EDWIN J. FEULNER, Ph.D.: Good afternoon, ladies and gentlemen. Welcome to The Heritage Foun­dation. It's great to be here on this very special day for the launch of Kim Holmes' new book, Liberty's Best Hope: American Leadership for the 21st Century. It is my pleasure to introduce Dr. Kim Holmes, who will speak about this timely new volume.

I believe that Liberty's Best Hope is particularly timely because today America stands at a real crossroads. Will she lead the cause of freedom with principle and with vigor, or will she allow others to lead with the so-called soft powers of diplomacy and foreign aid?

This book is a persuasive call for action and for leadership. In it, Kim Holmes highlights a national and global drift away from the principles of freedom. But he does not stop with diagnosing the problem; rather he calls for a new course of action--a course of action that entails both protecting and promoting the cause of liberty.

Lovers of liberty know that she must be protected, and when threatened by force, liberty must be defend­ed by force. With this in mind, Liberty's Best Hope is an argument for sustained investment in America's mili­tary. America must remain a strong counterbalance to militaristic, totalitarian regimes which continue to pose real threats to freedom and to freedom-loving peoples all over the globe.

We also have to promote the cause of liberty. Not in a chauvinistic sense, the way some would have it, but rather, this is a task that begins at home, where we must defend liberty against its intellectual enemies.

In addition, Kim Holmes calls on America to boldly champion the cause of liberty on the battle­field of ideas around the world. Many of our tradi­tional allies seem to forget that the powers of just government are rooted in liberty, and as a result they are drifting away from their traditional moorings.

This slim volume calls for a return to the tradi­tional principles that comprise the foundations of liberal government. It's a renaissance that America is well positioned, we believe, to lead.

Such a return to the principles of liberty, at home and abroad, will strengthen alliances among free nations. Dr. Holmes rightly argues that common principles must once again serve as the foundation for America's international relationships and as the rationale for America's involvement in the world.

And he argues that America is uniquely qualified to champion the cause of liberty. From John Win­throp and the founding fathers through President Ronald Reagan and his crusade against the evils of Communism, America has stood as a "city on a hill." Liberty's Best Hope is an articulate call for a return to leadership in that mold and in America's founding tradition of liberty.

So we thank you, Kim Holmes, for writing this important book. It is a significant building block for our entire Leadership for America campaign, and I think it is a significant message for Americans to receive.

I think everyone here knows that Kim Holmes is the Vice President of Foreign and Defense Policy Studies and Director of our Kathryn and Shelby Cullom Davis Institute for International Studies. I might point out that Dr. Kathryn W. Davis, a fre­quent visitor to Russia, just last week celebrated her 101st birthday.

We're very happy we were able to get Kim Holmes back from the State Department after his three years as Assistant Secretary of State for Inter­national Organization Affairs.

I'm also very happy indeed today to welcome two experts on international affairs who are here to comment on Kim Holmes' new book and the chal­lenge of spreading liberty around the world. Both are old and good friends of both mine and The Her­itage Foundation.

Dr. Dov Zakheim has a distinguished record of civil service and varied experiences in keeping America safe. He currently serves as Vice President at Booz Allen Hamilton and leader in the firm's glo­bal defense business. He knows our role in the world, and he knows the great potential of Ameri­can leadership.

Before this venture into the private sector, he worked for many years at the National Security Council and at the Congressional Budget Office, and most recently in the Department of Defense. During the 2000 presidential election, he served as a senior foreign policy adviser to then-Governor George W. Bush.

In addition, we are very pleased indeed to have Dov Zakheim as an adjunct scholar here at The Her­itage Foundation. It's always a pleasure to welcome him back.

The third person whom I would introduce today is also an old and close friend, Dr. Henry Nau. Henry is a distinguished scholar and author of many arti­cles and books. He is a Professor of Political Science and International Affairs at the George Washington University, a position he has held for many years.

He serves as Director for the U.S.-Japan and U.S.-Japan-South Korea Legislative Exchange Pro­grams. He also has held many significant positions in the executive branch and in the Department of State, and in the White House during President Ronald Reagan's first term. He is a valuable source of wisdom and experience in the field of interna­tional affairs. It's good to have you back with us also, Henry.

So at this point, Kim, I'm going to turn it over to you to launch us on a discussion of Liberty's Best Hope. Thank you very much, and congratulations on your new book.

--Edwin J. Feulner, Ph.D., is President of The Heritage Foundation.

KIM R. HOLMES, Ph.D.: You may recall that Richard Nixon once wrote a book entitled Real Peace. He struggled to distinguish his tough-mind­ed view of what it takes to make peace from a fuzz­ier, soft-minded version that he saw.

Well, I've got a similar problem. I've written a book about "hope" and "change," and yet I find that there's a certain presidential candidate whose repeated use of these words means something entirely different from what I mean.

Somehow I think that it won't do for me to say, unlike Barack Obama, that what I advocate is "real hope" or "real change." And yet that is what I "real­ly" mean.

I do think that this country's best days are still ahead of us--that, as the title of this book implies, America is still "liberty's best hope" in the world. But I also believe that we have to make some changes to realize this vision.

So, unlike Obama, I don't envision change as something entirely new, as making a leap into some unknown future. Rather, I think we need to "change" back to the fundamental principles that made this country great to begin with.

That is, in essence, what this book is about: how to build a foreign policy in this new century, one that is based on the principles of the nation's found­ing--on the Constitution and on safeguarding and advancing the idea of liberty.

It is about how to restore American leadership to the level of influence and power we enjoyed in the heyday of the Reagan presidency--not by trying to re-create Reagan's world, but by restoring the degree of respect and influence America had under his leadership.

And there's the rub.

If something needs "restoring," it means we do not have it any more. And, indeed, American lead­ership has taken a hit in recent years. Terrorists have declared total war on us, and yet we are having a devil of a time rallying our allies in a common defense. Anti-Americanism is widespread. We are routinely defied and criticized by our allies. We are in the middle of a war, and yet the main issue for the congressional leadership is how quickly we can arrange for a defeat in Iraq.

It is true that, if you look around the world, our claim of global leadership doesn't have the cachet it once had.

When I was writing this book late last summer, I held a series of luncheons with diplomats from Asia and Europe. I asked them, "Well, what do you expect of American leadership?" I was just asking them what they thought America should be doing in the world. It was an opening for the discussion. At the end of one of the luncheons, an Asian diplo­mat spoke up and said, "I can tell you one thing: 'Follow me' doesn't work anymore." That was quite a surprise to me and others in the room at the time.

