* A postmodern terrorist army - Hezbollah's - just achieved the first terrorist defeat of a powerful state on a conventional battlefield. The strategic echoes will embolden extremists throughout the Middle East and beyond.

* Iran, a state that openly sponsors terrorism, is well on the way to possessing nuclear weapons. And the world community pretends it doesn't really matter. Worse, military action to destroy Tehran's dispersed and bunkered nuclear program would require a massive, sustained effort - and still might fail. Iran's been playing poker while the West plays Old Maids.

* Iraq could fail - if the Iraqis fail themselves. It's still too early to pack up and leave, but if the people of Iraq will not seize the opportunity we gave them to build the region's first Arab-majority rule-of-law democracy, it won't be an American defeat, but another self-inflicted Arab disaster. Iraq is the Arab world's last chance - and the odds are now 50-50 they'll throw it away.

* Lebanon, the region's other "almost" democracy, is in shambles, thanks to Hezbollah's ruthlessness and Israel's misjudgments. By failing to take Lebanon's complex group psychologies into account, Israel's air campaign converted Hezbollah opponents into Hezbollah supporters.

* Syria escaped the recent fighting with just a few tactical nicks. Now Bashar Assad appears stunningly unaware of his odious regime's vulnerability. And over-confident dictatorships do very stupid things.

* The region's Sunni- Arab autocracies - on which we have relied, to our great shame - are terrified and unstable. Egypt, the Gulf city-states and even Saudi Arabia expected Israel to make short work of the Shia-Hezbollah problem. Instead, Hezbollah won - and the subjects of those sheiks and kings and eternal presidents have been cheering.

* Crucial oil producers on the Arab side of the Persian Gulf grow more vulnerable each day. Iran intends to exert hegemony over the region through nuclear threats and the exploitation of Shia discontents. The world's worst real-estate investment is luxury property in Dubai.

There's more, of course, from the Islamist takeover in Somalia, at the region's southern edge, to the Dorian Gray decomposition of the Pakistani state at its eastern extreme. So what on earth might give us cause for hope?

* Israel's recent defeat, for one thing. Yes, you read that right. The truth is that Israel got a relatively cheap, if embarrassing, wake-up call. And Israel's a part of Western civilization, not of the Middle East's decaying cultures. That means that Israel doesn't just wallow in blame - like Americans, Israelis figure out what went wrong and then fix it. After the post-war soul-searching and investigations are finished, failed leaders will be replaced and Israel will re-emerge with a renewed sense of mission, a stronger government and a powerfully reformed military - the next time the IDF goes to war, watch the way it devastates its enemies.

* The "unity of Muslims" confronting the West is history (it was always a bogus, ramshackle affair). Sunni-Arab leaders increasingly grasp that the real threat isn't from the United States or Israel, but from the explosion of Shia ambitions, prowess, wealth and desire for vengeance. The future of the Middle East could go a number of ways, but we may find ourselves as bemused spectators, while our sworn enemies and phony friends kill each other. Afterward, we'll pick up the pieces.

* Iraq still could muddle through - but even if it doesn't, our stock in the region is headed up, not down. The paradox is that a future civil war between Iraq's Sunnis and Shias makes our military protection more essential than ever to the effete Gulf emirates and the cowardly Saudis. Avoid linear analysis and reflexive predictions of doom for American interests: The Middle East will always do more harm to its natives than it does to foreign powers. Human beings may hate a distant enemy in theory, but they generally prefer to kill their neighbors.

* Terrorist groups with global aspirations continue to pursue grand, counterproductive gestures rather than effective actions. Plots to blow up a series of airliners, lesser strikes on subways or trains in the West and even the eventual "big one" they'll pull off won't convince the West to surrender. Despite intermittent left-wing lunacy, our debates and disagreements are about how best to solve the problem - not how to capitulate. Bit by bit, the Western mood is turning from disbelief regarding the "terrorist threat" to hard-knuckled realism about extremist Islam. 9/11 taught the terrorists little of use and many wrong lessons. It may be hard for some of us to discern what's really happening, but the Islamists are resurrecting a militant, ruthless West.