CAMBRIDGE, Mass. — President Barack Obama was the world’s favored candidate in what was America’s first global election. The key question is how the Obama administration will tap this rare good will to re-establish U.S. credibility and repair its reputation. How Obama manages issues in the Muslim world will determine the success or failure of his foreign policy because it is here that the greatest challenges lie, especially in dealing with the two U.S. war fronts in Iraq and Afghanistan.

Relations between the United States and the Muslim world have long been deteriorating. People in the Islamic world ascribe this to U.S. policy over the years. Perceptions have been shaped by decades of an uneven approach that placed the security of Israel and the need for cheap oil above and beyond the concerns of others and justice for the Palestinians.

The challenges the new U.S. administration faces are daunting. But it can begin by changing the tone in which it engages with the Muslim world to establish a relationship based on respect. It should signal that it cares about what others think and say. This can convey paradigm shifts in approach, even if it takes time for policy changes to be effected.

The U.S. should also consider discarding that unfortunate phrase “war on terror,” which has had so many unintended consequences in the Muslim world, where such rhetoric has led to the widespread impression that this is a war on Islam. The declaration of a global war on terror has mischaracterized the challenge and misdirected the response. It has shaped a strategy primarily military in its character whereas counter terrorism requires a combination of hard and soft power.

Turning to policy, the most important first step is to transform the psychological climate in the Middle East, which has been further vitiated by the brutal war in Gaza. This can be done by an early effort to address the issue of Palestine, which galvanizes Muslims everywhere and symbolizes their sense of historical grievance and injustice. The key question is whether Obama will be prepared to press Israel toward an accommodation that provides justice to the Palestinian people.

Obama has promised a realignment of strategic priorities, winding down from Iraq and switching focus to Afghanistan. This aims to correct the blunder of the Bush administration that diverted its attention from Afghanistan to give strategic priority to an unnecessary war in Iraq, and reinforced the perception that Muslim nations were being targeted by Washington’s aggressive unilateralism.

Having promised to give top priority to Afghanistan and Pakistan, the Obama administration’s most urgent foreign policy challenge will be to fundamentally overhaul strategy in Afghanistan, where the situation is widely judged to be in a “downward spiral.”

Obama has promised a troop surge in Afghanistan. But without a radical change in strategy, this will not reverse the collapse of security. Moscow, after all, deployed over 115,000 troops at the height of its occupation of Afghanistan and could not avert defeat.

Washington and its allies have tried to do several things in an inchoate way with no prioritization of objectives. This has resulted in the fusion between Pashtun nationalism and Muslim radicalism that has fueled the growing insurgency and risks turning this into a “Pashtun war of liberation.” Over-reliance on military force has led to high civilian casualties and has become a potent factor behind support for the Taliban.

A new strategy must start with redefining U.S. goals to distinguish between what is vital (disruption of terrorist networks) and what is best left for Afghans to undertake (building democracy, transforming society). Such an approach must seek to decouple al-Qaida and the Taliban, by engaging the Taliban in a reconciliation process and by holding out the offer for an eventual withdrawal of foreign forces in return for a cessation of attacks and support for the creation of a viable Afghan Army.

Such a plan must have regional backing and that includes Iran and Russia.

With Pakistan, the most significant first step should be to address the trust deficit that now characterizes relations with the U.S. Reversing this should be among Obama’s pressing priorities, because on that will depend the quality of cooperation between Washington and Islamabad.

Washington should cease unilateral strikes into Pakistan’s tribal areas. Its aggressive approach has inflamed public opinion, undercut Islamabad’s own counterinsurgency efforts, and risked destabilizing an already fragile country. Instead, Washington should help strengthen Pakistan’s capacity to contain militants.

The Obama administration should also break decisively with the Bush legacy of treating Pakistan as hired help rather than as a valued ally. Pakistan has paid a heavy price — both human and in terms of its socioeconomic stability — for being a frontline ally of the U.S. Thousands of people, including 3,000 law enforcement personnel, have been killed in terrorist violence since 2001. The economic cost is estimated to be around $34 billion.

The U.S. should make a preferential trade deal for Pakistani textiles — the lifeblood of its economy — the centerpiece of economic assistance. It should consider waiving tariffs altogether for a specified period. Trade creates jobs and durable income which are much more effective antiterrorism tools than bombs and bullets.

Obama has already acknowledged the need to resolve the long running Kashmir dispute to enable the Pakistan Army to switch focus from a conventional threat from India to counter-insurgency. To help bring this about, Washington should launch a diplomatic initiative aimed at reaching an accommodation between Pakistan and India. This is all the more urgent in the wake of the terrorist attacks in Mumbai.

The main policy changes the U.S. needs to signal for a fresh start with the Muslim world are: a just resolution of the Israeli-Palestinian conflict; a broad accommodation with Iran to give Tehran a stake in regional stability; ending the U.S. occupation in Iraq by an orderly withdrawal; a new, more realistic strategy in Afghanistan that separates al-Qaida from the Taliban and focuses on building an effective Afghan Army and security apparatus to enable foreign forces to eventually pull out from Afghanistan; and help to promote stability in Pakistan.

Maleeha Lodhi served as Pakistan’s ambassador to the U.S. (1993-96, 1999-2002) and Britain (2003-2008) and as editor of The News, Pakistan’s leading English newspaper. A longer version of this article appeared in the Harvard International Review.

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