Facing the Reality of a Changed World

There are many causes of our current situation:

The appearance of incompetence in the Iraq War.

Ineffective public diplomacy.

A vocal anti-war movement that makes America look weak and divided.

But we alone are not to be blamed.

The world has changed since the end of the Cold War, and our allies don't look at us the same way they used to. NATO is a pale reflection of its former greatness. Ideological differences that were long submerged with our allies have surfaced to divide us now that they do not feel as threatened. Our European allies are more eager to assert what I call "post-liberal" ideas, such as the preeminence of cli­mate change, ever-expanding definitions of human rights, the erosion of national sovereignty in inter­national law, and the downplaying of military pow­er in safeguarding liberty.

In short, our alliances have ideologically disinte­grated. It is true, they still operate in ad hoc circum­stances like Afghanistan and other places, but gone is the central organizing principle of defending democracy and the constitution of liberty from all forms of tyranny. Just witness the lack of NATO involvement in Iraq.

The world has changed in another way. The insti­tutions created largely by us at the end of World War II are badly outdated. Instead of working with the U.S. to preserve freedom and security, the Unit­ed Nations, for example, is seen today by many as an instrument to check American power.

But there is a deeper, more homegrown chal­lenge to American leadership. Some Americans no longer believe that America has the moral stature to be a world leader. Their doubts about traditional American values lead them to be skeptical about the assertion of American power abroad. In other words, they have doubts about us as a nation, mak­ing them reluctant to support an assertive foreign policy abroad. They fall back into a mindset like that of our European friends; they want to constrain and tame American power--to make us atone for our alleged sins and to create a nation not unlike what you may find in the European Union.

This brings me to why I wrote this book: This is not the America I believe in. I know that many peo­ple are going to draw the wrong conclusions about how we got into our current predicament and, more important, how to get out of it.

Some are going to say, "Yes, Holmes, you are right; we are in a mess, and Bush is to blame for all of it." Well, Bush is not to blame for all of it--per­haps some of it, but not all of it or even most of it. He's not responsible for the anti-American excesses of the foreign media or the efforts by some of our allies to undermine American influence. Nor is he responsible for the less than honorable Members of Congress who voted for the Iraq War and then turned against it.

I don't believe the way to restore American lead­ership is simply to accept defeat in Iraq; to empower the United Nations; to hold international confer­ences with our enemies; and, as Madeleine Albright puts it, to "end the politics of fear"--by which she means not getting so hung up about the fact that terrorists want to kill so many Americans.

Perhaps we do indeed need to find a way that avoids some of the mistakes that have been made, but that new path should be back to what has prov­en to work in the past--and not a leap into some escapist vision of the future.

Building on the Reagan Legacy

My touchstone for what restored leadership should look like is the legacy of Ronald Reagan. If we are to change, we should go to what worked for him: to supporting a strong national defense; to accepting the burden of world leadership; and, most important, to putting the advancement of lib­erty front and center as the purpose of American foreign policy.

This may sound like a replication of George W. Bush's foreign policy, but that is not exactly what I am advocating, as you will see shortly. So let me explain. How do we do this? How do we restore American leadership?

We do it first by honestly understanding what our problems are, but also by clearly and boldly defining what our goals should be. If we are to revive the cause of liberty in our alliances, we must not allow this noble goal to be reduced to a carica­ture of what we really mean. It is not about making wars to spread freedom at the end of a gun or about "dictating democracy or making regimes change through force." Rather, it is about building an inter­national system in which not only our own free­dom, but the freedoms of others can flourish.

Yes, we have to make good on our military com­mitments in places like Iraq, but we also have to win the war of ideas against Islamist extremists. We must refashion our foreign aid priorities to make sure they better reflect the values and purposes of liberty and also do a better job of linking the prin­ciples of freedom to how we try to solve global issues like climate change and human rights abus­es. There are real economic freedom and market solutions to the problems of poverty and disease, and yet our government often cannot find the voice to explain them.

We need also to find a new purpose in interna­tional security. Our military alliances need to lift their sights: They need to "go global," bringing lovers of liberty from all over the world into a common security association. And they need to focus once again on the cause of defending liberty from tyranny, whether that threat is from states or transnational terrorists. We should not be trying to run our global foreign policy through NATO or through Europe. We should invite countries from all over the world into a common alliance of defending liberty--what I call the Global Free­dom Alliance.

Refashioning the International System

We cannot possibly revive the brand of liberty unless America takes a more proactive role in refashioning the international system.

In addition to a Global Freedom Alliance dedi­cated to security, we should form a Global Eco­nomic Freedom Forum of free economies to champion and highlight the success of markets and economic freedom;

We should establish a Liberty Forum for Human Rights to work around the embarrass­ingly failed United Nations Human Rights Council; and

We should insist that the community of democ­racies focus on supporting real democracy and not be a shield behind which authoritarian regimes hide their contempt for freedom.

There is more to restoring American leadership than simply refashioning institutions. We also need to do a better job of reshaping the percep­tions of the United States of America. First and foremost--and this is very important--we must be seen as a winner. No one wants to follow a loser. Some people think that if we simply walk away from Iraq, the world will miraculously embrace us and forgive us for our sins. I don't believe that for a minute. Few things are held in such contempt as a fallen great power.

But prevailing in wars is not enough. We also have to learn to better calibrate our diplomacy and our military power. To paraphrase Teddy Roosevelt, we need to "speak more softly but get a bigger stick." Words matter--they matter a great deal; but actions need to be consistent with our words. I would go so far as to say that our actions should even speak louder than our words.

We have to do a much better job of persuading people that we are a leader who cares as much about our friends and as much about our allies as we do about ourselves--about how to integrate the interests of other peoples into a global vision of interests and values that we, and only we the Unit­ed States as a global leader, can best represent. This is partly the challenge of a more effective public diplomacy, but it also is about a President being capable of articulating a grand vision that is as inspiring as it is convincing.

Now, if you think that I am advocating a "soft," "go along to get along" kind of diplomacy, you would be mistaken. I am also saying in this book that some­times we have to be tougher with our friends and our allies. There is a double standard in diplomacy, believe it or not--something I did not really notice and see too much until I was at the State Depart­ment. And that is, when our allies are tough with us, that's great; they are simply standing up for them­selves. But when we do it, we are accused of being "arrogant" because we are a great power.

