For God's sake, act like Britain!" That, diplomatic telegrams record, was the reaction of America's secretary of state, Dean Rusk, when told in 1968 that a cash-strapped British government was pulling military forces from the Arabian Gulf and South-East Asia — or more simply, quitting the world "east of Suez". In vain his visitor, Britain's foreign secretary George Brown, rehearsed the domestic pressures weighing on his Labour administration. In a reply unearthed by W. Taylor Fain, a foreign-policy historian, Rusk raged that he could not believe that "free aspirins and false teeth were more important than Britain's role in the world."

The American's disbelief rings slightly false. Britain had just suffered a sterling devaluation. Like others in western Europe, it had slashed post-war defence spending to pay for a burgeoning welfare state. And yet with his appeal to some primal sense of British duty, Rusk was onto something too. By 1968 pacifism and post-colonial guilt were potent forces across much of western Europe. In contrast, Britain's Labour leaders felt miserable about their forced retreat from global influence. Fleeing to the British embassy in Washington to cable London, Brown felt "thoroughly sick with myself". His Britain was a nation that wanted butter, but guns too.

Four decades on, the cash-strapped government led by David Cameron is taking a bet that Britain still feels that way. Even as the coalition government this week outlined the most painful spending cuts Britain has faced in decades, it went to great lengths to avoid confronting the British public with a direct choice between aspirin and aircraft carriers. The National Health Service has seen its budget ring-fenced, as a (very expensive) token of the coalition's essential kindliness. But welfare spending is being squeezed. At the same time, Cameron took personal charge of efforts to convince voters that — even after 7.5 per cent cuts to defence spending over the next four years — Britain would still be able to "project power and influence" in a rapidly changing world.

The prime minister unveiled a package of defence cuts on Tuesday, a day before his Chancellor of the Exchequer, George Osborne, announced those affecting the other government departments. The three armed services would shrink, Cameron conceded (so that Britain would no longer be able to deploy forces of the size seen in Iraq and Afghanistan, a largely sceptical press noted). But, he assured the House of Commons, Britain would remain one of a "very few" powers able to deploy a brigade-sized force anywhere on earth, indefinitely.

Above all, the prime minister attacked the previous Labour government (with reason) for leaving behind a wildly overspent defence budget, complete with unbreakable contracts for two aircraft carriers, one of which the country cannot afford to equip with warplanes. What he did not do was suggest that money saved on defence might be used to offset cuts on civilian spending. In short, guns and butter were kept firmly separate.

There are several reasons for this. Defence spending is particularly precious to Conservative voters. A Tory prime minister can ill afford public rows with men in uniform. Defence spending is qualitatively different: decisions taken today affect national security for decades to come.

Whereas defence is an elite preoccupation in many European countries, in Britain it is the general public that is keen on hard power. Earlier this year, Chatham House, a think-tank, commissioned twin polls of the general public and a group of "elite opinion formers". Asked to name assets that best served Britain globally, elite respondents named the BBC and British culture. Two-thirds said ethics should at times trump the national interest in British foreign policy. The public put the armed forces joint first with the BBC, called for Britain to remain a "great power" and — by a narrow majority — put national interests ahead of values.

Actually, there are early signs that Cameron's foreign-policy doctrine combines hard and soft power. A National Security Strategy made public last Monday hailed Britain's military and intelligence services, but also vowed an intense focus on trade promotion.

Playing to its strengths

Britain should play to its strengths, it suggested: it was an open, outward-facing hub for the English-speaking world and financial markets, a second home to the restless global elite, a member of the European Union, the Commonwealth, the G8 and the G20 and a permanent member of the United Nations Security Council. Though its spooks should never work with torturers, Britain had to work with countries that did not share its values or standards of criminal justice, the strategy declared. In the interests of national security, Britain might not always indulge in "public condemnation" of such partners.

So, beneath the bombast, is this a new "east of Suez" moment? The British public does not want one, but it cannot be ruled out, says a senior official. Cameron's big vulnerability is that the full consequences of his cuts will take years to emerge. When it comes to less muscular forms of influence, the Foreign Office is taking a 26 per cent cut over four years. The BBC World Service will see its Foreign Office funding withdrawn, falling under the general BBC budget: this might harm that global broadcaster.

To some outsiders, Britain's obsession with global influence may appear tiresome. But a surly, protectionist Britain would be worse. The fear in official Washington, four decades ago, was that Britain was becoming a "Little England", walking away from the wider world and leaving America to grapple with its own isolationist temptations. That fear was overblown in 1968: Britain was broke, rather than determined to shun the world.

Cameron seems to think the same is true today. Wish him luck.