In an interview Sunday with Britain's Observer, US President George W. Bush made an important observation. The president argued that the common wisdom about the Middle East, which argues that Palestinian statelessness is the root of regional instability and jihadism, is incorrect. It is Iranian aggression rather than the lack of Palestinian sovereignty that lies at the root of the war.

As Bush put it, "When you go to the Middle East and you sit in my seat and listen, yes, there's concern about the Palestinian state. But the dialogue has shifted dramatically from 'solve the Palestinian state and you've solved the problems in the Middle East,' to, now, 'solve the Iranian issue and you solve the problems in the Middle East.' "

In acknowledging this basic reality, the president finally accepted the self-evident truth that people like US scholar Michael Ledeen, the author of The Iranian Time Bomb: The Mullah Zealots' Quest for Destruction, have been pointing out for years. It is Iran which is fueling the war in Iraq. It is Iran that has used its proxy in Lebanon to attack Israel and assert control over the country. It is Iran that stands behind the resurgence of the Palestinian jihad against Israel. And it is Iran that is developing nuclear weapons both to destroy Israel and to assert its control over global petroleum markets.

Given the continuously escalating nature of the Iranian threat to global security, Bush's remark was significant. And since Britain has led the campaign to convince the US that it is the absence of Palestinian sovereignty that stands at the root of the war, the fact that Bush made this statement of strategic lucidity to a British newspaper on the eve of his trip to Britain made it doubly significant.

So it is especially troubling and disappointing that in spite of the president's clear recognition of the nature of the Iranian challenge, he is refusing to confront Iran in any practical way.

As he moved through European capitals, Bush asserted repeatedly that he is completely committed to Europe's policy of diplomatically engaging Iran on its nuclear weapons program. He never once brought up the option of forcibly preventing Iran from acquiring nuclear weapons. Rather, he sufficed with calling for the three, toothless UN Security Council sanctions resolutions against Iran to be enforced.

BUSH'S STATEMENTS came against the backdrop of Iran's latest rejection of the West's latest offer to buy it off in exchange for a mere "suspension" of its uranium enrichment activities. That is, he embraced "negotiations" after Iran essentially said, again, that its nuclear weapons program is non-negotiable.

Bush tried to place a wedge between the Iranian regime and the Iranian people by arguing - correctly - that the Iranian people are suffering under the mullahocracy's jackboot. But he has also taken toppling the Iranian regime off the table. So the oppressed Iranian people have no reason to believe that were they to risk their lives in an attempt to free themselves of their leaders, the US would support them.

According to the US media, there was some talk a while back about a US strike against terror training camps in Iran that are used to train insurgents who are killing coalition forces and Iraqi citizens in Iraq. According to international law, such an attack would be permissible. But the Pentagon reportedly nixed the idea, arguing that while the US may start such a confrontation, it would have no control over how events would unfold.

This unfortunately, is a wild distortion of reality. The reality is that Iran has been actively engaged in confronting the US and its allies since 1979. And in every theater of action, it is Iran that has been calling all of the shots. A US strike against the terror training facilities in Iran would mark the first time that the US has ever seized the initiative in Iran's war against it and against the rest of the free world. So opposing such a strike is not an argument against confrontation, but an argument against acknowledging the existence of Iran's ongoing war against the US.

LEBANON IS one of Iran's key battlegrounds for regional dominance. Through its Hizbullah proxy, last month Iran consolidated its control over Lebanon. Hizbullah's bloody takeover of the country was capped off with the signing of the Doha agreement. In Qatar, Lebanon's defeated pro-democracy forces from the March 14 movement officially accepted Hizbullah control of the country by acquiescing to Hizbullah's demand for control over the Lebanese government.

Rather than accept that at Doha the Lebanese government became an open tool of Hizbullah, the Bush administration has decided to pretend - along with Europe - that nothing has happened. As far as the Bush administration and Europe are concerned, a pro-Western, democratically elected government still runs Lebanon's government.

Sadly, there is nothing new about this policy of denial. After the March 14 democracy movement successfully forced Syrian forces to withdraw from Lebanon in 2005, Hizbullah stepped in to protect Syrian and Iranian interests in the country by joining Fuad Siniora's supposedly pro-Western government. Like Europe, the US refused to acknowledge the fact that Hizbullah's partnership with Siniora rendered the Lebanese government - and with it the March 14 movement - proxies of Hizbullah and Iran. And so, prodded by France, throughout the 2006 Israel-Hizbullah war, the US ignored the fact that the Siniora government was nothing more than Hizbullah's diplomatic cover.

In 2006 the US and Europe justified their studied denial of Lebanon's political realities by arguing that Hizbullah was only a minority member of Siniora's coalition. This argument was never persuasive given that Hizbullah's Iranian-trained, financed and armed military force is more powerful than the Lebanese army. But it was a convenient excuse for inaction for leaders unwilling to acknowledge that Iran is the source of regional instability. Today, with Hizbullah in control over the Siniora government, this dubious argument has been wholly discredited. And yet the West's policy of denial has only escalated.