To understand the present, we must first understand the past, for the past is still with us. International order used to be based either on hegemony or on balance. Hegemony came first. In the ancient world, order meant empire. Those within the empire had order, culture and civilisation. Outside it lay barbarians, chaos and disorder. The image of peace and order through a single hegemonic power centre has remained strong ever since. Empires, however, are ill-designed for promoting change. Holding the empire together - and it is the essence of empires that they are diverse - usually requires an authoritarian political style; innovation, especially in society and politics, would lead to instability. Historically, empires have generally been static.

In Europe, a middle way was found between the stasis of chaos and the stasis of empire, namely the small state. The small state succeeded in establishing sovereignty, but only within a geographically limited jurisdiction. Thus domestic order was purchased at the price of international anarchy. The competition between the small states of Europe was a source of progress, but the system was also constantly threatened by a relapse into chaos on one side and by the hegemony of a single power on the other. The solution to this was the balance-of-power, a system of counter-balancing alliances which became seen as the condition of liberty in Europe. Coalitions were successfully put together to thwart the hegemonic ambitions firstly of Spain, then of France, and finally of Germany.

But the balance-of-power system too had an inherent instability, the ever-present risk of war, and it was this that eventually caused it to collapse. German unification in 1871 created a state too powerful to be balanced by any European alliance; technological changes raised the costs of war to an unbearable level; and the development of mass society and democratic politics, rendered impossible the amoral calculating mindset necessary to make the balance of power system function. Nevertheless, in the absence of any obvious alternative it persisted, and what emerged in 1945 was not so much a new system as the culmination of the old one. The old multi-lateral balance-of-power in Europe became a bilateral balance of terror worldwide, a final simplification of the balance of power. But it was not built to last. The balance of power never suited the more universalistic, moralist spirit of the late twentieth century.

The second half of the twentieth Century has seen not just the end of the balance of power but also the waning of the imperial urge: in some degree the two go together. A world that started the century divided among European empires finishes it with all or almost all of them gone: the Ottoman, German, Austrian, French , British and finally Soviet Empires are now no more than a memory. This leaves us with two new types of state: first there are now states - often former colonies - where in some sense the state has almost ceased to exist a 'premodern' zone where the state has failed and a Hobbesian war of all against all is underway (countries such as Somalia and, until recently, Afghanistan). Second, there are the post imperial, postmodern states who no longer think of security primarily in terms of conquest. And thirdly, of course there remain the traditional "modern" states who behave as states always have, following Machiavellian principles and raison d'ètat (one thinks of countries such as India, Pakistan and China).

The postmodern system in which we Europeans live does not rely on balance; nor does it emphasise sovereignty or the separation of domestic and foreign affairs. The European Union has become a highly developed system for mutual interference in each other's domestic affairs, right down to beer and sausages. The CFE Treaty, under which parties to the treaty have to notify the location of their heavy weapons and allow inspections, subjects areas close to the core of sovereignty to international constraints. It is important to realise what an extraordinary revolution this is. It mirrors the paradox of the nuclear age, that in order to defend yourself, you had to be prepared to destroy yourself. The shared interest of European countries in avoiding a nuclear catastrophe has proved enough to overcome the normal strategic logic of distrust and concealment. Mutual vulnerability has become mutual transparency.

The main characteristics of the postmodern world are as follows:

· The breaking down of the distinction between domestic and foreign affairs.

· Mutual interference in (traditional) domestic affairs and mutual surveillance.

· The rejection of force for resolving disputes and the consequent codification of self-enforced rules of behaviour.

· The growing irrelevance of borders: this has come about both through the changing role of the state, but also through missiles, motor cars and satellites.

· Security is based on transparency, mutual openness, interdependence and mutual vulnerability.

The conception of an International Criminal Court is a striking example of the postmodern breakdown of the distinction between domestic and foreign affairs. In the postmodern world, raison d'ètat and the amorality of Machiavelli's theories of statecraft, which defined international relations in the modern era, have been replaced by a moral consciousness that applies to international relations as well as to domestic affairs: hence the renewed interest in what constitutes a just war.

While such a system does deal with the problems that made the balance-of-power unworkable, it does not entail the demise of the nation state. While economy, law-making and defence may be increasingly embedded in international frameworks, and the borders of territory may be less important, identity and democratic institutions remain primarily national. Thus traditional states will remain the fundamental unit of international relations for the foreseeable future, even though some of them may have ceased to behave in traditional ways.

What is the origin of this basic change in the state system? The fundamental point is that "the world's grown honest". A large number of the most powerful states no longer want to fight or conquer. It is this that gives rise to both the pre-modern and postmodern worlds. Imperialism in the traditional sense is dead, at least among the Western powers.