Sorry, but you can't have it both ways. We need to change the culture of negotiations with our allies, whereby we establish clear linkages between what we want and what they want. For example, if they want to talk about climate change at a G-8 summit, that's fine; but we should insist on putting on the agenda that we should also be talking about what they should be doing for the common defense of Iraq.

As for "getting a bigger stick," we must regain our military strength. Our military power is simply inadequate to our claims of global leadership: Our forces are underfunded; they are underresourced; and they are wearing out. We need a renewed com­mitment to restoring American military strength if we are to reclaim that mantle of world leadership. This means modernizing our forces; it means better integration of the National Guard and reserves; and it means funding them, which we estimate costs at least 4 percent of gross domestic product. It also means building a comprehensive ballistic missile defense system.

This renewed military power is necessary to defend liberty itself, but it also is necessary as an insurance policy against a resurgent Russia and a ris­ing China. I argue in this book that our policies toward these two countries are terribly muddled. We desperately want to be friends with them, and yet they don't seem to want to return the favor--at least on terms that we understand. They do not behave in ways that are consistent with our understanding of freedom and international responsibility.

It's best, frankly, that we admit this and under­stand this. We don't have to make them into ene­mies as a result of this misunderstanding, but neither should we be pretending that they are our friends and that they have the same stake that we do in freedom and international stability. They do not share that with us. They are not our enemies, but they are also not like us, and we should not make the mistake of concluding that they are.

Getting America's House in Order

My last point is about America itself. If we wish to be a world leader, we need to get our own house in order. Unless we restore fiscal sanity to the fed­eral budget, we will not have enough money to fund the armed forces. Unless we overhaul our education system, we will not have the responsible citizens needed to safeguard our liberties. And finally, unless we solve the immigration problem, we will lose the civil society and, just as important, the national identity needed to stand up for and defend the country.

So, as you can see, what we do domestically has a clear bearing on whether we will remain a great power and defender of liberty. The road to great­ness always starts at home--and, frankly, it ends there as well. There's an old Chinese proverb that says, "nations rise in rough boots but decline in car­pet slippers."

We still need to keep our boots on.

So there you have it. What I am advocating here is nothing less than a liberty restoration--putting the advancement of liberty back at the heart of American leadership in the world. This is not Pres­ident Bush's "freedom agenda," at least as it was practiced, but it does embrace the idea that liberty has to be at the heart of our alliances.

I really do believe that the question before us is whether the United States will continue to be the champion of freedom or whether it will give up that responsibility.

There are some people in this country who are tired of what Reagan called the "burden of leader­ship." He was referring--and he talked about this at the time--to the Carter Administration. These peo­ple today may talk about "hope" and "change," but their words mask a deeply pessimistic view about America. They are in reality ashamed of their coun­try and think the only way to restore American lead­ership is to embark on a very long campaign of apology--or, as Madeleine Albright said, "to search for values in others."

What they are really promising is an escape--an escape from the burden of leadership by arguing that all will be well if we just pretend there are no threats, that all will be well if we just walk away from Iraq or sit down in an international conference with President Ahmadinejad. That's not the kind of hope--or American leadership, for that matter-- that Reagan was talking about.

And neither am I.

HENRY R. NAU, Ph.D.: It is a real delight to be here and be asked to comment on this book. This is an extraordinarily delightful book to read, and I highly recommend it.

I normally ask my students to read books that they don't agree with or find authors that they don't agree with. But every now and then, it's a real plea­sure to read a book that you do agree with, and this one just came right down my alley--the alley of affirmation--because as I was reading it, I would find myself nodding my head, and then a thought would occur to me: "Why hasn't he said this?" And on the next page, that's exactly what he said.

So there was a pace to the book--very, very well done and very nicely written. There are many artful phrases in there.

There are so many things in the book that I don't know where to start, but I'm going to pick out three points that Kim makes very emphatically and rein­force them and maybe along the way take an excep­tion or two here or there to fulfill my role as a responsible critic.

Classical Liberalism vs. Collective Liberalism

The first point Kim makes, which I think is the most important perhaps, is this need for the United States to frame its foreign policy in terms of the pur­pose of liberty, liberty defined in terms of the classi­cal political and economic thought of John Locke and Adam Smith.

He could not be more correct. Of course, we are concerned with defense and stability around the world. But, as he puts it in one of his memorable turns of phrase, we can never be just "look-the-oth­er-way realists" who never go beyond defense and stability and ignore opportunities to spread liberty.

America's commitment to classical liberalism is also at the heart of the "continental drift"--another of Kim's artful turns of phrase--that separates America and Europe. Europe and the left in America embrace what Kim calls post-liberalism, a set of ideas dedicated not to individual freedom but to collective goals such as the environment, global poverty, group discrimination, and universalist institutions.

The differences between classical liberalism and this post-liberalism, or what I would call collective liberalism, are huge.

Classical liberalism venerates the individual-- not, I would add, to the exclusion of community or collective goals, but as the indispensable building block of community. If individuals are not free and strong, governments can't be free and strong.

Thus, classical liberalism emphasizes the institu­tions of civil society--families, neighborhoods, local schools, voluntary associations, faith-based institu­tions, and churches--rather than government and calls on those institutions to shape individuals that are independent and strong intellectually and moral­ly. Strong individuals then have responsibilities toward communities and government, not the reverse: that governments or villages have responsi­bilities to help shape and mold individuals.

Thomas Jefferson gave us the motto of classical liberalism, which for me is modern conservatism, and that motto came in his first inaugural address in 1800. It's really simple, but it ought to fly from the banner of every conservative institution in the country: "Sometimes it is said that man cannot be trusted with the government of himself. Can he then be trusted with the government of others?"

Notice that government is constructed from the bottom up. Jefferson trusted free individuals to behave in ways worthy of equality. He gave the edge, as does classical liberalism, to individual lib­erty over communal equality.

And there's the sequence. We believe in strong individuals who then build a strong government, but we do not believe that government can compen­sate for individuals who cannot govern them­selves--who are not strong enough to govern themselves.

Collective liberalism celebrates the community, village, government--not, again to be fair, to the exclusion of the individual, but as the central infrastructure that ensures against discrimination, inequality, and exploitation among individuals. If communities aren't strong, collective liberalism fears, individuals will exploit or discriminate against one another.

