or the brass knuckles on our fists, we must learn to live at least somewhat by our wits and charm.”

It is said that when asked by allies for support, Athens would send an army, but Sparta would send a strategist. We could learn from that. Intelligent judgment, experience, and shrewd calculation matter more than mass and enthusiasm. To move others, one must find their cognitive centers of gravity and push—or, better yet, pull. Coercion is never as reliable as persuasion. Nor is a forceful shove the only way to consign our enemies to perdition. As a witty American woman once observed: “A diplomat is a person who can tell you to go to hell in such a way that you really look forward to the trip.” We need more people in government service who can do that.

It's even more important that we take a hard, new look at the emerging world order. This is not at all what we Americans expected as we waved the Soviet Union a joyous farewell. I am not speaking here of our recent anti-terrorist obsessions or their origins. I am addressing something more fundamental and paradoxical—the de-globalization of politics and the emergence of self-regulating strategic zones even as globalization continues. Globalization means that no country in a given zone is without the option of drawing on extra-regional forces to buttress its freedom of maneuver. But regional powers increasingly treat such external forces—very often meaning the United States—as outsiders to be manipulated rather than as partners to be loyally served. Geography, history, and geopolitics are coming together in ways that are reminiscent of those before the age of Western dominance began five centuries ago. In these globally amorphous and constantly shifting circumstances, it will not do to leave our foreign policy on military-operated autopilot.

Organizations like NATO, various pan-European institutions, the Arab League, the Unión de Naciones Suramericanas (UNASUR), the African Union, and regional powers associated with them now lead efforts to address regional conflicts, like those in the former Yugoslavia, Libya, the Andean region and Central America, Sudan, and Syria. The UN and other global institutions have acted at the instance of such regional groupings, or not at all. Similarly, the global financial crisis brewed up by Wall Street’s banksters did not stimulate effective reform proposals or coordinated responses from the G-20, the IMF, or anybody else at the global level. Rather, the affected parties and those seeking to escape being affected were left to cope more or less on their own or through regional initiatives. WTO-led negotiations to craft further liberalization of trade and investment have ended in gridlock. Responsibility for advancing economic prosperity has passed to a bewildering variety of bilateral and regional free trade arrangements.

The United States is therefore finding ourselves compelled to replace global and functional approaches with regionally differentiated strategies focused on new and sometimes rapidly evolving sub-global realities. At their best, these are “grand strategies” that combine political, economic, cultural, informational, and military measures in a coherent effort to maximize our influence on outcomes. There is no longer an all-purpose enemy or any possibility of successfully imposing a “one-size-fits-all” policy on our relations with either our allies or competitors. Indeed, in the new world of the 21st Century, our allies on some issues are our unscrupulous competitors on others. And vice versa.

Each region has inherited and is evolving its own power structure, which interacts with others even as it shapes decisions, events, and trends within its own sphere. In some regions, these power structures are dominated by a single subcontinent-sized country with comprehensive capabilities, like Russia in Eurasia or the United States in North America. Despite increasing challenges, giants like us face few constraints in our own regions.

In other cases, like those of India in South Asia or China in East Asia, regional preeminence is tempered by the existence of externally allied middle-ranking powers (like Pakistan or Japan). Such powers balance and constrain the regional giants’ freedom of action in their immediate environs as well as globally. In still others, like Brazil in South America and, potentially, Indonesia in Southeast Asia, regional giants must enlist or neutralize other, smaller powers to able to realize their leadership potential both in their neighborhoods and in the world at large.

In Europe, Britain continues to leverage American power to its advantage even if it is no longer prepared to play Tonto to our Lone Ranger. The confederal structure of the European Union allows former imperial powers like France and Germany—as well as rising nations like Poland—to aggregate the power of other Europeans to their own, enhancing their ability to play a leadership role at both the regional and global levels. For most purposes, they no longer need us.

It remains to be seen whether the Arab League will develop a similar pattern of global empowerment through the regional aggregation of power. Sub-Saharan Africa remains fractured into very many relatively small and weak countries that have so far proven incapable of effective collective action except on a very limited range of issues. Perhaps this will change as Africa’s economies, which are now among the most dynamic in the world, build up its several potential middle-ranking powers.

The complexity and dynamism of the new order place a premium on diplomatic agility. Stolid constancy and loyalty to pre-existing alliance relationships are not the self-evident virtues they once were. We should not be surprised that erstwhile allies put their own interests ahead of ours and act accordingly. Where it is to our long-term advantage, we should do the same.

We need to rethink our commitments in light of our current interests as they are affected by a world order we no longer direct. We cannot afford to reject or defer adjusting these commitments out of fear that doing so might undermine our credibility. Over the course of the past decade and more, we have amply demonstrated our capacity for willful obstinacy. No one now doubts that we are prepared to persevere in failing policies for as long as it takes them to fail. But, neither our allies nor our adversaries have been much impressed by our willingness to continue mindlessly to do things that neither serve our interests nor have any prospect of doing so. Reliable stupidity is still stupidity. Few admire it.

