A year ago, then United States National Security Adviser Condoleezza Rice announced that, “We are engaged primarily in a war of ideas, not of armies.” She was right, but it is a war that the US is losing, because it is regularly out-flanked by Al-Qaeda.

Rising anti-Americanism around the world threatens to deprive the US of the soft or attractive power that it needs to succeed in the struggle against terrorism. As Iraq has shown, hard military power alone cannot provide a solution. Poll after poll confirms that America’s soft power has declined, particularly in the Islamic world. Even in supposedly friendly countries like Jordan and Pakistan, more people say they trust Osama Bin Laden than George Bush.

Information is power, and today a much larger part of the world’s population has access to it. Long gone are the days when US Foreign Service officers drove Jeeps to remote regions of the Third World to show reel-to-reel movies to isolated villagers. Technological advances have led to an information explosion, and publics have become more sensitized to propaganda. The world is awash in information, some of it accurate, some misleading.

As a result, politics has become a contest about credibility. Whereas the world of traditional power politics is typically defined by whose military or economy wins, politics in an information age is about whose story wins. Governments compete with each other and with other organizations to enhance their own credibility and weaken that of their opponents. Unfortunately, the US government has not kept up.

Even the Pentagon’s Defense Science Board admits this, reporting that America’s strategic communication “lacks Presidential direction, effective interagency coordination, optimal private sector partnerships, and adequate resources.” In the final years of the Clinton administration, Congress mistakenly abolished the US Information Agency and gave its tasks to a new Undersecretary for Public Diplomacy in the State Department.

This office has subsequently been left vacant or, for two of the past four years, filled on only an interim basis. The entire budget for public diplomacy (broadcasting, information, and exchange programs) is $1.2 billion, about the same as France, or what McDonald’s spends on advertising. The US government spends 450 times more on hard military power than on soft power.

In 1963, Edward R. Murrow, the famous journalist who directed the US Information Agency in the Kennedy Administration, defined public diplomacy as interactions not only with foreign governments, but primarily with non-governmental individuals and organizations, often presenting a variety of private views in addition to government views. Skeptics who treat “public diplomacy” as a euphemism for broadcasting government propaganda miss the point. Simple propaganda lacks credibility and thus is counterproductive. Public diplomacy, by contrast, involves building long-term relationships.

Most important in the current situation will be the development of a long-term strategy of cultural and educational exchanges aimed at developing a richer and more open civil society in Middle Eastern countries. Given low official credibility, America’s most effective spokesmen will often be non-governmental. Indeed, some analysts have even suggested that the US create a non-partisan corporation for public diplomacy that would receive government and private funds, but would stimulate independent cross-border communications.

Corporations, foundations, universities, and other non-profit organizations can promote much of the work of developing an open civil society. Companies and foundations can offer technology to help modernize Arab educational systems and take them beyond rote learning. American universities can establish more exchange programs for students and faculty.

Foundations can support the development of institutions of American studies in Muslim countries, or programs that enhance journalistic professionalism. They can support the teaching of English and finance student exchanges. In short, there are many strands to an effective long-term strategy for creating soft power resources and promoting conditions for the development of democracy.

The response to the recent tsunami disaster in Asia is a case in point. President George W. Bush pledged – albeit belatedly – $350 million in relief to the victims, and sent high-level emissaries to the region. There has also been an impressive outpouring of private support by American charities and non-profit organizations. The images of US soldiers battling in Iraq have been supplemented by images of America’s military delivering relief to disaster victims.

But effective follow-up is essential. Bush’s prior announcements of increased development assistance and stronger efforts to combat HIV/AIDS in Africa were not only moral imperatives, but also important investments in American soft power.

Unfortunately, the funds needed to implement these initiatives have not flowed as rapidly as the rhetoric. Equally important, none of these efforts at relief or public diplomacy will be effective unless the style and substance of US policies are consistent with a larger democratic message.

That means that Condoleezza Rice’s chief task as Secretary of State will be to make American foreign policy more consultative in style as she seeks a political solution in Iraq and progress on Middle East peace. Only then will she be able to begin the job of repairing America’s tattered reputation by shoring up its neglected public diplomacy.