Collectivist liberals have less confidence that the institutions of civil society alone can provide this restraint. So if classical liberalism gives the edge to liberty over equality, collective liberalism gives the edge to equality over liberty.

Both classical and collective liberalism have their extremes. We can think of extreme libertarianism that wants nothing whatever to do with govern­ment; and, of course, on the side of collective liber­alism, we can think of authoritarian government. But in a healthy democracy, I would argue, you need moderate versions of both types of liberalism. The two positions come together and create a center that roughly balances liberty and equality. For example, all Americans are happy today that the central gov­ernment defeated sectionalism and slavery in the Civil War, and all Americans are equally happy today that the states of the United States retain sub­stantial autonomy and can never be yoked to central authority the way provincial governments have been in recent years in Russia.

But here's the problem: America has a healthy classical liberal or modern conservative political movement, but Europe does not. And that's the source, as Kim also implies in his book, of "conti­nental drift."

"Continental Drift"

We have a healthy competition in this country between classical and collective liberalism, thanks in good part to a gentleman whose life we celebrat­ed in these last few days: William F. Buckley. He did indeed stand athwart history and say to collective liberalism in America, "Stop!" Because of him and others like him such as Ed Feulner, as well as Ronald Reagan, the inspiration for Kim's book and the inspiration for the work and life of many of us, we have a "united" conservative or classical liberal political movement in this country.

That unity was long sought and hard fought, and we must never lose it. All conservatives venerate the individual rather than the government.

Social conservatives protect the life of the indi­vidual unborn child;

Fiscal conservatives protect the freedom of indi­vidual entrepreneurs whose creativity and inno­vation would be snuffed out by high taxes and inflation; and

National security conservatives fight for the freedom of individual dissidents wherever they are oppressed by tyranny.

All conservatives believe in the free and respon­sible individual as the cornerstone of the republic. As I wrote in The National Interest just a couple of years ago, there are "no enemies on the right." We don't have serious quarrels with each other, and I think it's going to be incredibly important for us to remember that in the upcoming elections.

Europe, however, has no significant classical lib­eral tradition. That tradition was destroyed by the titanic struggles in Europe between the right and left, between fascism and communism. Classical liberal parties that believe in the value of every indi­vidual, low taxes, and the vigorous defense of liber­ty are either marginal or nonexistent. European societies hold together by consensus coalitions that unite right and left parties, none of which believes in small government, low taxes, and the expansion of freedom.

The political imbalance between America and Europe is, I believe, the biggest reason for this "con­tinental drift," or for the anti-Americanism that flares up periodically in our relationships. Have you ever noticed how it is always worse when classical liberal or modern conservatives are in power in the U.S.? It was true during the days of Ronald Reagan, and it's partly the case today with George W. Bush. Let Obama be elected and watch how quickly some of this will fade. The reason is that Obama is the candidate of all of Europe because Europe has no classical liberal conservative parties that might back John McCain.

So, what do we do about this "continental drift?" The first thing I've already implied, and that is to keep conservatism united and strong in America. We need to remind ourselves, as Kim just suggest­ed, to keep faith with this country and what it stands for.

We also need to help Europe rediscover its classical liberal tradition. I know that's a pretty hard slog to think about, but it was a hard slog for Bill Buckley too when he started in the 1950s in this country to say to collective liberalism in America, "Stop!" We need to help Europeans stand athwart history and say to collective liberalism in Europe, "Stop!"

Margaret Thatcher and others have made some headway in this direction, but it is going to be ter­ribly important for the next generation, the next battalions of Bill Buckleys and Ed Feulners--and they may be in the audience here--to work hard in the next generation to try to build these counter­parts in Europe and to revive the relevance of John Locke and Adam Smith for the old country. Of course, it will never happen if we lose our unity; that is, if the classical liberal conservatives lose their unity in America.

Leveraged Diplomacy vs. Lilliputian Diplomacy

The second point that Kim makes that I want to emphasize is the point about strength, about what I would call "leveraged diplomacy," a diplomacy always backed by strength and pressure as com­pared to a diplomacy that seeks to be agreeable, popular, and tied down by all the smaller powers, both democratic and non-democratic, that domi­nate international diplomacy--something I would call, thinking of Gulliver's Travels, a "Lilliputian diplomacy." So I make the distinction between a leveraged diplomacy and a Lilliputian diplomacy.

Kim makes two very strong points about the rela­tionship between force and diplomacy, and I want to emphasize them because they're critical.

First, successful diplomacy depends on strength. No one knew this better than Ronald Reagan, and there is no diplomacy without it. And yet we con­stantly forget this. How many times have media and academic pundits, too often advocates of Lilliputian diplomacy, reminded us, for example, that the Western countries had no diplomatic option of U.N. inspectors in Iraq in 2002? Not very often. They overlook completely the fact that there was no such option. The inspectors weren't there: Saddam Hussein kicked them out in 1998.

That option had to be created by a show of cred­ible force; namely, the invasion force that the United States and Britain and others put in the Persian Gulf in the late summer and fall of 2002. Now, because of the use of force, we had a diplomatic option, and of course the Lilliputians were very happy to use that option--the inspectors--to tie us down indefinitely in a pas de deux with Saddam Hussein over the inspections. But we didn't get the inspectors in without a show of force.

On the other hand--and this is the other point about the relationship between force and diploma­cy--the successful use of force also depends on effective diplomacy. The best force can do is win a war; then diplomacy has to take over to win the peace. Unfortunately, the Bush Administration, as Kim rightly criticizes, got this one horribly wrong. The foul-up after the military victory in Iraq was inexcusable, not because "stuff happens" but because the Administration did not prepare proper­ly for "stuff to happen."

What do we do now? I like Kim's idea that we should clean up the tone as well as substance of our diplomacy and pay more attention to the interests of others but then, after hearing those interests, clearly assert our own. He gave the example of lis­tening to Europe's interest to put global warming on the agenda of the G-8 but then firmly insisting, from our interests, that Iraq and Afghanistan also be on that agenda.

I might take the idea a step further and say why not "hang back" on some issues in our discussions with the Europeans, especially on those issues where they may have a more immediate interest than we do? We did that, for example, in the case of Bosnia in the early 1990s. We deferred to the Euro­peans; we said, "You take charge." Eventually, they came to us because they were unable to pull it off.

