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Why is the Middle East so important to the United States --important enough to send hundreds of thousands of our sons and daughters in the military forces into the region and also to dominate Washington’s foreign policy attention? Let me state my bias for focus on this area and, I hope, a justification for your presence today. The quest for peace between Arabs and Israelis is the highest moral calling for US foreign policy. Efforts to assure the security of the Persian Gulf and the Arabian Peninsula are vital to global prosperity. Both are necessary if we are to win the war on terrorism and make Americans safer.

The strategic importance of the Middle East is based on two factors. First, it is the home of three great world religions and the source of the most influential cultural creativity in world history. The dark side is that grievances in the Middle East, real or imagined, stir passions around the globe that fuel violence. Chaos in Saudi Arabia, for example, would cause profound emotional shock for over one billion Muslims. If what happens in Jerusalem or Mecca is perceived as part of a clash of civilizations, it will render life more insecure for Americans. Second, the Middle East is the location of two thirds of the world’s oil reserves and much of its natural gas reserves. Someday those energy sources will not be so critical to the modern way of life. For now, however, we must consider how to foster the stability of the countries producing these resources and assure normal commerce between this region and the industrialized countries.

Neo-conservative theorists advocate concerted US pressure, including covert action and overt military pressure, to change governments in the Middle East and not merely to get them to modify their policies. These theorists reject the traditional notion that the US has an interest in maintaining stability in the Middle East. On the contrary, they see the region as one that should be destabilized, both for its own good and to further long-term US interests. They are prepared to use US power in an effort to reconstruct countries they deem as having a domestic system or social structure that could give birth to potential threats.

In dealing with governments like those in Iraq, Iran and the Arabian Peninsula, we are dealing with some very defective systems. But these are not banana republics where we can ignore the consequences of instability. Mistakes in the Middle East can destabilize not just the immediate region, but can also cause a global economic setback. This is not some notion dreamed up at the State Department, Central Command in Tampa, or the Middle East Institute. It is based on the hard facts of geology and patterns of energy consumption. Let me provide you with a few facts: Today only 31 percent of world oil production comes from the Middle East. Sixty-five percent of the world’s oil reserves, however, are in the Middle East – mainly in Saudi Arabia, Iraq, Iran, the UAE, and Kuwait. As a result, one can expect the Middle East share of production to increase. Additional large reserves of oil and gas are located in the Muslim countries of Africa and the Far East, where Middle East politics affects security and supply reliability. The DOE projects that by 2015, 34 percent of oil production will come from the Middle East, and by 2025 the figure will be 38 percent. Sixty percent of US oil consumption today is from imports, though primarily not from the Middle East. Because oil is a fungible commodity, a sudden reduction in the production of oil in Saudi Arabia, for example, will lead very soon to higher gasoline prices - and perhaps shortages - in New Jersey. By 2025, unless we stop driving SUVs or do something else drastic, 70 percent of the oil we consume will be imported.

Can the US lead the Middle East into a prosperous and democratic future free from terrorism? The US has demonstrated its overwhelming military dominance of the battlefield in Iraq, but this does not translate readily into leadership. In the Middle East, certainly, no combination of military forces can long withstand us. At the same time, our soft power, as represented by what used to be our ability to inspire and to persuade through the example of our values and through skillful diplomacy, is in decline. We are widely viewed as calloused, hypocritical, and unable to persevere in trying to gain the trust and confidence of other governments. US interests and US friends are increasingly exposed to the forces of envy, resentment, and despair. US military power by itself will never make Americans safe.

The Bush Administration has failed in four years to develop a convincing strategy for dealing with the full range of threats to American interests in the Middle East. The doctrine of pre-emption against a state viewed as hostile is an attempt to answer the question of how to deal with a non-conventional threat delivered either by an overt surprise attack or by the covert means of terrorism. It does little to deal with the threat posed by non-state actors whose address is largely unknown. Iraq under Saddam Hussein had lots of nasty problems, but it was not a center for terrorist activities directed against the United States. Now, however, Iraq is such a battleground, and real terrorists exploit the US occupation as a tool for recruitment and fundraising. The best defense of the Administration’s claim that Iraq was central to the war on terrorism from the beginning is an argument based on a plausible but unprovable hypothesis. Iraq did have a history of building and using weapons of mass destruction, and it did have a history of state sponsorship of terrorism. Therefore, some argue, a pre-emptive war was justifiable based on the possibility that Saddam would slip nuclear or biological weapons to international terrorists. But we could say the same thing about North Korea or Iran or any number of states.

