'West cannot enjoy the good life while ignoring world problems'

War on terrorism: Blair Speech

Tony Blair has declared that the 11 September terrorist attacks had shown the West that it could not enjoy "the good life" without tackling the world's problems.

Calling on world leaders to "seize the chance" to forge a new global order from the ashes of the World Trade Centre, the Prime Minister offered an olive branch to Syria and Iran, saying they could take the opportunity to come in from the international cold.

In his annual speech on foreign affairs to the Lord Mayor's Banquet at the Guildhall in London, Mr Blair said the lesson of the terrorist acts was that "engagement not isolationism" was "the only serious foreign policy on offer".

He hoped that events since 11 September had "buried the myth" that Britain had to choose between being strong in Europe or strong with the United States. "Afghanistan has shown vividly how the relationships reinforce each other ... so let us play our full part in Europe and not retreat to its margins; and let us proclaim our closeness to the USA and use it to bring Europe closer to America."

In a thinly disguised plea for the US to engage fully in tackling the world's problems, Mr Blair said: "One illusion has been shattered on September 11, that we can have the good life of the West irrespective of the state of the rest of the world.

"Once chaos and strife have got a grip on a region or a country trouble will soon be exported ... after all it was a dismal camp in the foothills of Afghanistan that gave birth to the murderous assault on the sparkling heart of New York's financial centre."

The Prime Minister said: "The war against terrorism is not just a police action to root out the networks and those who protect them ... it needs to be a series of political actions designed to remove the conditions under which such acts of evil can flourish and be tolerated. The dragon's teeth are planted in the fertile soil of wrongs unrighted, of disputes left to fester for years or even decades, of failed states, of poverty and deprivation."

Mr Blair said the Middle East peace process must be restarted. He proposed an incremental approach by which "mutual confidence and security" were created on both sides, with action against suspected terrorists by the Palestinian authority matched by Israel's withdrawal from one occupied area. Then negotiations should be based on two principles – a viable Palestinian state and a state of Israel accepted fully by its Arab neighbours.

He called for a new United Nations resolution to allow arms inspectors to return to Iraq in return for a new "smart" sanctions regime. "We should offer Syria, Iran and other nations in the same position a new relationship if they will work with us to end violence and promote a solution that is just for both Palestinians and Israelis and if they will join an international consensus on weapons of mass destruction. There can be a new beginning to their relations with the West. The opening is there now; I hope they will take it."

Mr Blair admitted the West could not fight the battle against Islamic extremists, saying the time had come for mainstream Islam to take them on. He dismissed criticism of his vision of a new world doctrine as "Utopian" and insisted that "self-interest for a nation and the interests of the broader community are no longer in conflict ... in the war against terrorism, the moralists and the realists are partners, not antagonists."

Mr Blair also called for the latest captured territory in Afghanistan to be used for a major humanitarian effort.