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Let us begin by taking stock of our new era. Four facts are salient. First, America's core concepts -- democracy and market economics -- are more broadly accepted than ever. Over the past ten years the number of democracies has nearly doubled. Since 1970, the number of significant command economies dropped from 10 to 3.

This victory of freedom is practical, not ideological: billions of people on every continent are simply concluding, based on decades of their own hard experience, that democracy and markets are the most productive and liberating ways to organize their lives.

Their conclusion resonates with America's core values. We see individuals as equally created with a God-given right to life, liberty and the pursuit of happiness. So we trust in the equal wisdom of free individuals to protect those rights: through democracy, as the process for best meeting shared needs in the face of competing desires; and through markets as the process for best meeting private needs in a way that expands opportunity.

Both processes strengthen each other: democracy alone can produce justice, but not the material goods necessary for individuals to thrive; markets alone can expand wealth, but not that sense of justice without which civilized societies perish.

Democracy and market economics are ascendant in this new era, but they are not everywhere triumphant. There remain vast areas in Asia, Africa, the Middle East and elsewhere where democracy and market economics are at best new arrivals -- most likely unfamiliar, sometimes vilified, often fragile.

But it is wrong to assume these ideas will be embraced only by the West and rejected by the rest. Culture does shape politics and economics. But the idea of freedom has universal appeal. Thus, we have arrived at neither the end of history nor a clash of civilizations, but a moment of immense democratic and entrepreneurial opportunity. We must not waste it.

The second feature of this era is that we are its dominant power. Those who say otherwise sell America snort. The fact is, we have the world's strongest military, its largest economy and its most dynamic, multiethnic society. We are setting a global example in our efforts to reinvent our democratic and market institutions. Our leadership is sought and respected in every corner of the world. As Secretary Christopher noted yesterday that is why the parties to last week's dramatic events chose to shake hands in Washington. Around the world, America's power, authority and example provide unparalleled opportunities to lead.

Moreover, absent a reversal in Russia, there is now no near-term threat to America's existence. Serious threats remain: terrorism, proliferating weapons of mass destruction, ethnic conflicts and the degradation of our global environment. Above all, we are threatened by sluggish economic growth, which undermines the security of our people as well as that of allies and friends abroad. Yet none of these threats holds the same immediate dangers for us as did Nazi conquest or Soviet expansionism.

America's challenge today is to lead on the basis of opportunity more than fear.

The third notable aspect of this era is an explosion of ethnic conflicts. As Senator Moynihan and others have noted, the end of the Cold War and the collapse of various repressive regimes has removed the lid from numerous caldrons of ethnic, religious or factional hatreds. In many states of the former Soviet Union and elsewhere, there is a tension between the desire for ethnic separatism and the creation of liberal democracy, which alone can safely accommodate and even celebrate differences among citizens. A major challenge to our thinking, our policies and our international institutions in this era is the fact that most conflicts are taking place within rather than among nations.

These conflicts are typically highly complex; at the same time, their brutality will tug at our consciences. We need a healthy wariness about our ability to shape solutions for such disputes, yet at times our interests or humanitarian concerns will impel our unilateral or multilateral engagement.

The fourth feature of this new era is that the pulse of the planet has accelerated dramatically and with it the pace of change in human events. Computers, faxes, fiber optic cables and satellites all speed the flow of information. The measurement of wealth, and increasingly wealth itself, consists in bytes of data that move at the speed of light.

The accelerated pace of events is neither bad nor good. Its sharp consequences can cut either way. It means both doctors and terrorists can more quickly share their technical secrets. Both prodemocracy activists and skinhead anarchists can more broadly spread their views. Ultimately, the world's acceleration creates new and diverse ways for us to exert our influence, if we choose to do so -- but increases the likelihood that, if we do not, rapid events, instantly reported, may overwhelm us. As the President has suggested, we must decide whether to make change our ally or allow ourselves to become its victims.

In such a world, our interests and ideals compel us not only to be engaged, but to lead. And in a real-time world of change and information, it is all the more important that our leadership be steadied around our central purpose.

That purpose can be found in the underlying rationale for our engagement throughout this century. As we fought aggressors and contained communism, our engagement abroad was animated both by calculations of power and by this belief: to the extent democracy and market economics hold sway in other nations, our own nation will be more secure, prosperous and influential, while the broader world will be more humane and peaceful.