Regrettably, there are too many “bad” governments trying to acquire weapons to go to war with all of them. Speaking at the United Nations in September 2001, President Bush said that governments must either choose to stand with the US in the global war against terrorism or stand against it. The war against the Taliban regime in Kabul left little doubt of what would happen to governments that harbored terrorists bent on mass murder of Americans. It is less clear, however, what might happen to all those bad and imperfect regimes that choose to cooperate with the US.

While US relations with Pakistan and the emerging relationship with Libya do not satisfy moral purists, the logic of statecraft is clear. There will perhaps always be small groups of fanatical individuals motivated by a hatred of the United States based on real or imaginary grievances. From time to time this may require the use of US military force to deal with them, as happened in Afghanistan. But virtually all Middle East governments see themselves as being equally targeted by extremists, if not being the principal targets. Usama bin Ladin did not set out to establish an Islamist government in Washington, but he certainly aimed to overthrow governments of various Muslim countries, including Indonesia, Pakistan, Saudi Arabia, Yemen, Egypt, Turkey, and Morocco.

Syria and Libya are not countries that one would normally look at as US allies. But for a variety of reasons, both have cooperated in the campaign against extremist organizations such as Al Qaeda. Libya has taken dramatic steps to end its WMD programs. Syria wants to resume negotiations with Israel and is finally cooperating along the Iraqi border. Without meaning to minimize the obstacles, we cannot afford a sterile, negative approach to our relations with such countries. From a US perspective, we have much to gain. If former state supporters of terrorism demonstrate by concrete deeds that they have moved down a responsible path, this advances a long way our goal of a world in which international terrorism becomes almost as rare as piracy on the high seas. We will never be capable of dealing with the multiple terrorist organizations that may arise around the world unless we have the other governments of the world as active partners. Terrorism is a problem that clearly illustrates the limitations of our vast military power.

Most of the established Arab and Muslim governments are cooperative. They see terrorism as an existential threat to their regimes and the painful internal modernization process. These governments would also be inclined to do more on other issues, including gradual reforms of their own political systems, provided that we are perceived as doing more to end the Arab-Israeli dispute. Moreover, Americans cannot. by ourselves, win the hearts and minds of the hundreds of millions of angry Muslims and Arabs. Governments and private elites in these countries must do most of the work to end the grievances that increase the pool of young men and women turning to extremist ideologies. Moderate Muslim governments and elites are begging us to adopt policies that will help them deal with the extremists in their societies.

If the US does not help the Israelis and the Palestinians find the path toward a lasting peace, no amount of preaching about democracy, human rights, and the value of free markets will check the tide of anti-Americanism. The Bush Administration has called for far reaching political, economic and social reforms in Arab and Muslim countries. While desirable from a theoretical point of view, it is not obvious that the United States has the wisdom, moral standing and political skill to push this agenda in an aggressive way.

We should encourage reform initiatives coming from within the region – the ones that are not covered with Washington’s fingerprints. Palestinian intellectuals were calling for years for reform of the Arafat-ruled Palestinian Authority, but both the US and Israeli governments ignored these voices as long as we were satisfied with the level of security cooperation that Arafat provided.

It is noteworthy that September 11 was not only a shock for us, but also for the Arabs and the Iranians, as moves for political and economic reform have increasingly emerged from both leaders and intellectuals. Democratic reforms will last only if they are perceived as being authentic and developing organically from local societies rather than being imposed from abroad. The US should focus on the direction of change rather than the precise end state. The goals of greater political participation and transparency of government decision making are widely shared by the people of the region.

But we can expect popular opposition to direct US intervention, particularly if it is military-related. When we set about to change the Iraqi regime, I said there would be only one thing worse than failing; to succeed and have Iraqis say six months later that their daily lives were better under Saddam Hussein. And yet, nearly two years later that is the view of many, if not most, ordinary Iraqis. How we emerge from Iraq is critical.

And what if we do not emerge from Iraq with a credible success? I can only imagine that the leaders of Iran, and other countries are watching the example of North Korea and comparing it with the example of Iraq. The resulting analysis is stark: either develop your own nasty deterrent to use as a bargaining chip or be overthrown.

So the stakes are high. Why did Iraq become so central to the efforts of the Bush Administration? It was an intoxicating idea: a liberal democracy embracing free markets, human rights and the rapid expansion of oil production to help fuel a global economic boom, and a different kind of Arab country - one that would embrace western values and peace close to Israeli terms. In fact it never had much to do with Iraq. But many US government and opinion leaders, relying more on ideological fantasy than hard facts, bought the seductive notion that the conquest of Iraq offered huge potential benefits in exchange for modest inputs of force and money. Believing that such achievements were close at hand, the Bush Administration reached for a quick and easy victory over the twin threats of terrorism and proliferation of nasty weapons. The long-term payoff promised to be great and a “decisive” president overrode the warnings of many experts in the CIA, State Department and uniformed military. Do the American people want a visionary president with a false vision? Do they want a decisive president that makes the wrong decisions? Historians would find it hard to believe.