We did the same thing in Kosovo, and we've done it so far in the last three or four years in the negotia­tions with Iran over nuclear weapons, deferring to the EU-3. Put them out on the point. Let them get worn down by the opposition. Then, at some point, they may come to us and ask us for our help.

We could do the same, for example, on relations with Russia over natural gas. Then we can in fact be very strong; or, as Kim argues, we can underpromise and then overperform. In other words, act decisive­ly only after they have asked us. This is the kind of leadership that says "Ask me" rather than moves out before they ask.

I realize there is a risk to this. Because of Europe­an flaccidness, we could fall behind the curve in dealing with some of the problems like the acquisi­tion of nuclear weapons by Iran. But it may be smart leadership, especially if you believe we are not going to be able to preempt again, at least not without some allied support or without domestic support.

Making Alliances Work

I disagree with Kim a bit on alliances and what to do about NATO. Kim suggests we think about expanding NATO, or possibly even leapfrogging NATO and creating a Global Freedom Alliance. I'm a little reluctant to give up on NATO as yet, and think that we should be very careful in doing that, since we've invested so much in NATO.

I think abandoning NATO is premature and, because of all the capital sunk into NATO, should not be done lightly. I would point out that NATO succeeded in "out of area" missions in Bosnia and Kosovo. It has succeeded, for all practical purposes, in those conflicts. There's no guarantee that we won't have to intervene again; but to this day and time, 10 or 15 years later, in the case of Bosnia, I think you can say that NATO passed its first test, at least in dealing with conflicts on the periphery of Europe.

Now it's facing its biggest test outside of Europe, in Afghanistan. NATO can also succeed in Afghani­stan. I would continue to look for ways to put some Europeans on the spot in Afghanistan, embarrassing them for their unwillingness to supply adequate military equipment or fight. After all, this is the war they support. After 9/11, they said they were all Americans. So where are the European Americans in Afghanistan?

I think NATO even has a future in Iraq. If we continue to succeed in Iraq, at some point NATO is going to be called upon to take the place of Ameri­can forces as we leave, maybe under a U.N. umbrel­la. But there's no other force that's going to be adequate in that region, certainly not a U.N. force.

As an alternative to a Freedom Alliance, let me suggest that we expand NATO rather than leapfrog it. Kim's got a very good point about bringing Japan and other countries that have been supportive of our policies into the alliance structure. We need to "globalize" NATO.

How about establishing a series of NATO Demo­cratic Councils, with Japan, with New Zealand, with Australia? I would call them Democratic Councils because that would distinguish them clearly from the Russia-NATO Council, which should have nev­er been established, in my opinion. Keep NATO as a democratic club. How better to spotlight the defense and quest for liberty, which is, as Kim says, the lode­star of American foreign policy?

If NATO can't work, we can always go to backups such as coalitions of the willing. I'm not suggesting we abandon alternatives to either EU leadership under the "hang back" strategy or NATO expan­sion under the "democratic council" strategy. But these backups will ultimately be more acceptable to allies and our own domestic public if we have clearly demonstrated a good-faith effort to make alliances work.

I don't think we can have a leadership role with­out a partnership of some sort with other great democracies. However frustrating it may be, Amer­ican has no leadership role in the 21st century with­out a basic partnership with other democracies in Europe and Asia.

Most especially, we can't advocate the expansion of democracy in the world by abandoning the most advanced democracies in the world. We're just going to have to live with the hard slog of eventually bringing the Europeans around and eventually helping them to build a greater sense of the need for both the defense and expansion of liberty.

Proud vs. Passive Public Diplomacy

The third point is equally important. Kim makes the point that we should always have a proud public diplomacy, not a passive public diplomacy, and that point is critical.

I'm not sure a new agency of public diplomacy is going to make much difference. What I think would make maybe the biggest difference is for us to address the tendency for a moral equivalence to exist in our discussion with the Europeans. That is the notion that, somehow or other, Vladimir Putin's Russia represents a model global citizen, whereas George Bush's America is to be vilified.

The United States should never hang its head in the diplomatic arena for any reason--Guantanamo, the Foreign Intelligence Surveillance Act, Iraq, whatever. We should always project a proud, not a passive, self-image and remind the world of where it would be today if they and we had not won the Cold War: if Communist Russia or China or East Germa­ny had climbed the ramparts after the Berlin Wall came down and placed their stamp on post-Cold War global security and commerce. The American role was crucial in heading off the two worst totali­tarian scourges of the 20th century: fascism and communism. We should find ways to remind all those anti-American advocates out there about that unquestioned fact.

For this purpose, the U.N. should be our bully pulpit. Kim knows this institution well, and he is absolutely right to say that we should not ignore it but play to it; that is, use it as an arena of discourse and debate where we fly high the banner of Jefferso­nian self-government and Adam Smith markets. The tradition has already been established by free­dom-fighting pioneers such as Senator Patrick Moynihan, Ambassador Jeanne Kirkpatrick, and, more recently, John Bolton and Zalmay Khalilzad.

We should flatly reject the moral equivalence of collective liberalism, which, in the interest of com­munity or inclusion, recognizes all political cultures to be equal.

Gerhard Schroeder, former German chancellor, asked the American public recently in a "Dear Americans" letter published in the February 2008 Atlantic Times, "Do you Americans accept Russia's global political and economic role in the world?" He has become an advocate of Russia. He's working on the board of Gazprom to help Russia dominate mar­kets for natural gas supply.

My firm answer would be "No!" We should be saying absolutely not. We don't accept Russia's political role if that role involves suppressing free­doms in the world as Vladimir Putin has done in Russia.

Think about it. Schroeder is one of the most caustic critics of Bush and America's war in Iraq, particularly America's handling of detainees at Guantanamo and CIA bases around the world and its alleged transgression of civil liberties through aggressive surveillance techniques. Yet he not only supports Putin but works closely with him and his successor, Dmitry Medvedev, on the board of Gaz­prom to establish Russian dominance over Europe's natural gas supplies.

Imagine if Bush had fired 50 state governors and appointed his own personal representatives instead. Imagine that he closed down The New York Times, The Washington Post, and all broadcast media that criticized his actions (with the exception of the Voice of America, a government-run broadcast company). Imagine that he had put all of his political prisoners in jail and all of their financial supporters.

This is what Vladimir Putin has done. Yet Schroeder gets away with complaining about alleged U.S. infidelities to the rule of law while he advertises Putin's Russia as a model global citizen.