The expansion of market-based economics abroad helps expand our exports and create American jobs, while it also improves living conditions and fuels demands for political liberalization abroad. The addition of new democracies makes us more secure because democracies tend not to wage war on each other or sponsor terrorism. They are more trustworthy in diplomacy and do a better job of respecting the human rights of their people.

These dynamics lay at the heart of Woodrow Wilson's most profound insights; although his moralism sometimes weakened his argument, he understood that our own security is shaped by the character of foreign regimes. Indeed, most Presidents who followed, Republicans and Democrats alike, understood we must promote democracy and market economics in the world -- because it protects our interests and security; and because it reflects values that are both American and universal.

Throughout the Cold War, we contained a global threat to market democracies; now we should seek to enlarge their reach, particularly in places of special significance to us.

During the Cold War, even children understood America's security mission; as they looked at those maps on their schoolroom walls, they knew we were trying to contain the creeping expansion of that big, red blob. Today, at great risk of oversimplification, we might visualize our security mission as promoting the enlargement of the "blue areas" of market democracies. The difference, of course, is that we do not seek to expand the reach of our institutions by force, subversion or repression.

We must not allow this overarching goal to drive us into overreaching actions. To be successful, a strategy of enlargement must provide distinctions and set priorities. It must combine our broad goals of fostering democracy and markets with our more traditional geostrategic interests. And it must suggest how best to expend our large but nonetheless limited national security resources: financial, diplomatic and military.

In recent years, discussions about when to use force have turned on a set of vital questions, such as whether our forces match our objectives; whether we can fight and win in a time that is acceptable; whether we have a reasonable exit if we do not; whether there is public and congressional support. But we have overlooked a prior, strategic question -- the question of "where" -- which sets the context for such military judgments.

I see four components to a strategy of enlargement.

First, we should strengthen the community of major market democracies - including our own - - which constitutes the core from which enlargement is proceeding.

Second, we should help foster and consolidate new democracies and market economies, where possible, especially in states of special significance and opportunity.

Third, we must counter the aggression - - and support the liberalization - - of states hostile to democracy and markets.

Fourth, we need to pursue our humanitarian agenda not only by providing aid, but also by working to help democracy and market economics take root in regions of greatest humanitarian concern.

A host of caveats must accompany a strategy of enlargement. For one, we must be patient. As scholars observe waves of democratic advance are often followed by reverse waves of democratic setback. We must be ready for uneven progress, even outright reversals.

Our strategy must be pragmatic. Our interests in democracy and markets do not stand alone. Other American interests at times will require us to befriend and even defend non-democratic states for mutually beneficial reasons.

Our strategy must view democracy broadly -- it must envision a system that includes not only elections but also such features as an independent judiciary and protections of human rights.

Our strategy must also respect diversity. Democracy and markets can come in many legitimate variants. Freedom has many faces.

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Let me review each of the four components of this strategy in greater detail.

It is axiomatic in electoral campaigns that you start by firming up your political base. The same is true in international politics. Thus, the highest priority in a strategy of enlargement must be to strengthen the core of major market democracies, the bonds among them and their sense of common interest.

That renewal starts at home. Our efforts to empower our people, revive our economy, reduce our deficit and re-invent our government have profound implications for our global strength and the attractiveness of democracy and markets around the world. Our domestic revival will also influence how much of their hard-earned money Americans will commit to our engagement abroad.

The imperative of strengthening the democratic core also underscores the importance of renewing the bonds among our key democratic allies. Today our relations with Europe, Canada and Japan are basically sound. But they suffer from an economic problem and a military problem.

The economic problem is shared sluggish growth and the political cost it exacts on democratic governments. For example, over the past decade, many western European nations have not created a single net job. Partly as a result, most of our key allies are now sitting atop thin treasures and thin political majorities. Economic stagnation and its political consequences undermine the ability of the major democratic powers to act decisively on our many common challenges, from the GATT to Bosnia.

Fortunately, many of our democratic allies are undertaking searching re-examinations of government processes and domestic policies, just as we are. These efforts should proceed boldly -- not only for the sake of justice and prosperity in each of our nations, but also so that our democratic community once again can act with vigor and resolve.

