* Opposition party sets out foreign policy aims * Need for defence spending review, Conservatives say (Updates with speech) By Matt Falloon and Adrian Croft LONDON, July 21 (Reuters) - Britain must accept a less interventionist role in the world and review defence spending to address extreme pressure on budgets, opposition Conservative foreign affairs spokesman William Hague said on Tuesday. In a speech setting out Conservative foreign policy aims, Hague said economic sanctions were losing their potency and that Britain could no longer tell other countries how to govern themselves. However, it could, and should, exert its influence when necessary, he added. The Conservatives, well ahead of the Labour government in opinion polls with less than a year to go before an election, are starting to flesh out how they might govern Britain. They set out plans for financial regulation reform on Monday. "As a nation we will have to accustom ourselves to there being more situations which we dislike but cannot directly change," said Hague, who is likely to become foreign minister in any Conservative government. "But it is our contention that Britain must seek to retain her influence wherever possible and in some places seek to extend it," he said, speaking at the International Institute of Strategic Studies think-tank in London. Britain's Labour government adopted an interventionist foreign policy, sending thousands of troops to both Iraq and Afghanistan. Most of its troops have now left Iraq, though it still has 9,000 in Afghanistan. BUDGET PRESSURE Hague said the British defence budget faced "extreme pressures" and the Conservatives would conduct a wide-ranging strategic defence review, if elected. The Labour government has already promised a similar exercise. The relative economic decline of Britain and other Western nations as power shifted to China and India would have a "major impact on the ability of Western nations to achieve their foreign policy goals," in years to come, Hague said. "For instance, we are used to the idea of calling for economic sanctions against nations whose human rights records we find unacceptable," he said, citing sanctions on Myanmar, Zimbabwe and Iran. While much tougher sanctions may soon be needed against Iran over its nuclear programme, "it is already clear that the power of such economic weapons is declining and ... it will decline much further in the years to come," Hague said. Despite the new constraints, a Conservative government would not simply accept a shrinkage of Britain's international role, Hague said. It would seek to maintain its influence by using Britain's resources more effectively, increasing its knowledge of other countries and often strengthening relations with them, he said. Hague attacked the European Union's Lisbon reform treaty, saying it would lead to institutional conflict in the EU and a loss of democratic decision-making in EU member states. Although the treaty has already been ratified by the British parliament, the eurosceptic Conservatives have promised a referendum on the treaty if it is not in force when they come to power. The EU should admit western Balkan states and Turkey, Hague said. Britain should make more effort to improve relations with "friendly Muslim nations" -- even those which may not share Britain's democratic or social values, he added. (Editing by Jon Boyle)
An Afghan National Army soldier takes aim during a patrol in the village of Tantil in the Pesh Valley in Afghanistan's Kunar Province July 21, 2009. REUTERS/Tim Wimborne (AFGHANISTAN POLITICS CONFLICT ...