In the new world order of regions, East Asia is once again the global center of economic gravity, as it was until the mid-XIX Century. It is also increasingly Sinocentric. The factors driving this return to centrality for China are mainly economic and political rather than military. We have nonetheless chosen to respond with a mainly military “pivot” that is transforming intrinsically trivial territorial disputes between China and its neighbors into broad US-China strategic rivalry. The so-called “pivot” foretells a prolonged struggle by Americans to restrict China’s influence in its own region.

To the delight of defense contractors, a major feature of our “pivot” is an arms race with China with a prefabricated procurement plan called “Air Sea Battle.” To the distress of those in Asia who had hoped for American help in avoiding a fight with China while they made their peace with it, the “pivot” risks kindling a new Cold War. If so, this one will be a doozie.

American views of China often seem to have less to do with its realities than with the effects of enemy deprivation syndrome on our national strategic imagination. China is presented as a peer competitor compounded from past adversaries of the United States or as a sort of fun-house mirror-image of America as we rose to regional and then world power, combining putative aspirations for an Asian version of the Monroe Doctrine with an alleged lust for full spectrum dominance of the global commons. This sort of misperception does wonders for defense budgets but provides a very poor basis for national strategy.

China presents many challenges to our interests but few of them are military. China is not the Soviet Union. It is not failing or isolated and cannot be “contained.” Nor does it have an ideology aimed at global conquest. Its military focus is self-defense in its own region. The defender has the advantage. So does the side with the short lines of communication. So does the contestant with the largest and most dynamic economy.

China's economy is projected to eclipse ours in a few years and to be more than twice as large by 2050. A Sino-American Cold War would thrust a fiscally fragile America (already living beyond our military means) into long-term contention with a country that has a relatively low defense burden, few budgetary constraints, and a graduation rate for scientists and engineers that is already ten times ours. No one in Asia wants to have to kowtow to China, but the United States would have few, if any, allies in any confrontation with it. No one wants to be caught in any kind of Sino-American crossfire. There has got to be a better way to secure our interests in the Indo-Pacific than by getting into yet another a zero-sum competition with a great nuclear-armed power, this time one that will be able to outspend us.

Our efforts to recruit India as an ally to counter China have come up against the reality that India, like the United States for most of our history, has a well-founded aversion to entangling alliances. It does not wish to subordinate itself to anyone else’s strategic enthusiasms and is not prepared to be anyone’s “protectorate.” Our relationship with Pakistan has, meanwhile, resembled nothing so much as a check-into the Hotel California with the Manson Family.

In West Asia and North Africa, we have lost much of our political clout and most of our traction. Islamic populism is displacing the region’s autocrats. Not surprisingly, leaders drawn from the Islamist tradition take a dim view of our so-called “war on militant Islam.” The peace process we sponsored between Israel and the Palestinians is dead, leaving behind it a funeral pyre that is waiting to be lit by extremists. We should not be surprised if there is an IED or two hidden in that pile of broken promises, waiting to explode.

Our intervention in Iraq installed a pro-Iranian government and set off a war of religion. Our pacification effort in Afghanistan is going nowhere. The good news, such as it is in our relations with the Muslim world, is that we are once again cooperating with Saudi Arabia in sponsoring Islamist mujahedin to effect regime change; this time not in Afghanistan but in Syria.

We remain fundamentally estranged from Iran. There’s no diplomatic process in play to address this or to harmonize Iranian behavior with international law. Israel has spent a year and a half trying to blackmail us politically into committing ourselves to an assault on Iran’s nuclear facilities. Israel admits that it cannot carry out a militarily effective attack on Iran on its own but insists that, unless we agree to do for it what it cannot do for itself, it will go ahead and attack Iran anyway, expecting to drag us into the fight.

The latest twist is a campaign by prominent Israeli politicians and their American flacks to persuade us to give Israel still more weapons to improve its ability to attack Iran. This, they say, is the price we must pay to persuade Israel to agree to delay a unilateral assault on Iran till after our elections. As an astute observer of this interaction has pointed out, this is a bit like a pyromaniac demanding more matches to distract himself from setting fire to his neighborhood.

The person who comes up with the solution to these interlocked problems in what Alfred Thayer Mahan first called “the Middle East” will win a valuable prize. First prize is not to be sent there. Second prize is not to have to fight Middle Easterners here.

Turning to more congenial regions, the Atlantic community is our ideological and geopolitical homeland. But we are now joined to Europe as much by mutual annoyance as by common values. Even before our European allies got into financial trouble, they were cutting their military spending, reducing their commitment to the “Western defense effort.” They don’t see a convincing external military threat, and we can’t identify one either. We have nonetheless taken on the burden of coping with the indefinable menaces we fear. So much for realism; so much for burden sharing, some might say.

