To compound the strategic setback for Israel, the Olmert government failed to achieve any of its objectives. Hezbollah was not flushed out of the territory between Israel's northern border and the Litani River. It still has an Iran-supplied arsenal of some 10,000 hidden rockets after firing 150 a day into Israeli towns, villages and kibbutzim. And Hezbollah chief Hassan Nasrallah, 46, has achieved iconic status throughout the Middle East, bridging the Shiite-Sunni divide. Flushed with this victory, Iran has told the United States to take a hike and mind its own business about the mullahocracy's nuclear plans.

Israel also lost its trademark of military invincibility. Mobilized reservists complained to the media about faulty planning, poor equipment and haphazard resupply in food and water. Some parched Israeli soldiers took the water canteens from dead Hezbollah guerrillas. Worst of all, sub-standard intelligence failed to show the extent of Hezbollah's underground infrastructure just beyond the Israeli border. Reservists staged a protest in Jerusalem to demand the resignation of the prime minister, defense minister and chief of staff.

American neo-cons, led by chief theoretician Richard Perle, now believe that the Tony Blair government in Britain and the Bush administration are chickening out of the world war that militant Islam has declared on Judeo-Christian civilization. "It is global in scope," Perle wrote in the British Sunday Telegraph, "from madrassas in Pakistan, to mosques in London, to 'charities' in America, to banks and boardrooms in the Middle East." In this perspective, Hezbollah's victory against the mighty IDF was a battle lost in the new world war.

For Perle and the neo-cons, it is a war with a cultural and ideological component "lavishly financed by easy oil money from states like Saudi Arabia that we have long (and foolishly) regarded as 'moderates' and 'friends.' The warriors in this jihad are identified, indoctrinated and recruited by men who manipulate the power of faith to induce a fanaticism whose ultimate expression is the martyrdom of suicide missions. Among them are clerics who have rewarded their welcome into our liberal, open societies by preaching our destruction."

So far Perle is right, with one major error. Saudi Arabia has taken drastic measures to rein in clerical fanatics. Almost 1,000 Imams were read the riot act by the royals and warned transgressions would turf them out of their mosques. Pakistan, however, remains a major problem. Flat-earth clerics continue to spew anti-Western venom and some 12,000 madrassas continue to churn out male teenagers who can recite the Koran verbatim, but still liberally sprinkled with hate-filled ideas about the United States, Israel and India.

Perle also says in both Britain and the United States "we have been reluctant -- dangerously so -- to restrict, and in many cases even to monitor, what is said in mosques and social centers of Islamist extremists." That was once the case, but no longer. The only impediment for the FBI and Britain's MI5 has been a shortage of Arabic-speaking undercover agents.

It was the painstaking work of MI5 agents who tracked two dozen British Muslims, almost all of Pakistani origin, which foiled the plot to down ten U.S. airliners on the same day while flying from London to U.S. cities -- a terrorist tsunami that would have changed the world beyond recognition.

British authorities believe as many as 3,000 veterans of al-Qaida's training camps over the years were born or raised in Britain. U.K. polling data showed almost 200,000 British Muslims approved the July 7, 2005 subway and bus terrorist attacks. A quarter of Britain's 1.8 million Muslims -- or some 450,000 people -- are sympathetic to violent jihad (holy war). A third, or 600,000, said they would rather live under Sharia, or Islamic law, than British law. And an overwhelming majority is convinced the war on terror is a war on Islam.

Disillusioned Muslim youngsters are increasingly attached to the global Muslim community via the Internet -- and are angry at what they consider the anti-Muslim policies of the local government where they live. The estimated 5,000 pro-al-Qaida Websites include recipes for mixing nail polish remover and hair bleach and detonating the explosive cocktail with the flash unit from a throwaway camera.

The world of on-line jihadism is not something imaginary, theoretical or conceptual -- it is real and it is here. The virtual caliphate's many visionaries, participants and supporters toil toward the day when the removal of secular leaders in North Africa, the Middle East, South Asia, and Southeast Asia, transforms the electronic caliphate into political reality.

Richard Perle, a former chief executive of Conrad Black's Hollinger Digital company, should know this is where a world war is currently underway. And the Bush administration should know that democracy in Arab countries hastens the advent of what it wishes to avoid. Hamas in Gaza and Hezbollah in Lebanon are exhibits A and B.

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