The architects of the US-led invasion of Iraq in 2003 and of the subsequent occupation were not evil men. In key respects, however, they were dead wrong. They sincerely believed that the US commitment would rapidly transform the Middle East for the better and make Iraq a positive element in global security and the war against terrorism. They imagined that Iraq would readily become a model of democratic governance and free market economics – the “Norway of the Middle East.” Moreover, they thought this could be accomplished with a modest application of US military force and a commitment to post-war stabilization and progress that would largely be financed by Iraqi oil revenues. They were blinded by illusions based on an excess of ideological zeal and minimal regard for the hard realities of Iraq’s troubled history and damaged social structure. They also minimized the importance of cultural differences between Americans and Iraqis in an atmosphere of intense nationalism. Just as remarkably, they overestimated the tolerance of the US public for sustained imperial adventurism. In short, the architects of US strategy overreached and underestimated the resources required to accomplish their ambitious objectives.

The influence of neo-conservative ideologues in the Bush Administration, led by the Vice President, Secretary of Defense, and Deputy Secretary of Defense, is now less than it was, although the reelection of President Bush might lead to a renewal of their influence. But we cannot simply walk away from the problems of Iraq - a country of vast strategic importance - especially when we have made some of the problems worse. Some people will be tempted to spin a setback for US strategic interests and misery for the Iraqi people in order to make it look like a foreign policy success. I don’t believe this will happen, in good part because Senator John Kerry resisted the temptations of the primary campaign and the Nader candidacy. On the contrary, it looks like Kerry, old-fashioned Republican conservative internationalists, Democratic internationalists, and responsible elements of the US media will not forget the dangers to our national interests of unfinished business in Iraq. I believe we have entered a period where realism will get new respect in Washington. We need to face up to hard facts and not rely on scare tactics or comforting illusions from those who oversold the war.

It is still possible to help Iraqis make their country a better place for their children and a much safer place for Iraq’s neighbors, and it is imperative that we prevent Iraq from becoming the imminent danger to the US that some argued it was at the beginning of the Bush Administration. Instead of building utopian sand castles, the US needs to focus on damage control.

The US needs modest but achievable expectations, and redlines for dangerous Iraqi behavior distinct from Iraqi behavior that is merely disappointing and annoying. The good news is that the Bush Administration has in fact been moving in that direction on the ground, even while the rhetorical exuberance of the President and Vice President changes more slowly. The key goals of the emerging, non-rhetorical policy are as follows: Iraqi cooperation in the war against terrorists bent on violence against Americans and our de facto allies in the region. Strict Iraqi adherence to UN resolutions prohibiting future efforts to reconstitute weapons of mass destruction or long-range missile programs.

If the new Iraqi political order fails to cooperate on those two points, it will have crossed redlines that I believe would be intolerable for any US Administration – Republican or Democrat.

There are two other objectives that are achievable, as well as necessary, to sustain an Iraqi government that could deliver on the two primary US goals: Stabilization of Iraq under an elected leadership in order to ensure that it not become a breeding ground for a new generation of terrorist groups and a center for the recruitment of desperate and bitter young people. Economic reconstruction that generates employment, delivers basic services, and puts Iraqi oil production on a sound basis for gradual growth.

I have known Iraqi Prime Minister Iyad Allawi since 1991. Thomas Jefferson he is not, but he is not going to be another Saddam Hussein. He is tough, but committed to rule of the law. His no-nonsense pragmatic approach is what most Iraqis want now, and it’s the best the US can get. Allawi was not the first choice of ideologues in the Bush Administration, and he angered them last year by publicly criticizing the dismissal of the Iraqi army and radical purge of Baath Party members. The darling of the neo-cons was Ahmed Chalabi, another former exile. He was Vice President Cheney’s nominee to become the leader of Iraq. Ahmed is another Iraqi I have known since 1991, and he has considerable strengths as well as weaknesses. Those of us in the State Department and CIA who worked closely with Ahmed never saw him as playing anything more than a useful coordinating role, and we did not trust him very much.

On the second point: prior to Iraqi sovereignty in June, the US used Iraqi funds for awarding big contracts to US firms, which resulted in the creation of few Iraqi jobs. Now that we are starting to move the over $18 billion dollar US aid program into the pipeline, we need to do better. Most of the current Iraqi cabinet members are capable technocrats who can deliver if they receive basic security and funding.

