Gerry Hassan: Britain's standing could soon be glaringly clear

It can be seen in the BP Gulf of Mexico disaster, the Megrahi case, and life generally post-crash, pre-cuts. It touches and magnifies what can be viewed as almost an existential crisis of the nature and purpose of Britain, amounting to a British crisis of confidence, after the hyperbole, self-importance and triumphialism of the Blair era.

Britain is struggling to find a role for itself in the modern world. Recent evidence from Chatham House, the foreign policy think-tank, shows a sizeable difference between public opinion and experts on what Britain's role in the world should be after an in-depth study of attitudes among both groups, and a yearning in elite opinion for a more nuanced approach.

The general public has a more traditional view of foreign policy than opinion-formers. It still supports conventional ways of defending Britain, maintaining our defences and using military power, while opinion formers believe in the uses of "soft" power, and in particular, international aid, the BBC and British culture generally.

While the first of these has been ring-fenced by the coalition, cultural bodies are facing cuts and uncertain times. The BBC has already been singled out for cuts.

The main pillars of British foreign policy are all in flux: Atlanticism, our relation with Europe and the slow withering of the Commonwealth. The UK-US relationship, the so-called "special relationship", still continues to be the prism through which British politicians see the world.

Despite David Cameron trying to be nonchalant in the run-up to his mini-summit with Barack Obama, the moment he arrived he reverted to type, placing a piece in the Wall Street Journal eulogising America.

He wrote about the US that "I love this country … but I am not some idealistic dreamer about the special relationship". He went on to sound exactly like that dreamer, laying out the UK-US way of seeing the world: "Together we fought fascism, stood up to communism and championed democracy." In the present age this involved "combating international terrorism, pressing for peace in the Middle East, working for an Iran without the bomb, and tackling climate change and global poverty".

It almost sounds Blairite in its belief in America as a force for good - with no mention of Guantanamo, extraordinary rendition, the war of torture, or the Iraq and Afghanistan wars. Cameron also undermined the warmth of his words by talking in Washington of Britain being "the junior partner in 1940", when Britain actually stood alone at that time against the Nazis.

Atlanticism goes to the heart of how the British political elite see themselves, the world and crucially Britain itself; America to "our" politicians, civil servants and senior media is seen as magical, mythical and a parallel-universe Britain: an earlier version of us that grew into something bigger, better and more important.

As fundamental an obsession for our political elite is the so-called British independent nuclear deterrent, which is in fact totally reliant on the US. Now, despite a strategic defence and security review by the new government, Defence Secretary Liam Fox is insisting on keeping Trident off-limits of the review, and trying to find its capital costs from elsewhere than the Ministry of Defence budget. A Britain without nuclear weapons would be unimaginable to our government and this issue cuts to the core the issue of what Britain is and how it sees its role in the modern world.

Another core part of national identity has been a belief that our armed forces in many places made the world a better place, standing against dictatorship and military aggression.

The Iraq war has challenged much of this, as has the British military defeat and humiliation in southern Iraq, being driven out of Basra. The same fate and future defeat seems to be befalling the British military expedition in Afghanistan.

On top of this David Cameron has, like Blair before him, seen the traditional Foreign Office way of doing things as too stuffy and not dynamic enough. He is proposing that business people could be used as British ambassadors across the globe, and diplomacy used more actively for trade and commerce. That sounds like a good idea on paper, but mixing the business of government and business never works, and that is part of the context of the Megrahi-Libya-BP controversy.

The Senate's foreign relations committee investigation into the Megrahi case will open next week, and this could be a defining moment in how we are seen by significant parts of the US elite. This may bring some embarrassing moments for the Scottish Government, but nothing compared with what it may do to the British government.

Post-empire, under Thatcher and Blair, Britain plc has increasingly conflated its corporate, financial and military interests. To the cynics who say it was ever thus, and that everyone else - the French, the Russians and Chinese - are all up to the same, the UK crossed a line a couple of decades ago. It is true that as we retreated from empire particularly in the Middle East, the British state got involved in the CIA-backed coup against Iran in 1953, and Suez in 1956, all driven by protecting British commercial interests such as the Anglo-Iranian Oil Company (later to become BP), and the Suez Canal Company.

Nowadays the British state sees no embarrassment in being a salesman for arms companies or in aid being dependent on privatisation programmes in the poorest countries in the world. We have had the BAE Systems kickbacks scandal kicked into the long grass, and now we have the prospect of a BP-Libya scandal erupting.

If it isn't the Senate investigation, something else will arise that will tell us unpalatable truths about what the UK has become in the world.

We are as far away as one could imagine from the bright days of "ethical foreign policy" now. Maybe such an occurrence will cause us to wake up and do something about the British crisis of confidence, who we are and what is done in our name.