Why do we have to apologize for anything? Why do we have to apologize because we don't think detainees have the same rights as political combat­ants or American citizens? Why don't we advertise the fact that there have been untold numbers of congressional delegations going to Guantanamo, and not one of them has come back with any case to be made, including Senator Ted Kennedy? I don't know why these kinds of arguments aren't being made all the time.

Part of it is the media, and part of it is the fact that there's nothing to resonate with this in Europe. There is no classical liberal tradition in Europe, or there's a very, very small one. So, somehow or other, it seems to me that may be the bigger problem, and the bigger answer may be--and it's a long-term answer, I realize--to devote the kind of effort to Europe that we've devoted in this country over the last 40 years to build a unified classical liberal tradi­tion in America.

Great progress has been made on this score in the United States. Heritage and Ed Feulner have con­tributed mightily in the policy community, as Fox has done most recently in the broadcast media. Now make the same kind of effort to try to restore at least a somewhat stronger classical liberal tradition in Europe.

Europe needs to do this not for America, but for the sake of its own democracy; for without the leav­en of classical liberalism, collective liberalism is always tempted, as Schroeder's love affair with Putin suggests, to walk off into the jungle of authoritarian, if not totalitarian nihilism, which Europe unfortu­nately knows all too well from its own past.

DOV ZAKHEIM, Ph.D.: It's good to be back here. Every time I come here now, there's a little more innovation, and that's a credit to you, Ed.

Kim Holmes is a big thinker, and I think Henry was responding to his really big thoughts. But at the same time, Kim gets into the details. So, whereas Henry addressed more of the bigger thoughts, let me deal with some of the details, because this is an extremely broad, comprehen­sive set of prescriptions. It's actually remarkable for its breadth.

Let me also say at the outset that I share Kim's bias toward the Reagan years. That may sound strange from someone who was Undersecretary of Defense in the Bush Administration until just a few years ago, but when I think back to the Reagan years, perhaps the biggest difference between then and now is that this President, with whom I worked from, I guess, 1998 onwards, is very com­fortable in his own skin, as was President Reagan.

But the country's not comfortable in its own skin right now, and I would argue that a good part of our country was much more comfortable in its skin in those years. That is in many ways what Henry was alluding to and what Kim's trying to get us back to. If we're going to deal with the rest of the world, we have to first eliminate our own self-doubt, and we've got a way to go.

The menu of ideas that Kim throws out is really first-rate. I love the way Kim has taken the notion of globalization and stood it on its head. I'm maybe much more sympathetic to Kim's idea of a global­ized NATO than Henry is, but you can get to that in lots of ways.

Implementing the Big Ideas

One of the things that all of these great ideas need to have in terms of realization is implementa­tion. How do you implement them? I'll get back to that. But seeing globalization in a different light, whether it's on the economic side or the security side, is really very, very important. We shouldn't give the left a monopoly on the term, and Kim does that very well: He pulls it back.

I love the idea of a more assertive United States. We've got to be selective, and if you actually look carefully at, say, how Kim speaks about even China and Russia, you see that he's arguing for subtlety there. That means we're not just going to be a bull in a china shop, but we need to be more assertive.

It's been done. It's done whenever we really want to do it. You actually can pick up the phone to a foreign official and say, "If you don't do X, we won't do Y." It's happened to me; I've done it. The success rate is something north of 99 percent, because we are still who we are. It doesn't mean that we should be a bully. It does mean that, every once in a while, we should remind folks that we are who we are. And, of course, to do that we have to remind ourselves, as Kim does so well.

I love the ideas of rethinking foreign aid, our commitment to free trade, the need to keep a lid on domestic spending, the need to rethink what we do about the National Security Council staff. We have a lot of tools, and I don't think they're particularly soft.

For instance, the use of the financial tool can be very, very hard, but that means thinking more cre­atively about how we link diplomacy to those other tools. We shouldn't have the military as the constant default option when diplomacy fails. We should have other tools in our tool chest like the financial tool so that we'll be less inclined to go immediately to the military, and then when we use the military tool, we will use it well.

Thinking about some of our friends and how we relate to them, whether it's old friends like Japan-- Kim speaks about them--or developing friends like India, what do we do? How do we proceed? These are very, very important questions. Let me just throw out some observations and a few cautions.

First of all, as a realist Republican, let me say that we're not really bad guys. Not only that, but we do recognize the importance of values, because with­out values, you have no motivation; without values, you can't be an example for anybody; without val­ues, you don't have any objectives. So there may be some for whom there's no moral compass one way or another, and those people are no different from people on the left. There is a commonality there if one lacks any kind of moral compass.

But looking at the world realistically and saying "Here's what we want to do; now here's how to implement it" is very different. So let me first go to what you might call Kim's "liberty agenda." The challenge here is pretty straightforward. It's simply to avoid being labeled as hypocrites, and the reason is that once you're labeled as a hypocrite, you get dismissed entirely.

This is a tough row to hoe; there's no question about it. Abu Ghraib really did set us back a long way, and everybody beats us on the head with it. Everybody beats us on the head with torture. The Republican candidate for President, John McCain, is someone who was tortured, and he comes out and says he's against torture.

We can't allow the world--and we can't allow those who actually torture--to use torture in a way that undermines what we're trying to accomplish. We've got to be very careful about that sort of thing. We also have to recognize that, as we pursue this course that Kim lays out, we don't get tripped up by what will inevitably be uneven implementation.

This is what really tripped up the democracy agenda. You can't go to Egypt one day and talk about democracy and then go to Egypt another time and say that everything's fine when the same people who were in jail before are in jail now. And if you really need Egypt as an ally--as, in fact, we do--you've got to be careful about saying it in the first place.

Preaching, hectoring, doesn't work. We have to set ourselves up as a model. We are the city on the hill. There's no question about it, and there will be times when we will tell people to tear down the wall as President Reagan did. But sometimes we have to be lower key about it so that countries will not say, "Well, you're so close to the Gulf Arabs, and how democratic are they? Therefore, you're hypocrites; therefore, everything you say is worthless."

No, everything we say is not worthless--far from it. We have to be judicious about how we say it. That's not a critique; it's a caution.

The War on Terrorism

In a way, we have to think a little more creative­ly about where we go with this one. The war on terrorism was a very important term on the 12th of September 2001. It was a very important term and a very important motivator for quite some time, and it does connote that terrorists aren't ordinary criminals.