That is why we are leading the effort to secure a successful GATT agreement by year's end. And it is why enactment of NAFTA is one of the President's top priorities. But while these specific agreements are of enormous importance, this need for economic renewal goes even further. We are in the early stages of as great a change in the global economy as we faced at the end of World War II. And with hard times in all our nations, we face the possibility of creating vicious rather than virtuous circles of international economic action. Unless the major market democracies act together -- updating international economic institutions, coordinating macroeconomic policies and striking hard but fair bargains on the ground rules of open trade -- the fierce competition of the new global economy, coupled with the end of our common purpose from the Cold War, could drive us into prolonged stagnation or even economic disaster.

The military problem involves NATO. For half a century NATO has proved itself the most effective military alliance in human history. If NATO is to remain an anchor for European and Atlantic stability, as the President believes it must, its members must commit themselves to updating NATO's role in this new era. Unless NATO is willing over time to assume a broader role, then it will lose public support, and all our nations will lose a vital bond of transatlantic and European security. That is why, at the NATO summit that the President has called for this January, we will seek to update NATO so that there continues behind the enlargement of market democracies an essential collective security.

Beyond seeing to our base, the second imperative for our strategy must be to help democracy and markets expand and survive in other places where we have the strongest security concerns and where we can make the greatest difference. This is not a democratic crusade; it is a pragmatic commitment to see freedom take hold where that will help us most. Thus, we must target our effort to assist states that affect our strategic interests, such as those with large economies, critical locations, nuclear weapons or the potential to generate refugee flows into our own nation or into key friends and allies. We must focus our efforts where we have the most leverage. And our efforts must be demand-driven -- they must focus on nations whose people are pushing for reform or have already secured it.

The most important example is the former Soviet Union -- and it fits the criteria I just noted. If we can support and help consolidate democratic and market reforms in Russia and the other newly independent states, we can help turn a former threat into a region of valued diplomatic and economic partners. In addition, our efforts in Russia, Ukraine and the other states raise the likelihood of continued reductions in nuclear arms and compliance with international non-proliferation accords.

The new democracies in Central and Eastern Europe are another clear example, given their proximity to the great democratic powers of Western Europe.

And since our ties across the Pacific are no less important than those across the Atlantic, pursuing enlargement in the Asian Pacific is a third example. In July, the President underscored that point in Japan and Korea with his descriptions of a New Pacific Community.

Continuing the great strides toward democracy and markets in our emerging Western Hemispheric Community of Democracies also must be a key concern. And we should be on the lookout for states whose entry into the camp of market democracies may influence the future direction of an entire region; South Africa and Nigeria now hold that potential with regard to sub-Saharan Africa.

How should the United States help consolidate and enlarge democracy and markets in these states? The answers are as varied as the nations involved, but there are common elements. We must continue to help lead the effort to mobilize international resources, as we have with Russia and the other new states. We must be willing to take immediate public positions to help staunch democratic reversals, as we have in Haiti, Guatemala and Nigeria. We must give democratic nations the fullest benefits of integration into foreign markets, which is part of why NAFTA and the GATT rank so high on our security agenda. We must link wider access to technology markets with commitments to abide by nonproliferation norms. And we must help these nations strengthen the pillars of civil society, improve their market institutions, and fight corruption and political discontent through practices of good governance.

In all these efforts, a policy of enlargement should take on a second meaning: we should pursue our goals through an enlarged circle not only of government officials but also of private and non-governmental groups. Private firms are natural allies in our efforts to strengthen market economies. Similarly, our goal of strengthening democracy and civil society has a natural ally in labor unions, human rights groups, environmental advocates, chambers of commerce, and election monitors. Just as we rely on force multipliers in defense, we should welcome these "diplomacy multipliers" such as the National Endowment for Democracy.

The third element of our strategy of enlargement should be to minimize the ability of states outside the circle of democracy and markets to threaten it.

Democracy and market economics have always been subversive ideas to those who rule without consent. These ideas remain subversive today. Every dictator, theocrat, kleptocrat or central planner In an unelected regime has reason to fear their subjects will suddenly demand the freedom to make their own decisions.

