The Strategic Survey 2007 determined that the relative decline in US power affected a broad swath of developments around the globe as world leaders and other groups positioned themselves to either take advantage of or protect themselves from the change in circumstances.
According to Chipman, "A few countries flexed their muscles regionally more confident in their relative power, while radical groups sought to discredit the leaders of those countries who maintained solid relations with the US. Other countries appeared to hedge their diplomatic relations with the US by strengthening their links with regional powers."
The report cites Iran's continuing intransigence on the nuclear issue, the ineffectiveness of US efforts on Israel-Palestine, and the Bush administration's sudden capitulation on climate change as a few indicators of the decline in US prestige.
While the US global position has declined as a result of the burden it took on in Iraq, the negative consequences for US interests also work in the reverse, with regional powers or other allies less likely to share the burden of Iraq because the US has lost its position of eminence.
A turnover in leadership in major European powers spark expectations of a new era in the Trans-Atlantic relationship, but the IISS warns "these leaders will have to wait until 2009 to deal with an American counterpart who has real authority."
But even the next administration will have a big job repairing the damage of the past years, as the report concludes that the "the restoration of American strategic authority seemed bound to take much longer than the mere installation of a new president".
Highlighting one troubling strategic setback to the US, the report also concludes that while the US has been focused on Iraq, the draw of al Qaeda has only deepened.
"The United States and its allies have failed to deal a deathblow to al-Qaida; the organisation's ideology appears to have taken root to such a degree that it will require decades to eradicate," IISS reports.
IISS said al Qaeda had demonstrated great skill and ingenuity in spreading its extremist ideology. The report advised that al Qaeda's "single narrative" that views Muslims as victims of American aggression needed to be addressed, both in the Islamic world and elsewhere.
Regarding current US strategy in Iraq, IISS said national reconciliation efforts were needed to ensure that gains of the "surge" could be maintained, and advised the US needed to increase pressure on Iraq's leaders to reform.
"Goals will need to be set for cabinet ministers, from Nuri al-Maliki on down, ranging from the removal of sectarian actors through to the unbiased delivery of government services," the report said.
"If these targets are not met then the US might have to consider reducing its financial and security support for those ministries and ministers not complying with its requests."
Strategic Survey 2007 concludes:
"The world in 2008 will be doubly consumed by the politics of parochialism – sectarian rivalries and religious disputes – and by the manoeuvres of balance-of-power politics – alliance politics and arms races... In Europe, the United States and Asia big powers will talk to each other about role, status, alliance, deterrence, containment, balance of power. In the meantime, groups around the world will fight those states and alliances ... In this 'non-polar world,' the space for aggressive non-state actors to advance their particularist strategic aims has grown. In 2008, managing nuclear proliferation and terrorism will remain the priorities. But the unse