We can't revert back to that. The World Trade Center wasn't attacked for the first time on 9/11. On the other hand, because so much of the world translates "war on terrorism" into the use of the military and immediately reacts negatively, we've got a problem. We need to find another term.

We need to find a term that designates these peo­ple as something more than criminals, that recogniz­es that they are not ordinary criminals but doesn't make them feel good by thinking that somehow they're at war with us. They want to say that they're on the same battlefield as we are. They're not.

The anarchists tried the same thing in the late 19th and early 20th centuries for 30 years. They killed President William McKinley. Imagine if somebody killed President Bush, God forbid. But we didn't call a "War on Terror" on them or a "War on Anarchy." We just brought about some really tough measures and got rid of those people and worked with the international community to do it, because they didn't just kill our President; they were blowing up parliaments, palaces, and leaders all over the world.

So we've got to figure out a way to treat these ter­rorists the way we treated the anarchists: as basically scum of the Earth. Again, we want to do that for two reasons. First, because we should not elevate these people into something they are not and, second, because we need the international community, and we don't want them to misinterpret what we're doing.

I will say again: We were absolutely right to call it a "War on Terror." We had to contrast what we were doing after 2001 to where things were before 2001; that was absolutely right. But I think that it's time for a change.

DOD "Entitlements"

I want to talk a little bit about defense spending. We need to be careful when we are talking about percentages of GDP, because the Defense Depart­ment needs to get what it needs to get. In any event, people will sometimes include the supplementals, and sometimes they will not include the supple­mentals. Or they will say, "At a trillion-and-a-half-dollar GDP, we're spending $600 billion to $700 bil­lion; that's more than we ever have." The real point is this: There are some things we've got to do inside the department, and there are things that we have to make sure other people don't do to the department.

Kim rightly talks about entitlements, but we need to think about DOD entitlements. Twelve per­cent of our budget is going to be spent on health care; that's nuts. If we just cut 2 percent out, that's another $10 billion to be spent on acquisition.

I see Baker Spring here in the audience, nodding his head in agreement. He knows as much about this as anybody in this city. We've got a broken acquisition system. Why is it broken? In part because our acquisition officials have not had to go to any kind of retraining or any school since they took their jobs. The military has professional mili­tary education; the civilian side has no forced con­tinuing education at all.

My grandkids know how to use a computer and understand that better than some senior civil ser­vants. Why? Because the senior civil servants have been doing the same thing for 40 years, and 40 years ago they didn't have computers. We need to do something about that. Moore's law tells us that computing power doubles every 24 months. So if you've been in the same job 10 years and you've never been retrained, how far behind are you? We have to do something about that. It's not to under­cut what Kim is saying; it's to supplement what Kim is saying.

Finally, one major point that my former boss, Don Rumsfeld, made on the 10th of September 2001: Perhaps the biggest headache we have is our own bureaucracy. Part of what conservatism has always been about is smaller government. There is a reason for that. People think they give money to the government and it immediately goes out in pro­grams. In fact, the money gets siphoned off paying bureaucrats.

In this city, everybody carpools. Think about it: You come in at 9:00; you leave at 5:00. It doesn't matter what you're doing. It doesn't matter what case is on your desk. You're out at 5:00; you've got a carpool.

What does that tell you about dedication, about commitment to your work? How many agencies of this government right now are really engaged in the war in Iraq? It's a war, but our government's not at war. The Department of Defense is at war, part of the State Department's at war, part of Treasury's at war, maybe a few bits of some of the other agencies.

So as we think about implementing Kim's ideas, we've got to think about how our government can get itself organized to implement them. That con­cern goes beyond the National Security Council. It goes to the heart of whether we still need to be liv­ing in the mid-19th century with Chester Allen Arthur's civil service.

And while I'm on the mid-19th century, let me end with this: We have another institution that's mid-19th century--maybe early 19th century. It's called the Congress. If the executive branch needs to change, what about the Congress? And that, my friends, may be the biggest challenge of all.

DR. HOLMES: Let me respond, if I could, just to a couple of points that were made by Henry and Dov, and then we may have time for a few questions from the audience.

Henry, let me talk about the point you made about expanding NATO and the global alliance I am proposing. A European colleague of mine thought I was being a little hard on the Europeans in this book, and perhaps I should clarify what I want to see happen to NATO per se.

I'm not ready to give up on NATO either. NATO is not performing as well as we would like in places like Afghanistan, but it has a rich history of institu­tional, organizational, political, and other traditions and precedents that we would give up at our peril. But that doesn't mean that we shouldn't try to find other ways of finding security associations or alli­ances that may or may not necessarily, at least in the beginning, have an association with NATO.

Your idea of democracy councils is really a good one. I think that may be one way of creating connec­tions between the democracies in Europe and democracies in other parts of the globe. That would allow NATO to stay on its current path but enable us to work around it or with it, depending on the issue.

The main point I'm trying to emphasize is that I just don't think that we can run our global policy solely through NATO. However we get around that doesn't mean we're demolishing NATO; it doesn't mean we're giving up on it, but that NATO is too constraining. NATO does not really appreciate our larger global interests and values, and it also doesn't appreciate some of our other allies that are equally important to us.

NATO's members are democracies, and you are right: We should not give up on them. We shouldn't necessarily work around them to minimize them or weaken them; but by the same token, we shouldn't allow that focus to weaken our global reach.

Regarding Dov's point about being a realist: I'm a realist lover of liberty. You'll see in my book that I frequently mention the need to find other ways to get to where we want to go. And I tried to address the charges of hypocrisy and the like, such as when I made the point about speaking more softly and getting a bigger stick. You mentioned Egypt, but there is also the example of the Palestinian elections.

The problem is that if we define the liberty agen­da as just posturing over elections and speeches, whether in Egypt or anywhere else, or even if the focus is just on supporting dissidents--if that becomes the sum total of what our democracy agenda is, then we will inevitably always be accused of being hypocrites. With or without Abu Ghraib, it is going to happen. We need a richer, broader understanding of what we mean by the constitution of liberty.

Democracy is much too narrow a concept to hang our sign on. For liberty, we also need to talk about the need for the rule of law, for political pluralism and the important role of the judiciary, and respect for minority rights: All kinds of principles and poli­cies make up this idea of freedom, and we really can't reduce it to just taking a stand on a particular elec­tion somewhere. Nor can we make it the sum total of what a President or Secretary of State says in a speech. The liberty agenda has to infuse everything the entire government is doing, including our for­eign aid programs and our approach to globaliza­tion. It has to infuse what we do at the United Nations. It has to have a real institutional depth to it.