In this respect, our relations with Europe now remind me of the poem: “As I was going up the stair, I saw a man who wasn’t there. He wasn’t there again today. Oh, how I wish he’d go away!” There is enough wrong with this picture to justify a serious American effort to work with Europeans to fix it. We should begin by admitting that our previous complaints about Europe may not have been entirely sound.

I don't need to tell you that, despite a “reset,” our relations with Russia are still on the fritz. There’s an economic boom on in Africa, where Chinese, Indian, and Brazilian companies have begun to make a lot of money. Americans are not making out so well, but the good news, I guess, is that AFRICOM finally has something to do. U.S. forces are now engaged in an expanding range of combat operations in sub-Saharan Africa. This is part of our growing alignment with the political status quo against “militant Islam” and against attempts at ethnic self-determination that would disturb the borders established by European colonial powers a century and more ago.

Meanwhile, South America has successfully decoupled itself strategically from the United States. After centuries of torpor, it is now among the most dynamic of the world’s major regions. But, we still have no strategy for drawing on its rising prosperity and power to buttress our own.

Beyond the policy review, we also need to conduct a fundamental reexamination of diplomatic doctrine. We've fallen into some pretty counterproductive foreign policy practices. In 1919, Woodrow Wilson proclaimed his faith in sanctions. Dean Acheson later called them ‘a persistent and mischievous superstition in the conduct of foreign affairs.” Wilson declared: “A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force.” A century of experience shows that Wilson was spouting pernicious nonsense. Acheson was right.

Sanctions only work when they are tied to a negotiation. Negotiations only succeed when they are built around a proposition that can get to “yes.” But sanctions have come routinely to be used as an alternative to negotiation. They allow politicians to buy time by pretending to be doing something bold. But they always become an end in themselves, evaluated in terms of the pain they inflict, not the behavior modifications they fail to induce. And, in a world in which the United States no longer enjoys undisputed economic primacy, sanctions that do not have the legitimacy and universality of United Nations’ endorsement are both ineffectual and an invitation to others to make inroads in the markets Americans forgo.

Simply put, sanctions are diplomatic ineptitude and military cowardice tarted up as moral outrage. They are a poor and mostly counterproductive response to international discord and dispute. In practice, they are not an alternative to war so much as a prelude to war, or an empty threat of it. They are also integral to a strange and counterproductive mentality that asserts that one should only bargain with those who have previously agreed to one’s bargaining position. But diplomatic dialogue is not a favor to those with whom one speaks. Rather, it is a way to present one’s case directly to them, to understand the interests that underlie the positions they take, and to gather intelligence about their intentions. In diplomacy as in war, one should never lose contact with one’s adversary.

The"American Century" is now behind us. As a country, we have fallen pretty low. We are in an unacknowledged depression. Our politics are paralyzing and our fiscal situation is dire. Our longstanding grand strategy of containment succeeded and thereby became irrelevant. We’ve failed to adjust to the new world this remarkable success created or to develop an effective strategy to deal with it. The lack of situational awareness can have serious consequences, as 9/11 should have shown us. Technology is now such that anyone we bomb anywhere in the world can find a way to bomb us back.

Yet I am optimistic about the United States of America. We have an overwhelming set of strengths going for us. We just need to get our policies right.

Our geostrategic location is unmatched. We are protected from most of the world by two great oceans to our east and west. Our neighbors to our north and south have no history of aggression against us. The only foreign threats to us are those that either envy or our own behavior provoke.

We have inherited a disproportionate endowment of the world’s arable land, water, and mineral resources. We have a remarkably diverse population of 310 million, with a huge array of talent. Anyone who watched the London Olympics will have seen that amply on display. As foreigners who have invested here can attest, amidst all our diversity, we are united by being a diligent and productive people. Thanks to new technologies that exploit oil and gas in shale, we are once again about to become a major gas and petrochemical exporter.

We have a political system that, until we started cutting constitutional corners and allowing invective to rule our airways, gave us the freest and politically most appealing society on the planet. We may now be less free but, for now, we still have the world’s most powerful economy. There is nothing—other than our own lack of resolve—to stop us from reviving the constitutional and cultural sources of our strength and prosperity.

Our once superior educational system and physical infrastructure were the products of sound fiscal practices and far-sighted government policies. The steady deterioration in both as well as in our business climate reflects policies that are short-sighted, dogmatic, and disastrous. We used to learn from foreign best practices, not insist that we had all the answers. We have shown in the past that we can recognize our mistakes, correct them, and move on. There is no reason we cannot do these things once again. We can foster educational excellence, transportation efficiency, affordable public health, and cutting-edge business expansion, if we devote the resources and develop the policies to do so.

There are a lot of smart people in this country. We are blessed with a spirit of patriotism. Some Americans—though, frankly, too few—are also imbued with the ideology of public service. I think I see such people before me tonight. It is not unreasonable to believe that you can reimagine the United States of America and a foreign policy to serve our interests in our new circumstances.