If this is true, it follows that we should not think of the EU or even NATO as the root cause of the half century of peace we have enjoyed in Western Europe. The basic fact is that Western European countries no longer want to fight each other. NATO and the EU have, nevertheless, played an important role in reinforcing and sustaining this position. NATO's most valuable contribution has been the openness it has created. NATO was, and is a massive intra-western confidence-building measure. It was NATO and the EU that provided the framework within which Germany could be reunited without posing a threat to the rest of Europe as its original unification had in 1871. Both give rise to thousands of meetings of ministers and officials, so that all those concerned with decisions involving war and peace know each other well. Compared with the past, this represents a quality and stability of political relations never known before.

The EU is the most developed example of a postmodern system. It represents security through transparency, and transparency through interdependence. The EU is more a transnational than a supra-national system, a voluntary association of states rather than the subordination of states to a central power. The dream of a European state is one left from a previous age. It rests on the assumption that nation states are fundamentally dangerous and that the only way to tame the anarchy of nations is to impose hegemony on them. But if the nation-state is a problem then the super-state is certainly not a solution.

European states are not the only members of the postmodern world. Outside Europe, Canada is certainly a postmodern state; Japan is by inclination a postmodern state, but its location prevents it developing more fully in this direction. The USA is the more doubtful case since it is not clear that the US government or Congress accepts either the necessity or desirability of interdependence, or its corollaries of openness, mutual surveillance and mutual interference, to the same extent as most European governments now do. Elsewhere, what in Europe has become a reality is in many other parts of the world an aspiration. ASEAN, NAFTA, MERCOSUR and even OAU suggest at least the desire for a postmodern environment, and though this wish is unlikely to be realised quickly, imitation is undoubtedly easier than invention.

Within the postmodern world, there are no security threats in the traditional sense; that is to say, its members do not consider invading each other. Whereas in the modern world , following Clausewitz' dictum war is an instrument of policy in the postmodern world it is a sign of policy failure. But while the members of the postmodern world may not represent a danger to one another, both the modern and pre-modern zones pose threats.

The threat from the modern world is the most familiar. Here, the classical state system, from which the postmodern world has only recently emerged, remains intact, and continues to operate by the principles of empire and the supremacy of national interest. If there is to be stability it will come from a balance among the aggressive forces. It is notable how few are the areas of the world where such a balance exists. And how sharp the risk is that in some areas there may soon be a nuclear element in the equation.

The challenge to the postmodern world is to get used to the idea of double standards. Among ourselves, we operate on the basis of laws and open cooperative security. But when dealing with more old-fashioned kinds of states outside the postmodern continent of Europe, we need to revert to the rougher methods of an earlier era - force, pre-emptive attack, deception, whatever is necessary to deal with those who still live in the nineteenth century world of every state for itself. Among ourselves, we keep the law but when we are operating in the jungle, we must also use the laws of the jungle. In the prolonged period of peace in Europe, there has been a temptation to neglect our defences, both physical and psychological. This represents one of the great dangers of the postmodern state.

The challenge posed by the pre-modern world is a new one. The pre-modern world is a world of failed states. Here the state no longer fulfils Weber's criterion of having the monopoly on the legitimate use of force. Either it has lost the legitimacy or it has lost the monopoly of the use of force; often the two go together. Examples of total collapse are relatively rare, but the number of countries at risk grows all the time. Some areas of the former Soviet Union are candidates, including Chechnya. All of the world's major drug-producing areas are part of the pre-modern world. Until recently there was no real sovereign authority in Afghanistan; nor is there in upcountry Burma or in some parts of South America, where drug barons threaten the state's monopoly on force. All over Africa countries are at risk. No area of the world is without its dangerous cases. In such areas chaos is the norm and war is a way of life. In so far as there is a government it operates in a way similar to an organised crime syndicate.

The premodern state may be too weak even to secure its home territory, let alone pose a threat internationally, but it can provide a base for non-state actors who may represent a danger to the postmodern world. If non-state actors, notably drug, crime, or terrorist syndicates take to using premodern bases for attacks on the more orderly parts of the world, then the organised states may eventually have to respond. If they become too dangerous for established states to tolerate, it is possible to imagine a defensive imperialism. It is not going too far to view the West's response to Afghanistan in this light.

How should we deal with the pre-modern chaos? To become involved in a zone of chaos is risky; if the intervention is prolonged it may become unsustainable in public opinion; if the intervention is unsuccessful it may be damaging to the government that ordered it. But the risks of letting countries rot, as the West did Afghanistan, may be even greater.