We should expect the advance of democracy and markets to trigger forceful reactions from those whose power is not popularly derived. The rise of Burma's democracy movement led to the jailing of its most vocal proponent, Aung San Suu Kyi. Russia's reforms have aroused the resistance of the nomenklatura.

Centralized power defends itself. It not only wields tools of state power such as military force, political imprisonment and torture, but also exploits the intolerant energies of racism, ethnic prejudice, religious persecution, xenophobia, and irredentism. Those whose power is threatened by the spread of democracy and markets will always have a personal stake in resisting those practices with passionate intensity.

When such leaders sit atop regional powers, such as Iran and Iraq, they may engage in violence and lawlessness that threatens the United States and other democracies. Such reactionary, "backlash" states are more likely to sponsor terrorism and traffic in weapons of mass destruction and ballistic missile technologies. They are more likely to suppress their own people, foment ethnic rivalries and threaten their neighbors.

In this world of multiplying democracies, expanding markets and accelerating commerce, the rulers or backlash states face an unpleasant choice. They can seek to isolate their people from these liberating forces. If they do, however, they cut themselves off from the very forces that create wealth and social dynamism. Such states tend to rot from within both economically and spiritually. But as they grow weaker, they also may become more desperate and dangerous.

Our policy toward such states, so long as they act as they do, must seek to isolate them diplomatically, militarily, economically, and technologically. It must stress intelligence, counterterrorism, and multilateral export controls. It also must apply global norms regarding weapons of mass destruction and ensure their enforcement. While some of these efforts will be unilateral, international rules are necessary and may be particularly effective in enforcing sanctions, transparency and export controls, as the work of the IAEA in Iraq demonstrates.

When the actions of such states directly threaten our people, our forces, or our vital interests, we clearly must be prepared to strike back decisively and unilaterally, as we did when Iraq tried to assassinate former President Bush. We must always maintain the military power necessary to deter, or if necessary defeat, aggression by these regimes. Because the source of such threats will be diverse and unpredictable, we must seek to ensure that our forces are increasingly ready, mobile, flexible and smart, as the President and Secretary Aspin have stressed.

Let me take a moment to illustrate what America's armed forces are doing, right now as we meet: In South Korea, some 37,000 U.S. troops are on guard against aggression from the North. In the Persian Gulf, the "Abraham Lincoln" carrier battle group and other forces remain stationed as a follow up to Operation Desert Storm. And as we move toward new Middle East peace agreements, some 1000 soldiers continue to help keep the peace in the Sinai peninsula. Such forces cost money. Some people may regret our "Bottom up Review" did not suggest a substantially smaller or cheaper force. But the fact is: these forces, the world's very best, are part of the necessary price of security and leadership in the world.

While some backlash states may seek to wall themselves off from outside influence, other anti-democratic states will opt to pursue greater wealth by liberalizing their economic rules. Sooner or later, however, these states confront the need to liberalize the flow of information into and within their nation, and to tolerate the rise of an entrepreneurial middle-class. Both developments weaken despotic rule and lead over time to rising demands for democracy. Chile’s experience under General Pinochet proves market economies can thrive for a time without democracy. But both our instinct and recent history in Chile, South Korea and elsewhere tell us they cannot do so forever.

We cannot impose democracy on regimes that appear to be opting for liberalization, but we may be able to help steer some of them down that path while providing penalties that raise the costs of repression and aggressive behavior. These efforts have special meaning for our relations with China. That relationship is one of the most important in the world, for China will increasingly be a major world power, and along with our ties to Japan and Korea, our relationship with China will strongly shape both our security and economic interests in Asia. It is in the interest of both our nations for China to continue its economic liberalization while respecting the human rights of its people and international norms regarding weapons sales. That is why we conditionally extended China's trading advantages, sanctioned its missile exports and proposed creation of a new Radio Free Asia. We seek a stronger relationship with China that reflects both our values and our interests.

Our policies toward the Islamic world prove another example. Let me emphasize this point: our nation respects the many contributions Islam has made to the world over the past 1300 years, and we appreciate the close bonds of values and history between Islam and the Judeo-Christian beliefs of most Americans. We will extend every expression or friendship to those of the Islamic faith who abide in peace and tolerance. But we will provide every resistance to militants who distort Islamic doctrines and seek to expand their influence by force.

