Last night was the tenth occasion on which Tony Blair delivered his annual Guildhall review of British foreign policy. Much has changed since the heady days of 1997 when, younger and more optimistic, he spoke about a confident new Britain, ready to improve education, reform the constitution and, relying on domestic success, play a pivotal world role. Wars have been fought in the Balkans and the Middle East. Terrorism has taken a terrible toll. India and China have grown strong. But the core concerns of British foreign policy have remained largely the same.

In 1997 Mr Blair spoke of the need to end Britain’s isolation in Europe. He called for reform of the Common Agricultural Policy. He mentioned EU enlargement, the completion of the single market and economic flexibility as other priorities. He also underlined the alliance with the US and insisted that there should not be a choice between Europe and America. He said that Britain must maintain its defence capabilities, champion free trade, protect the environment and play a key role in issues of drugs, terrorism, crime, human rights and development.

His speech yesterday came full circle. Again, he underlined the importance of a foreign policy that gave equal weight to its relationship with America and the EU. He rejected isolationism and insisted on Britain’s world role. And he returned to the other preoccupation of the 1997 speech: Iraq. This time, however, he was concerned not by Saddam’s defiance but by the downward spiral of violence and terror, the urgency of building a non-sectarian government and Iraq’s potential to destabilise the entire region, acting as a catalyst for terrorism.

The Prime Minister recognised that withdrawal from Iraq cannot begin unless there is some structure for stability in place. He spoke about the need for a “compact” in Iraq, bringing all parties together, and the need to build up Iraq’s armed forces. But more than that is needed. The Iraqi Government now appears incapable alone of getting on top of the violence or preventing sectarian conflict. As Mr Blair recognises, Iraq’s neighbours have a vital interest in the country’s future. They must now assume some responsibility for its stability.

Mr Blair is proposing that the West should engage Iran and Syria in a dialogue over Iraq’s future. He floated the same idea three months ago in Los Angeles, but it was quickly sunk by the Lebanon war and Washington’s hostility to any dealings with Iran. The timing now is better. The Democratic electoral gains and the influence of James Baker’s policy options for Iraq mean that Washington is more receptive to any plan that might make withdrawal a realistic option. Mr Blair has also co-ordinated his speech with the testimony that he will deliver today by video link to the Baker Iraq Study Group.

There is no question of “going soft” on either Damascus or Tehran. Talks will not be offered at any price. Only if the two countries stop their interference in Iraq and support for terrorism and halt attempts to build nuclear weapons will the West recognise a role in Iraq and the wider Middle East. Even now Ehud Olmert, the Israeli Prime Minister, is urging Washington to take a yet more intransigent stance on Iran. Mr Blair must therefore stick to tough conditions if he is to persuade President Bush. In Syria he may find a receptive audience. Iran, however, is a much, much tougher case.