We need to be judicious; we need to find a way to talk about our values so that it implies we do appreciate the interests that other countries have, and it's not just about us. There are a lot of other countries that fear terrorism as much as, if not more than, we do; and yet we've found it very difficult, for example, to deal with the ideological part of dealing with Islam.

I see Lisa Curtis is here. We have a project exam­ining Islam and liberty and how the United States government and Americans can talk about the issue of political Islam in a way that's more convincing so that people in Muslim societies know that we care just as much about their freedom, including their religious freedom, as we care about our own.

There is obviously a lot we can do better, and cer­tainly public diplomacy is part of that. But, frankly, if you don't get the basic ideas right to begin with, public diplomacy is just going to reflect the muddle. And even if you had another U.S. Information Agency, if we can't be clear about what we stand for and how we talk about liberty in a convincing and compelling way--whether the war on terrorism or supporting globalization--we are going to find our­selves drifting further and further away, not only from our roots, but also from what it means to be a great power and a great country to begin with.

Notwithstanding what a lot of our friends and allies, including their governments, may say in pub­lic, during the discussions I had with foreign diplo­mats, they were not only very critical of what we are doing in Iraq and elsewhere, but told me, "We understand that you still are the United States of America; we still can't do without you, being the power that you are." They don't say that in public as much as we would like them to, but they still believe it. And they are looking for a kind of leader­ship where they can come along and support what we're doing in ways that are more enthusiastic, per­haps, than the way that we've been framing it.

Selected Questions and Answers

QUESTION: During the Reagan Administra­tion, I was in the Army in field artillery. Back then, President Reagan engaged in a buildup in absolute numbers of personnel in the military while also doing transformation, investing in the most modern weapon systems. Whenever that is brought up today, Democrats and Republicans and conservative people say, "You want quantity over quality. We just can't afford a larger military."

DR. HOLMES: Perhaps Dov can comment on this too, but we had extended discussions here about this very problem. It really comes down to what kind of force you need for the current threat environment. During the Cold War, the Warsaw Pact had been around a long time, and you could plan around that. The environment that we have right now is not as predictable, so the question is: Do you really need a larger active force or a force that can surge or go in the directions you need on very short notice?

The answer we came to is the latter. We have the Guard and the Reserves, and they are already being terribly strained. We need to do more to try to get a surge capacity rather than a large overlay of an active force that is very expensive. So it's not just a matter of numbers; it's what they do, how they're structured, how they're trained, and how they're organized.

Getting to Dov's point about defense spending, the 4 percent of GDP is an estimate that historically has been something we can afford, and it is what has been necessary in the past. It's not a magic number that'll necessary go down into the microlevel of what is needed to fund a budget for the Department of Defense, because you're absolutely right--we argue this all the time: We also need acquisition reform. We certainly need to do something about the health care and entitlements situation. Baker Spring talks about that all the time. There are ways we can save money. The main point is that we don't lose sight of the fact that we do need to have more funding resources.

DR. ZAKHEIM: I'm inclined to agree with that. I think Kim's got it right, and Baker and Jim Carafano do too, when they say that the circum­stances are just different today. Part of the problem, frankly, is that every time you add an individual to the active force, you carry this whole baggage of personnel costs that just didn't exist 20 years ago.

What's interesting is that many of the proposals that passed the Hill to increase health provisions and other things came from liberal Democrats who were trying to demonstrate that they cared about the troops in some way better than Republicans did. These same people on a regular basis vote against any kind of modernization; so the net effect of this is to put a young man or woman on the bat­tlefield without the most modern tools but to say, "Don't worry. If you get shot, we've got good health care for you."

QUESTION: I was wondering if any of you could be more specific when you talk about restruc­turing foreign aid?

DR. HOLMES: We produce the Index of Economic Freedom, which measures economic freedom in 157 countries around the world, and the underlying assumption of it is that over time, economic policies that reflect economic freedom--lower taxes, dereg­ulation, and so forth--produce economic growth and more prosperity for people. We think that insight should be applied to our foreign aid programs.

To President Bush's credit, he did do that through the Millennium Challenge Account. He understood that there was a responsibility on the part of the governments receiving foreign aid. They had to meet certain standards and were dedicated to eco­nomic reform if, in fact, they received aid from us.

What we need to be doing is finding ways to encourage countries to reform, to make the kind of institutional reforms that would produce economic prosperity. We should not be giving bilateral aid, or aid even through multilateral banks and other ven­ues, that simply props up governments that keep on doing the wrong things and that deprive their citi­zens not only of economic freedom, but also of the prosperity it brings.

That has been the case in the last 40 or 50 years with our economic aid; studies show it has not brought prosperity. We've studied this many times. In fact, in cases where there are large amounts of foreign aid going to governments, that's precisely where economic growth has been the worst.

QUESTION: In your section on the United Nations and American sovereignty, you mentioned left-wing lobbying groups on quite a number of issues. I'm wondering if you could comment on, particularly, those social issues affecting basic soci­etal structures like family.

For the past several years, I've worked on family policy issues countering a number of trends in the United Nations, and the issue that we face is the cre­ation of international legal norms that could then force the hand legally in the United States and par­ticularly in Third World countries. I wonder if you could comment and expand on that trend.

DR. HOLMES: When I was Assistant Secretary of State for International Organization Affairs, I was shocked at the power of the nongovernmental organizations dedicated to the social and economic issues. Sometimes these groups consisted of no more than a fax machine and one or two people with a grand name for their association. Yet they had access to the U.N. commissions and were working hand in glove not just with the U.N. Secretariat in New York, Geneva, and elsewhere, but with some of the most repressive regimes on Earth, and their main target was usually the United States.

They do not operate out in the open, and as a result, most Americans don't know how influential they are. The impact of the United Nations on the U.S. is often through these NGOs operating not only with the U.N., but also with American political parties, churches, and universities.

They are challenging the idea of national sover­eignty, bringing what I think are foreign concepts of international law into the American tradition and expanding international humanitarian law--far beyond what we agreed to when we first signed the Geneva Conventions, for example--in an effort to create a sort of political and cultural revolution behind the scenes. Conservatives don't do that very well, and as a result, we often find ourselves very much on the defensive.