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Nick Clegg: The world needs Britain to step out of the US shadow

As members gather in Bournemouth, the Liberal Democrat leader argues that only their party has an effective modern foreign policy

The late 20th century was defined by a wall that divided East from West Berlin. The early 21st century will be defined by the internet, a technology that has demolished borders at a pace never seen before.

Globalisation is the greatest engine for change – for better or worse – in our modern world. Free trade, climate change, al-Qa'ida, the credit crunch and international crime are all expressions of a borderless world of unprecedented opportunities and threats.

It has become commonplace to say that party divisions have disappeared into a colourless, centrist consensus. Yet our response to globalisation represents one of the greatest dividing lines in contemporary politics – between those who understand that power has now escaped the clutches of the nation state and those who refuse to accept limits on that power.

Politics is about wielding power and influence to create a better, more stable fairer and greener future for all. But national politicians can no longer deliver that on their own. If we are to create a better society for ourselves we must work with others.

I am lucky enough to have worked abroad for many years and to come from a family of mixed nationalities, brought up to believe that nations are stronger together than apart. So whether it was managing development aid projects in Central Asia and the Caucasus in the mid-1990s, or dealing with hard-headed Russian and Chinese trade negotiators, or pushing forward Europe-wide legislation to help create the largest single market in the world, I have always been guided by a simple insight: supranational government is not a sacrifice of our sovereignty; it is the only way we can extend our sovereignty to shape and influence the world around us. It is an insight still denied by large parts of the British political establishment.

Didn't Labour promise a new beginning in foreign policy? The party came to power pledging an ethical response to the post-Cold War world. British troops would be placed in the line of fire only where military intervention was justified. Tony Blair promised a fresh start for Britain's relationship with Europe, a relationship tested to destruction by the mini-nationalism of the outgoing Conservative government. Yet in one fell swoop, Labour deserted this vision by backing the invasion of Iraq. Against the deep reservations of the nation, Labour and the Conservatives abandoned multilateralism, threw aside international legitimacy, and swore their allegiance to President George Bush.

The arrival of Gordon Brown in No 10 gave Labour an opportunity to start afresh. While the British public would never have forgotten their betrayal over Iraq, a new leader had the chance to reassert European multilateralism as the new guide to foreign policy-making. This chance has now been squandered, most notably by Brown's refusal to take on George Bush and withdraw British troops from Iraq, creating an overstretch that puts our armed forces in danger and threatens the vital mission in Afghanistan.

The Prime Minister has also failed to resurrect British leadership in Europe. His defining European moment so far has been the bizarre spectacle of him signing a treaty all alone, hours after his counterparts had left the building.

So what of the Conservatives? Have they finally reconciled themselves to the modern world? David Cameron has been quick to propose his oxymoronic brand of "liberal conservatism". But, as in all areas of policy, the words ring hollow. In the same way that he talks of a broken society without explaining how he would fix it, or proclaims an affection for civil liberties but wants to destroy the Human Rights Act that protects them, he employs the language of liberal internationalism but shows no understanding of its meaning.

Does Cameron seriously think we should send British servicemen and women under a Nato guarantee to fight the Red Army in the Caucasus? Did he not understand that that is what early Nato membership for Georgia means? Does he seriously think that Russian aggression can be brought to heel without a firm response from the European Union, an institution he wants to break in two? How does he think we will be able to regulate global corporations to abide by new environmental standards other than at a European level? When will the Conservatives understand that the clout of the EU as the world's largest borderless market and the world's most advanced pioneer in transnational law-making lies at the core of Britain's long-term prosperity and sustainability?

The refusal of the Conservative establishment to drop its Pavlovian admiration for all things American and loathing of all things European means it is speechless on so many issues where politicians must speak out. The Tories have been mute in support of Liberal Democrat condemnation of the absurd UK/US extradition treaty that short-changes British rights while protecting the rights of Americans. They declined to join with us in opposing the Government over its shameless halting of a Serious Fraud Office investigation into alleged corruption in British arms deals.

Liberal Democrats offer a solution. We are now the only voice in British politics unambiguously on the side of multilateralism in the world, and a strong EU in Europe. At our conference this week we will be setting out proposals for a new response to globalisation, building on our liberal internationalist tradition. We believe that nation states remain the essential building blocks of the international system. But we also accept their limits. Nation states have the traction and support to do what is right for global stability only when they work together. This is not a starry-eyed plan for institution-building. It is compelling common sense.

In the forthcoming US presidential elections, two world-views will approach something of a reckoning. Behind the McCain/Obama contest lurks a choice that will shape not only America's future but our place in the world, too: a choice between unilateralism and multilateralism and the need for all nations, even superpowers, to build new rules binding on all. The exercise of unilateral power makes no sense in a world increasingly shaped by the dramatic might of emerging powers such as China, India and Brazil.

We are a European nation with a unique history of centuries of engagement in the world around us. But we must never allow the nostalgia for our past to cloud our judgement about the future. Neither Labour nor the Conservatives shows any understanding of the great shift needed in British foreign-policy priorities. The Liberal Democrat alternative is now needed more than ever before.