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The fourth part of a strategy of enlargement involves our humanitarian goals, which play an important supporting role in our efforts to expand democracy and markets. Our humanitarian actions nurture the American public's support for our engagement abroad. Our humanitarian efforts also can stimulate democratic and market development in many areas of the world. Ultimately, the world trusts our leadership in that broader effort in part because it witnesses our humanitarian deeds: it knows that our responses to hunger and suffering, from Bangladesh to Somalia to Chernobyl, are an expression of who we are as a nation. Our humanitarian efforts must continue to include a broad array of programs -- economic and military assistance, disaster relief, and projects to assist education, nutrition and health. Over the coming months we plan to work with Congress to reform this array of aid programs -- to focus them more strategically and efficiently on the promotion of democracy and markets, environmentally sustainable development and early responses to social and economic chaos.

We face great challenges to our humanitarian instincts in this era, and far fewer barriers to action than there were during the period of superpower competition. Public pressure for our humanitarian engagement increasingly may be driven by televised images, which can depend in turn on such considerations as where CNN sends its camera crews. But we must bring other considerations to bear as well: cost; feasibility; the permanence of the improvement our assistance will bring; the willingness of regional and international bodies to do their part; and the likelihood that our actions will generate broader security benefits for the people and the region in question.

While there will be increasing calls on us to help stem bloodshed and suffering in ethnic conflicts, and while we will always bring our diplomacy to bear, these criteria suggest there will be relatively few intra-national ethnic conflicts that justify our military intervention. Ultimately, on these and other humanitarian needs, we will have to pick and choose.

Where we can make a difference, as in Somalia and Northern Iraq, we should not oppose using our military forces for humanitarian purposes simply because these missions do not resemble major wars for control of territory. Such missions will never be without risk, but as in all other aspects of our security policy, our military leadership is willing to accept reasonable risks in the service or our national objectives.

Ultimately, it is through our support for democracy and sustainable development that we best enhance the dramatic new winds of change that are stirring much of the developing world. In Africa, for example, we recently have seen the birth of democracy in Namibia and multiparty elections in over a dozen African countries. These developments, combined with new efforts at regional conflict resolution and a shift away from planned economies, provide real hope that sub-Saharan Africa can at long last begin to realize her vast potential. One key to that progress will be South Africa, which has now begun its historic countdown toward a full non-racial democracy. Just as our strategy of enlargement focuses on key points of leverage, so our strategy toward Africa must focus on providing international leadership to help South Africa's transition succeed.

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What does a strategy of enlargement tell us about the major foreign policy debates we hear today? Above all, it suggests many of those debates are overdrawn. The headlines are dominated by Bosnia, Somalia, and "multilateralism." A strategy of enlargement suggests our principal concerns should be strengthening our democratic core in North America, Europe and Japan; consolidating and enlarging democracy and markets in key places; and addressing backlash states such as Iran and Iraq. Our efforts in Somalia and Bosnia are important expressions of our overall engagement; but they do not by themselves define our broader strategy in the world.

The conflict in Bosnia deserves American engagement: it is a vast humanitarian tragedy; it is driven by ethnic barbarism; it stemmed from aggression against an independent state; it lies alongside the established and emerging market democracies of Europe and can all too easily explode into a wider Balkan conflict.

That is why this Administration supported lifting the arms embargo against Bosnia, led a successful effort to enforce the no-fly zone, initiated a large-scale humanitarian airlift, and pushed NATO's pledge of air strikes to stop the strangulation of Sarajevo and other Bosnian cities. It is why we remain committed to helping implement an acceptable and enforceable peace accord, and through that commitment, encourage its achievement. But while we have clear reasons to engage and persist, they do not obliterate other American interests involving Europe and Russia, and they do not justify the extreme costs of taking unilateral responsibility for imposing a solution.

In Somalia, President Bush engaged our forces to help end a murderous famine. He correctly concluded we could create a secure military environment for humanitarian relief at a reasonable cost and risk. As a result our nation helped save hundreds of thousands of lives and restored order throughout most of Somalia. As we have approached our goals, we have reduced our military presence by 80 percent and transferred lead responsibility for peacekeeping and reconstruction to the UN. The withdrawal of our remaining combat troops is only a matter of time but it must not come in a way that undermines all the gains made in the areas beyond Mogadishu and leads, almost inexorably, to the chaos which caused the human tragedy in the first place.

