The terrorist attacks in Mumbai have dramatised how the urgent will often take precedence over the important for the incoming Obama administration.

The attacks have plunged relations between Pakistan and India into unpredictable territory just when a series of policy reviews in Washington are focussed on overhauling strategy in Afghanistan.

With Afghanistan in a "downward spiral" Washington is groping for a new strategy. It would do well to recall Lewis Carroll's famous line in Alice in Wonderland: "When you don't know where you are going, any road will take you there."

The Obama Administration will need to define both where it needs to go and the way out of the quagmire in Afghanistan.

Washington recognises that no country is more pivotal than Pakistan to its goals of defeating terrorism and stabilising Afghanistan. But this relationship is today held together only at the leadership level with the wider establishments and publics in both nations viewing the other with suspicion, even hostility. The trust deficit must be addressed as this will determine the quality of cooperation that Washington and Islamabad can mobilise to avert the chaos that now threatens to engulf the region.

President-elect Obama should break from the Bush legacy of treating Pakistan as hired help rather than valued ally. Pakistan has paid a heavy price for being America's frontline ally. Thousands of people, including 2,000 military personnel, have been killed in terrorist attacks since 2001. Economic losses are estimated at $34bn.

Three decades of strife in Afghanistan have taken a heavy toll on Pakistan. Bush's flawed Afghan strategy compounded by the fatal distraction of Iraq, widened the conflagration and pushed the war into Pakistan.

Obama has pledged a troop surge in Afghanistan. But without a fundamental change in strategy, this may increase the sense of occupation and mire the United States in a war without end. Moscow deployed more than 150,000 troops at the height of its occupation of Afghanistan and failed to avoid defeat.

A more realistic approach must start with redefining US goals, and distinguish between what is vital and attainable (disruption of terrorist networks) and what is desirable but best left for Afghans to undertake (transforming society).

So far Washington has lacked clarity about objectives and sought to eliminate terrorists, defeat the Taliban, transform society, and promote democracy.

This has fused Pashtun nationalism with Muslim radicalism, and fuelled the growing insurgency.

Over reliance on military force led to high civilian casualties and become a potent factor behind support for the Taliban.

A new strategy must seek to de-couple al-Qa'ida and the Taliban, engage the Taliban in a reconciliation process and hold out the offer for an eventual withdrawal of foreign forces in return for a cessation of attacks and support for the creation of a viable Afghan army. Bombing campaigns should be replaced by political accommodation and economic development.

A new Afghan grand assembly or Loya Jirga should be called to endorse this process. Washington should also help orchestrate a regional consensus to back this plan which should include Iran and Russia.

Washington should cease unilateral missile strikes into Pakistan's territory. These attacks have inflamed public opinion, undercut Pakistan's own counter-insurgency efforts and risk shattering ties with Islamabad. Instead the US should strengthen Pakistan's own capacity to fight militancy.

A new US approach should also recognise that Pakistan's stability depends not just on containing militancy but on strengthening the economy and on addressing its long adversarial relationship with India.

Economic help to Pakistan should be construed more in trade than in aid terms. The Obama administration should make a preferential trade deal for Pakistani textiles - the lifeblood of its economy - the centrepiece of economic assistance. Trade creates jobs and durable income which are more effective anti-terrorism tools than bombs and bullets.

Obama has already acknowledged the need to resolve the long-running Kashmir dispute to enable Pakistan to switch focus from India to counter-insurgency. Washington should launch a diplomatic initiative aimed at reaching an accommodation between Pakistan and India.

This may seem a daunting menu, but continuing with present policy promises to sink the region in a whirlpool of chaos.

The writer is a Fellow at Harvard's Kennedy School and a former Pakistan ambassador to the UK and United States