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Many readers will be vaguely familiar with game theory, if only through Russell Crowe playing the game theorist John Nash in the film A Beautiful Mind. The classic game theory is the prisoner’s dilemma, when two prisoners are being separately questioned for jointly committing the same offence. If one confesses while the other stays silent, the former is let off for honesty, the latter gets a long sentence. If both confess, or stay silent, they get locked up. Each individual’s strategy depends on what the other does.

In the case of terrorism, things are more transparent, but similar dilemmas apply. The best way to deal with a global terrorist threat is global co-operation. That may mean that individual countries abandon autonomy — sharing and in some cases combining intelligence operations, operating the same regime when it comes to arresting terrorist suspects, and so on. United, the world is stronger.

The trouble is that each individual country has an incentive not to co-operate too much, in order to maintain national independence, not be seen as America’s ‘poodle’, and hope (probably in vain) to deflect terrorist attention elsewhere. This, which economists would call the “free rider” strategy, appears to be the approach of the new Spanish government.

The task has to be to persuade countries to engage fully in a global coalition against terrorism. As Sandler put it: “Networked terrorists present a formidable threat to a globalised and technologically sophisticated world where targets still act largely independently to curb transnational terrorism . . . All solutions require collective action by rich, developed countries that is not easy to achieve.”

Building an international coalition against terrorism may be beyond the Bush White House, loaded down with Iraq baggage. It has to be the urgent task of the next US administration.

PS Sir Donald MacDougall, who died last week aged 91, had a distinguished career as an economist in academia, government — he rose to become the Treasury’s chief economic adviser — and business. He was instrumental in wartime planning, and rebuilding the British and European economies after the war.

Less successfully, he was associated with Labour’s failed attempt at economic planning, when he was the civil servant put in charge of the short-lived Department of Economic Affairs under George Brown in 1964.

His lasting legacy, however, could be work he did after leaving government. As chief economic adviser to the CBI, he was asked by the European commission to head an inquiry into how big a central budget would be needed for a fully integrated, single-currency EU. The verdict was between 20% and 25% of gross domestic product, roughly 20 to 25 times the existing budget, and too much fiscal federalism for most people.

Whether it was because of this, MacDougall became one of several ex-Treasury mandarins to sign up to the “No” campaign against UK membership of the single currency. Last week the campaign more or less shut up shop, on the ground that the budget kicked entry prospects into the very long grass. They’re probably right, although Tony Blair remains as keen as ever to pull it off before he rides off into the sunset.