Unfortunately, debates over both Bosnia and Somalia have been cast as doctrinal matters involving the role of multilateralism. This focus is misplaced. Certainly, in each case -- as in Cambodia and elsewhere -- our actions are making multilateral case law for the future. But we should not let the particular define the doctrine. So let me say a word about the current doctrinal debate on multilateralism -- a subject Ambassador Albright will address more fully on Thursday.

I believe strongly that our foreign policies must marry principle and pragmatism. We should be principled about our purposes but pragmatic about our means.

Today some suggest that multilateralism should be our presumptive mode of engagement. Others suggest that it is inherently flawed -- dragging us into minor conflicts where we have no interest and blocking us from acting decisively where we do have an interest.

This debate is important but dangerous in the rigidity of the doctrines that are asserted. Few who bemoan multilateralism today object to NATO, the IMF, or the GATT. And it is beyond debate that multilateral action has certain advantages: it can spread the costs of action, as in our efforts to support Russian reform; it can foster global support, as with our coalition in the Gulf War; it can ensure comprehensiveness, as in our export control regimes; and it can succeed where no nation, acting alone, could have done so, as in Cambodia. I would go further and state my personal hope that the habits of multilateralism may one day enable the rule of law to play a far more civilizing role in the conduct of nations, as envisioned by the founders of the United Nations.

But for any official with responsibilities for our security policies, only one overriding factor can determine whether the US should act multilaterally or unilaterally, and that is America’s interests. We should act multilaterally where doing so advances our interests -- and we should act unilaterally when that will serve our purpose. The simple question in each instance is this: what works best?

I believe there is a more fundamental foreign policy challenge brewing for the United States. It is a challenge over whether we will be significantly engaged abroad at all. As suggested at the outset, in many ways, we are returning to the divisions and debates about our role in the world that are as old as our Republic. On one side is protectionism and limited foreign engagement; on the other is active American engagement abroad on behalf of democracy and expanded trade.

The last time our nation saw that classic division was just after World War I. It pitted those Democrats and Republicans whose creativity produced the architectures of post-war prosperity and security against those in both parties who would have had us retreat within the isolated shell we occupied in the 1920s and 1930s. The internationalists won those debates, in part because they could point to a unitary threat to America's interests and because the nation was entering a period of economic security.

Today's supporters of engagement abroad have neither of those advantages. The threats and opportunities are diffuse and our people are deeply anxious about their economic fate. Rallying Americans to bear the costs and burdens of international engagement is no less important. But it is much more difficult.

For this reason, those who recognize the value of our leadership in the world should devote far more energy to making the case for sustained engagement abroad and less energy to debates over tactics. To be sure, there will be disagreements over tactics: we expect to be held accountable for our policy decisions, and our critics can expect us to respond where we disagree. But all of us who support engagement should be careful to debate tactics in a way that does not prevent us from coming together in common cause around the fundamental importance of that goal.

All of us have come out of the Cold War years having learned distinct lessons about what not to do -- don't go to war without a way to win; don't underestimate the role of ideas; don't minimize the power of nationalism. Yet we have come into the new era with relatively few ways to convince a skeptical public that engagement abroad is a worthwhile investment. That is why a national dialogue over our fundamental purposes is so important.

In a world of extraordinary complexity, it would be too easy for us in the Internationalist camp to become "neo-Marxists" --not after Karl, but after Groucho, who once sang, "Whatever it is, I'm against it."

It is time for those who see the value of American engagement to steady our ranks; to define our purpose; and to rally the American people. In particular, at a time of high deficits and pressing domestic needs, we need to make a convincing case for our engagement or else see drastic reductions in our military, intelligence, peacekeeping and other foreign policy accounts.

In his farewell address in January, 1953, Harry Truman predicted the collapse of Communism. "I have a deep and abiding faith in the destiny of free men," he said. "With patience and courage, we shall some day move on into a new era."

Now that era is upon us. It is a moment of unparalleled opportunity. We have the blessing of living in the world's most powerful and respected nation at a time when the world is embracing our ideals as never before. We can let this moment slip away. Or we can mobilize our nation in order to enlarge democracy, enlarge markets, and enlarge our future. I am confident that we will choose the road best travelled.