Liberal institutionalism has traditionally emphasized the need for institutional arrangements to initiate and sustain cooperation among states. The theory regenerated much interest in the capacity and potential of international institutions, particularly the United Nations, for sustained international cooperation and peace in the post-cold war world. A good number of recent developments, particularly the 11 September 2001 terrorist attacks on America and the resurgent neoconservative agenda in American foreign policy to wage the endless ‘war on terror’ and to extend the zone of freedom and democracy through force, run counter to the basic premises of liberal institutionalism. This article analyzes the impact of the neoconservative foreign policy agenda on wider forms of international cooperation and argues that the unilateral US invasion of Iraq in 2003 has created an international environment of conflict and insecurity where rival and hostile states view each other with deep suspicions and prefer not to cooperate on important international peace and security issues. The prevailing international environment of insecurity has seriously undermined, the potential of international institutions, particularly the United Nations, to hold the post-September 11 world together and get states on board to cooperate on a sustained basis.