There is a long list of things that Washington had in mind for Iraq that will be unattainable, at least in the near term. If we are wise, we will swallow our disappointment and be ready to accept compromises - even if they often seem cynical. The Iraqis will do many things, even if they do not cross our redlines, that make us unhappy. We should expect, for example, that Iraqi foreign policy will be within the Arab consensus regarding the Palestine issue, and we should not be surprised if Iraq also supports the Syrian demand for full withdrawal of Israel from the occupied Golan. Many Americans will probably be uncomfortable with the role that Iraqi leaders give to Islam in social and educational affairs. We need to accept that an Iraqi consensus on this point is far more important than some model the US might prefer.

In dealing with economic matters, it would be surprising if the unbridled free market, low tax, and low tariff models the Bush Administration prefers prevail in Iraq. My own prediction is that with much carping from second guessers in the White House, and State Department, and elsewhere in Washington, and Congress will adjust to the emerging realities. After all, Pakistan is now called a “major non-NATO ally,” a step that few of us would have predicted in the summer of 2001. September 11th changed our priorities toward Pakistan, and the realities of the war on terrorism must affect our policy toward Iraq.

US Ambassador Negroponte has a radically different role than Ambassador Bremer. Whereas Jerry Bremer started each morning thinking of the twelve decisions he planned to take, John Negroponte needs to consider the twelve problems for which he must find support and the multiple centers of influence with whom he will have to negotiate. Negroponte has leverage in dealing with the Iraqis, but he does not have decision power. He must “lead from behind”, consciously choosing a lower profile in order to assure that Iraqis get the job done and receive credit. Negroponte will have at least some control over how US funds are spent for Iraq’s reconstruction, although decisions already made by the Pentagon have greatly limited the diplomatic effectiveness of this tool. Tragically, Pentagon mishandling of the nearly $19 billion aid budget also undercut efforts to get Iraq back on its feet economically and socially. Negroponte also has unusually good experience and contacts in the UN system. This will be especially important with regard to the electoral and constitutional process so critical over at least the next eighteen months. Wisely, even if grudgingly, Washington has realized that the United Nations is more capable than the United States in helping Iraqis deal with the mechanics of the upcoming political process. The UN can only be successful, however, if powerful UN members, especially the United States, provide it with unstinting support. Negroponte can be a key player in assuring that this happens.

We had better hope that current trends in US policy are successful. There are Bush Aministration officials in Washington, members of Congress and influential think tanks that are all too ready to say that Bremer, Negroponte, and the State Department sabotaged the policy of President Bush and “lost Iraq” – as if Iraq was ever ours to lose.

In fact, US policy toward Iraq is changing even while Washington’s rhetoric remains stuck in the time-warp of the immediate post-war euphoria. Harsh realities are driving this change, with the events on the ground in Iraq and the evolving attitudes in the United States. To judge the latter, observers should pay close attention to the views being expressed in Congress, a body historically much more attuned to public opinion than the executive branch. Under the bi-partisan leadership of US senators Richard Lugar and Joe Biden, the Senate Foreign Relations Committee has engaged in serious rethinking of the role of the United States in Iraq. They are aided not only by many Democratic members, but also by influential Republicans such as Senators John Warner, John McCain and Chuck Hagel and large numbers of Republican House members. Among many Republicans, there is growing dissent, though usually only heard privately, from the strategic assumptions that led to the conduct of the war and occupation of Iraq.

Nineteen months after the overthrow of Saddam Hussein, far too many Iraqis say their daily lives were better off before that event. If this remains true after two years, it will be a huge political defeat. We must not keep our military forces in permanent occupation on the banks of the Tigris and Euphrates because theorists along the Potomac have decided we are the new Roman Empire and should act accordingly. We must not fritter away our multi-billion dollar aid program in ways that largely serve pet economic theories, the interests of a few US corporations and a relatively small number of favored Iraqi partners. We should raise our sights beyond the old tolerance for an autocratic Iraqi government that is temporarily serving US interests, but we should be realistic in how we define the process of democratization. The key building blocks for democracy are basic security, rule of law, and institutions of civil society. Here is where it is important that we do not promise too much but that we help meet those needs which Iraqis themselves identify.

One final thought: We have not shared the burdens of this war in a way that is either fair or wise. A small minority of the US population sees military service in Iraq, Afghanistan, or other danger zones. They and their families deserve better support. We are also not paying the costs of the war on terror or the war in Iraq out of balanced budgets. Leaders like John Kerry and John McCain have argued for budgetary changes to better meet these costs. Instead, we have put them on the national credit card. We borrowed the money because we were too shortsighted to raise taxes and cut other spending. Our children and grandchildren will have to repay the debt for commitments to homeland security and foreign military ventures. This is wrong, and we should tell this to our elected representatives – Democrats and Republicans alike. We should demand that the President and Congress resume deficit reduction now rather than rely on rosy scenarios for painless economic growth.