What form should intervention take? The most logical way to deal with chaos, and the one most employed in the past is colonisation. But colonisation is unacceptable to postmodern states (and, as it happens, to some modern states too). It is precisely because of the death of imperialism that we are seeing the emergence of the pre-modern world. Empire and imperialism are words that have become a form of abuse in the postmodern world. Today, there are no colonial powers willing to take on the job, though the opportunities, perhaps even the need for colonisation is as great as it ever was in the nineteenth century. Those left out of the global economy risk falling into a vicious circle. Weak government means disorder and that means falling investment. In the 1950s, South Korea had a lower GNP per head than Zambia: the one has achieved membership of the global economy, the other has not.

All the conditions for imperialism are there, but both the supply and demand for imperialism have dried up. And yet the weak still need the strong and the strong still need an orderly world. A world in which the efficient and well governed export stability and liberty, and which is open for investment and growth - all of this seems eminently desirable.

What is needed then is a new kind of imperialism, one acceptable to a world of human rights and cosmopolitan values. We can already discern its outline: an imperialism which, like all imperialism, aims to bring order and organisation but which rests today on the voluntary principle.

Postmodern imperialism takes two forms. First there is the voluntary imperialism of the global economy. This is usually operated by an international consortium through International Financial Institutions such as the IMF and the World Bank - it is characteristic of the new imperialism that it is multilateral. These institutions provide help to states wishing to find their way back into the global economy and into the virtuous circle of investment and prosperity. In return they make demands which, they hope, address the political and economic failures that have contributed to the original need for assistance. Aid theology today increasingly emphasises governance. If states wish to benefit, they must open themselves up to the interference of international organisations and foreign states (just as, for different reasons, the postmodern world has also opened itself up.)

The second form of postmodern imperialism might be called the imperialism of neighbours. Instability in your neighbourhood poses threats which no state can ignore. Misgovernment, ethnic violence and crime in the Balkans poses a threat to Europe. The response has been to create something like a voluntary UN protectorate in Bosnia and Kosovo. It is no surprise that in both cases the High Representative is European. Europe provides most of the aid that keeps Bosnia and Kosovo running and most of the soldiers (though the US presence is an indispensable stabilising factor). In a further unprecedented move, the EU has offered unilateral free-market access to all the countries of the former Yugoslavia for all products including most agricultural produce. It is not just soldiers that come from the international community; it is police, judges, prison officers, central bankers and others. Elections are organised and monitored by the Organisation for Security and Cooperation in Europe (OSCE). Local police are financed and trained by the UN. As auxiliaries to this effort - in many areas indispensable to it - are over a hundred NGOs.

One additional point needs to be made. It is dangerous if a neighbouring state is taken over in some way by organised or disorganised crime - which is what state collapse usually amounts to. But Usama bin Laden has now demonstrated for those who had not already realised, that today all the world is, potentially at least, our neighbour.

The Balkans are a special case. Elsewhere in Central and Eastern Europe the EU is engaged in a programme which will eventually lead to massive enlargement. In the past empires have imposed their laws and systems of government; in this case no one is imposing anything. Instead, a voluntary movement of self-imposition is taking place. While you are a candidate for EU membership you have to accept what is given - a whole mass of laws and regulations - as subject countries once did. But the prize is that once you are inside you will have a voice in the commonwealth. If this process is a kind of voluntary imperialism, the end state might be describes as a cooperative empire. 'Commonwealth' might indeed not be a bad name.

The postmodern EU offers a vision of cooperative empire, a common liberty and a common security without the ethnic domination and centralised absolutism to which past empires have been subject, but also without the ethnic exclusiveness that is the hallmark of the nation state - inappropriate in an era without borders and unworkable in regions such as the Balkans. A cooperative empire might be the domestic political framework that best matches the altered substance of the postmodern state: a framework in which each has a share in the government, in which no single country dominates and in which the governing principles are not ethnic but legal. The lightest of touches will be required from the centre; the 'imperial bureaucracy' must be under control, accountable, and the servant, not the master, of the commonwealth. Such an institution must be as dedicated to liberty and democracy as its constituent parts. Like Rome, this commonwealth would provide its citizens with some of its laws, some coins and the occasional road.

That perhaps is the vision. Can it be realised? Only time will tell. The question is how much time there may be. In the modern world the secret race to acquire nuclear weapons goes on. In the premodern world the interests of organised crime - including international terrorism - grow greater and faster than the state. There may not be much time left.

· Robert Cooper is a senior serving British diplomat, and writes in a personal capacity. This article is published as The post-modern state in the new collection Reordering the World: the long term implications of September 11, published by The Foreign Policy Centre.