The crisis sparked by Hamas and Hizbullah is more important and revealing in psychological terms for the Arab world than any military or direct political impact. The most poignant statement of its meaning is a leading Arab liberal's anguished cry in a letter, summing up how these events mark the death of the dream of democracy and pragmatism among his people: "I have been watching some 20 Arabic-speaking television channels (Egyptian, Emirate, Qatari, Syrian, Sudanese, Lebanese and Kuwaiti). The outcome is: Either these (hundreds of) people who appeared on the screen(s) and talked passionately about 'our' dignity, raising 'our' heads, 'our' national pride and the victory that God will grant 'us' were mad, or I am the one who represents madness." In short, extremist groups with an assist from the media controlled by Arab regimes can still stir up the old-time hysteria quite successfully. Who needs peace, stability, economic progress, women's rights, an independent judiciary, an accurately reporting media, control of corruption, a good educational and health system, free speech and all that stuff when you can kidnap Israelis? Of what importance is the Arab weakness in commercial hi-tech if you can purchase a rocket that hits an Israeli patrol boat? Why keep your children in school learning how to make a living if they can be deployed as martyrs? This analysis is not mere cynicism; it is the actual situation in the Arab world. Once again, as happened so often in past decades, the terrorists (with a little help from the privileged) are directing events. And rather than abandon the idea of finding the right murderous savior, much of the Arab world has just switched to the latest fad and the newest messiah. Gamal Abdel Nasser, Hafez Assad, Saddam Hussein, Yasser Arafat, and Osama bin Laden all failed. But no lesson is drawn from this. Now it is on the Hamas-Hizbullah axis that people place their faith. Iran, of course, is the patron of both groups and played a central role in provoking the crisis. Yet while Iran may be the only indigenous regional power, its direct gains are going to be limited. THE ARABS in general are not giving credit to Teheran. After all, the whole point of this being an Arab and (Sunni) Muslim victory is ruined if the new hero is Persian and Shi'ite. Lebanon is playing both sides at once. Christians, Druse and even Sunni Muslims are angry that Hizbullah has dragged them into the war, destroyed their tourist industry and wrecked the prospects for the country's economy for years to come. In private, Lebanese say they would like Israel to wipe out Hizbullah for them. Publicly, though, most Lebanese politicians are standing beside Hizbullah and will not lift a finger to help. Nobody should have any illusions about the Lebanese government doing anything even if the whole country is leveled. The country's leaders simultaneously use, fear, and support Hizbullah. To cheer on the extremists protects their careers, and none of them have gotten where they are today by caring very much about the nation's interest. HAMAS AND Hizbullah are now in the drivers' seat of the Arab world. It is worth underlining the fact that these two groups were supposedly going to be moderated by winning elections and participating in governments. Now we know that the effect went the other way: The situation gets pushed in a radical direction when terrorists are in government. This does not mean, however, that Arab regimes are altogether pleased with these developments, even if they will often exploit them demagogically to build support while blaming all their problems on Israel, the United States, and the West. They are quite happy if their people believe that fighting Israel, rather than their own corrupt dictatorships, is what needs to be done. Still, Egypt, Jordan, Saudi Arabia and others are horrified. Current events also threaten them, both by emboldening their own radical Islamist opponents and possibly bringing wider regional instability. In the unprecedented words of an official Saudi statement: "A difference should be drawn between legitimate resistance and rash adventures carried out by elements... without consultation or coordination with Arab countries, thus creating a gravely dangerous situation exposing all Arab countries and [their] achievements to destruction with those countries having no say." I think the Saudis are right to be nervous, though wrong to keep playing the game of whipping the radical and Islamist horses forward with one hand (money and propaganda) and trying to rein them in with the other (repression and a bit of persuasion). This type of maneuver keeps them in power in the short run, but may end up by burying them in the long run. AS FOR the long-term consequence of this crisis, I think that after the rockets and guns stop firing the big effect will be to fully reinstate the folly. As the Arab world rediscovers (if it ever forgot) that fighting Israel is more emotionally satisfying than fighting dictatorship or socioeconomic stagnation, the old pattern will prove as strong as ever. There will be no real democracy, peace, or rapid progress for the Arab world in this decade and, more likely than not, in the next one either.