At least the mullahs still take Britain seriously. While the rest of the world has been laughing at our expenses scandal, last week Manochehr Mottaki, Iran’s foreign minister, paid us the highest diplomatic compliment – that of believing in our malevolent powers. Mottaki blames the democratic Twitter revolution on the activities of dozens of James Bonds flown in by MI6 from London. Presumably their tuxedos and ferocious consumption of martinis, shaken or otherwise, alerted the authorities to their true identity and nefarious intentions.

But the Iranians, with their bitter memories of our imperial heyday, alas, are the exception to the rule. Our other friends and enemies believe Britain is, at best, marking time while Gordon Brown concentrates all his resources on survival. At worst, they believe the country no longer counts. The problem is the prime minister can’t articulate a vision of our place in the world. Perhaps he doesn’t have one.

One who knows the Washington foreign policy establishment at a very high level recently came back dumb-founded: “They are sniggering at us.” Another foreign elder statesman and old friend of Britain believes the country has gone to the dogs. Tales of moats and duck houses are repeated around the globe, confirming the Wodehousian caricature of stuffy old Brits, although avarice has now been added to our national portrait. The Australians are ribbing us with a “visit Oz” tourist campaign showing a spoof expenses form completed by an MP who “sought temporary accommodation at Kangaroo Island with family, whilst constituency house underwent renovation. Cost to taxpayer, £18,726”. How we laugh.

More seriously, in America they fear we are becoming “Europeanised”: Britain shows less appetite for fighting wars than peacekeeping. American GIs in Afghanistan quip that Isaf, the Nato-led International Security Assistance Force, stands for “I Saw Americans Fight”. More than 160 British deaths rebut this as a gross libel, but the charge still hurts.

The low point of our military reputation has unfortunately occurred on Brown’s watch. British forces stood aside during the “charge of the knights” in Basra when Iraqi forces swooped into Iraq’s second city, supposedly in our area of occupation. While our commander was off on a skiing holiday, government forces eventually beat the militias with American help.

No one knows what Brown is up to because foreign policy never was his passion. It was Tony Blair’s. The prime minister likes the safety in numbers of G20 and G8 summits and a broad focus on the economy, international trade, aid to Africa and such like. But give him a hot war, such as the Russian invasion of Georgia last year, and he is nowhere to be found, letting the Americans and the French make the running. In diplomacy as in domestic politics – if you’re not quick, you’re dead.

At the top there hasn’t been a close political and personal relationship between prime minister and foreign secretary throughout new Labour’s period in office. It has reached its nadir today. David Miliband is a competent minister, but was put there to stop him becoming a rival to Brown. In any case, the prime minister has loaded DFID, the international aid department, with a budget some three times bigger than that of the Foreign Office.

New Labour is finding it difficult to get the right tone with Washington. Our relationship should, of course, be close but not slavish. Brown has friends among the ruling Democrats but, as in his speech before Congress, can’t project warmth for our great ally. As for Europe, he nails his colours firmly to the fence. He signed the Lisbon treaty but refused to attend the diplomatic celebrations: dithering of a high order.

While the world fights off a new great depression, you can argue that it doesn’t matter much if the country turns in on itself. Indeed, there are many who believe that Britain should no longer be playing the role of international do-gooder, let alone poodle to the American president: 1m people demonstrated against our participation in Bush’s war against Saddam Hussein, after all. Yet I think the right-wing little Englanders and the left-wing pacifists are still in the minority.

President de Gaulle famously had a certain idea of France: to revive its glory after the traumas of German occupation and its colonial humiliation in Vietnam and Algeria. The British have a certain idea of their country, too. Post-imperial we may be, a grumbling member of the timid European club and conscious of the limits to our power, yet our horizons are not narrow.

Sitting on our hands while evil is abroad in the world really isn’t in our nature. The country that first exported football hooligans is always up for a scrap. Nor do we want to be relegated to the third rank of states even if we can’t be in the first. Margaret Thatcher in her guise as Iron Britannia struck one popular chord. Blair’s liberal interventionism, in a tradition harking back to Gladstone, touched another. We hated it when John Major subordinated our foreign policy to Brussels and its German paymaster. Playing the impotent bystander as the Serbs massacred the Bosnians at Srebrenica – “This is the hour of Europe,” boasted Jacques Poos, the absurd Luxembourg foreign minister – was lowering.

However, the recession is intensifying the squeeze on already hard-stretched armed services, particularly the army. Without boots on the ground or a booming economy, our weight in the world inevitably goes down. The defence budget has already been cut from 4% to 2.6% of GNP over the past 20 years. Yet we must cut our coat according to our parlous finances.

In private, armed services chiefs admit cuts can be made – the Ministry of Defence itself is ripe for the axe – but hack back their budgets by 10%-15% and, in the words of one top military analyst, “they are completely stuffed”. General Sir David Richards, the next head of the army, gave a forceful speech last week warning of overstretch: “If this . . . is not gripped our armed forces will try with inadequate resources to be all things in all conflicts and perhaps fail to succeed properly in any. The risks of such an approach are too serious for this any longer to be acceptable.”

Something has got to give. But there will be no defence review before the next general election, just as there will be no comprehensive spending review of all Whitehall budgets. Yet cuts are made on the quiet, nevertheless. The prime minister vetoed the dispatch of an extra 2,000-3,000 troops to Afghanistan recently. Given the shortage of armoured vehicles and Chinook helicopters, perhaps it was a mercy.

Instead of clarity on national security we are getting a belated inquiry into the Iraq war – a bone thrown to the parliamentary Labour party to shore up Brown’s shaky authority.

We must hope for a trumpet blast from the Conservatives, the traditional party of a forward foreign policy and robust defence spending. David Cameron is anxious to cut a dash while George Osborne, his shadow chancellor, is an Atlanticist with contacts in all the right places. William Hague, the shadow foreign secretary, will soon be setting out his stall. He has the personal authority to ensure any review of our commitments will be a Foreign Office rather than a Treasury-led exercise.

As Philip Larkin warned in his Homage to a Government, we don’t want penny pinching for a foreign policy:

Next year we shall be living in a country

That brought its soldiers home for lack of money

The statues will be standing in the same

Tree-muffled squares, and look nearly the same

Our children will not know it's a different country

All we can hope to leave them now is money

Times Recommends

• Strip away the figleaf and reveal naysayers
• Dave’n’George: there may be trouble ahead
• I do not accept that £64,000 a year for politicians is peanuts