When Israeli Prime Minister Ehud Olmert addressed the Knesset and claimed victory against Hezbollah, some members of the body audibly scoffed, reports WorldNetDaily.com. Israel's tentative military campaign, Olmert asserted, "changed the strategic balance in the region." Well, he's right about that part.

By failing to crush Hezbollah, as 90 percent of the Israeli public, the U.S. government, the French and even the Saudis hoped they would do, Israel has sustained the most damaging defeat of its history -- and this defeat has hurt the United States as well. An Israeli columnist, calling himself an "optimist," notes that contrary to Hassan Nasrallah's prediction that Israel would "'collapse like a spider web,' it didn't collapse." Those are not words to chill the hearts of Hamas and Hezbollah.

In a better world, the tactics of Hezbollah -- crossing an international boundary in an unprovoked act of ruthless aggression; kidnapping soldiers; using civilians as human shields; deliberately targeting Israeli civilians -- would have provoked universal revulsion. Every death of an innocent Lebanese would have been laid at the feet of Hezbollah. But in the world we actually inhabit, the European Union, Muslims throughout the world and many on the left in the United States condemned Israel instead. This war brought us not embedded journalists but embedded terrorists, woven into the fabric of civilian society -- missiles hidden in mosques, launchers within laundries.

Hezbollah, with a large assist from the Reuters news agency, boldly and blatantly falsified photographs and other news from Lebanon -- strategically posing human beings (dead and alive), stuffed animals and weeping women for world media consumption (see www.aish.com/movies/JP/PhotoFraud.asp). Thanks to alert bloggers like those at LittleGreenFootballs.com, we have come to recognize the ubiquity of figures like "Green Helmet Guy" posing as a Lebanese rescue worker when he almost certainly works for the terrorists -- the Leni Riefenstahl of Hezbollah.

One part of the world that proved particularly vulnerable to this manipulation was Israel itself. It fought this war with one eye on the camera. And though utterly unskilled in such tactics itself (where were the pictures of suffering Israelis?), the Israeli government worried excessively about the public relations price it was paying to defend itself. But by failing to finish the war, Israel did itself far more damage than any public relations hit could do. It emboldened the enemy -- and Israel's enemy in this war is our enemy, too.

How do you fight people who are not afraid to die? Well, certainly not by letting them believe that such tactics succeed. Iran, the font of so much misery in the world right now, has no reason to believe that defiance of the United Nations, Nazi-like belligerence toward the U.S. and Israel, funding and training of suicide bombers, and the pursuit of nuclear weapons have brought them anything but gain. Hezbollah was their cat's paw. Had it been crippled, they would have felt the pain. The psychic blow would have been enormous. The psychological war is every bit as important as the one fought with bullets (it has always been so). It's one thing to blow yourself up for a great cause that is everywhere on the march. It's quite another to sacrifice your life for futility.

At this moment, Israel has done the most dangerous thing we in the West can do: It has withdrawn from a fight without victory. The U.S. has offered some wobbly signals as well. Michael Rubin of the American Enterprise Institute reports that after Secretary of State Condoleezza Rice announced that the U.S. would "engage" Iran, a top Iranian official jeered, "Why don't you just admit that you are weak and your razor is blunt?" A few days later, an Iranian Revolutionary Guards boat unfurled a banner as it passed a U.S. Navy ship in the Persian Gulf. It read: "The U.S. cannot do a damn thing."

A Hamas columnist has predicted that Hezbollah's "victory" will open the door to a "third intifada."

We await the consequences elsewhere around the world -- from London to New York to Baghdad to Bali to Calcutta -- of jihadists who feel the wind at their backs.