British diplomacy has finally met its Waterloo

Tony Blair looks older, greyer and full of strain. This is usually blamed on two much travel and too little sleep, yet that is not the real reason. After all, Tony Blair is fit and in the prime of life, doing one of the most interesting jobs in the world that stimulates even when it stresses. Though he may need and deserve a holiday, he is not looking haggard because he is knackered. The cares of office are oppressing his spirits, but only because a crucial area of policy has gone wrong.

Diplomacy has gone wrong. Everything was supposed to have turned out differently. After 11 September, the Prime Minister's calculations rapidly caught up with his immediate response. He saw a great diplomatic opportunity. Britain could constrain American unilateralism by proving that international institutions could work – including the EU – and that the US could secure redress of grievance within international law and a framework of alliances. Mr Blair also believed that he could convince the Europeans of the Americans' case, thus demonstrating the usefulness of the special relationship and its compatibility with EU membership.

He set about this task with optimism and enthusiasm. He tried, he talked, he failed. As a result, British foreign policy is even more frayed than the PM's features.

In the Foreign Office itself, and especially among those with EU responsibilities, there is alarm and despondency. The FO has finally stopped denying that the Government's Euro-diplomacy has been hit by a Cruise missile, and is beginning to recognise that years of effort have been wasted. Our diplomats are dismayed by some of the thinking aloud that is now coming out of Paris and Berlin. "De Gaulle was right,'' they are arguing. "We cannot trust the British. In any crisis, they will always side with the Americans. That is even true under Mr Blair, who has always assured us that he is a Europhile. If this Prime Minister cannot bring Britain into Europe, who can? So if the EU is ever to have an effective diplomacy, we have to devise new structures that exclude the Anglo Saxons.''

That sort of talk horrifies the Foreign Office, and Mr Blair. But it is not clear what they can do about it. From a Franco/ German perspective, anti-British feeling is hardly an irrational response to recent events. The skill with which the UK has disrupted the EU will not endear us to our Continental partners. Mr Blair would like to regain Europe's trust, but how?

The Prime Minister is much less happy about trading Europe for America than many in his own party darkly suspect. Given their differences in outlook and background, the Bush/Blair friendship is a tribute to both men's geniality and charm. But there is no profound meeting of minds. George Bush is not only more intelligent than most Europeans recognise; he is also much colder and more driven. This is a man with very few close friends and very strong ideological certainties.

It is a recurring source of surprise to Mr Bush that he finds it easy to collaborate with a non-conservative. At moments of overreach even by their standards, Number 10 spin doctors have occasionally suggested that Mr Blair is the leading intellectual partner in the relationship. That could never be true. Mr Bush, who does not lack intellectual self-confidence, would never dream of deferring to a non-conservative politician. When Tony Blair agrees with the President, Mr Bush inwardly congratulates him from escaping from his dubious political origins. When he holds back, the President assumes that Mr Blair is succumbing to those origins, or to his party.

Mr Bush, who is surprisingly well-informed about the European debate in Britain, cannot understand why any sensible Brit would choose the EU over the special relationship. Mr Blair thought, as he so often thinks, that he could avoid choice by embracing both the apparent rivals. Over Iraq, he found, as he will find increasingly, that conflict was inescapable.

So it will continue. As soon as the Iraq war is over, Mr Blair will find himself confronted by Israel/Palestine, another situation in which the contending parties are irreconcilable. I am not referring to the Israelis and Palestinians; over time, their disagreements could be reconciled. But the early conflict will be between the Americans and the EU. The EU will want a role in the Middle East. The US will be determined to exclude it.

The Bush administration is now ready to override many of its visceral instincts and to pursue the goal of a Palestinian state. Britain could play an important role in this, but only on our own. If we came as part of an EU package, we would be disregarded in Washington. Any European involvement would only antagonise the Americans and would be exploited by Israeli irreconcilables. Yet the EU will try to insist on a say and might even hope to pressurise the British into helping.

This will not succeed. Tony Blair has no choice. Even if it means snubbing the EU, he will have to assist the Americans. Yet it will be an irony if Britain's involvement in a Palestinian peace process, a long-desired goal of the EU and the British Europhiles, will also complete the destruction of Mr Blair's European credentials.