Undoubtedly there will be good that comes from this. Organizations take on little bubble cultures, and State is no exception, with each Embassy being a bubble within a bubble. Having their bubbles pricked a bit and open to external critical review will undoubtedly lead to some positive reform.
This will also undoubtedly, at least in the short term, cause a dip in U.S. influence. Influence is, I believe, our most critical asset. Many factors contribute to the building of influence, and like a reputation, it is harder to build than it is to lose. Containment strategies are expensive in terms of influence (and other forms of national capital as well), and I believe the U.S. has been burning influence throughout the Cold War; and that the burn rate has increased considerably as we entered the post-Cold War / GWOT era. Following the hit associated with the economic crisis, this additional hit is either well timed or poorly timed depending on which side of aisle one is sitting on.
Military power can be an effective substitute for other, more subjective forms of influence when dealing with states; but as we enter deeper into a age where non-state and quasi-state players emerge as more serious challengers, military power lacks much impact. Sledgehammers are great for breaking rocks, but not much for swatting flies.
My cautionary recommendation from all of this is to keep a close eye on the "influence gage." Back away from Ways and Means with high burn rates in pursuit of interests that are truly critical; and back away from Ends that really don't make the same sense today that they did when first adopted.
Here's a little example. In the just released CNAS recommendation on Afghanistan they essentially adopted the same two "vital interests" that the Afghan Studies Group identified in their recommendation released a couple months earlier (A product roundly criticized by Andrew Exum, who also was a key author of the CNAS product, btw)
These two vital interests identified are "AQ inspired terrorism" and "the stability of Pakistan."
Now it is hard to find fault with either interest; the difficulty is in logically linking the effective pursuit of either one to US operations in Afghanistan. After all, Pakistan was quite stable prior to being strong-armed into a series of actions counter to their own national interests in order to support US interests regarding AQ. So our very AFPAK strategy has created the concerns to one of the two interests we use to justify our AFPAK strategy.
The vital interest of AQ stands on ground that shakes just as much, but for different reasons. Yes AQ's current base of operations is in the FATA, but like "Facebook" or "Google" they are largely an IDEA. We proved very well in our efforts to contain the idea of communism was futile when so many populaces pursuing liberty were willing to adopt it. I think we will find that efforts to somehow "contain" the ideas of Islamism will fall equally flat when so many populaces pursuing liberty are willing to adopt it as well. If we "contain," "deny" or "defeat" Facebook or Google in the Silicon Valley will we end their influence or take away their market? No, they simply stand up servers elsewhere, go underground for some period of time if necessary, or worst case, are replaced by some more savvy successor. The same applies to AQ and the FATA, and as to AQ ever regaining their old freedom of action in Afghanistan, the odds of that are virtually nil.
How much influence will we have to expend to attempt to serve these interests by continuing actions tied to a specific space and built upon current Ways and Means?? Too much, and even then it is unlikely to produce the desired results because the problem is poorly defined. By looking at the problem itself with fresh eyes we can drop Ends that just don't make sense, and revise Ways and Means to be more "influence-efficient" for those that must be addressed.
Just observations from an interested observer.
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