We may be about to witness a major victory in the War on Terrorism, a victory as important as any in Afghanistan or Iraq. But American troops will not win this victory, and the battle will be fought without the support and even against the wishes of our president. That battle is now being fought by Israel.

Israel finally seems to have rejected the policy of unilateral restraint we have foisted on it, responding to the Passover Massacre with a counter-attack that will probably eliminate the Palestinian Authority and which I hope will eliminate terrorist leader Yasser Arafat. This war, which Israel needs to wage for its own survival, also constitutes the most important front in America's battle to eradicate terrorism.

Until now, Arafat and his Palestinian Authority were the world's foremost example of terrorism as a successful war strategy. Three decades of terrorist murders had won Arafat his own independent state, with armies supplied, trained, and fed by millions of dollars of "development aid" from the civilized world. The skinny 15-year-olds who threw rocks at Israeli soldiers during the first intifada had grown, with our help, into strapping 27-year olds with shiny new M-16s slung over their shoulders.

The "peace process" enshrined by America and Europe allowed Arafat to unleash these terrorist minions for a new wave of attacks on Israeli civilians. Israel was never allowed to strike back decisively, because that would "endanger the peace process"; instead, we demanded that Israel offer Arafat more concessions at the bargaining table.

Since September 11, rational people might have expected this to change. But the Bush administration insisted on treating the Palestinian's terrorist war against Israel as an isolated conflict, not to be connected to the Muslim world's terrorist war against America. This willful evasion of the facts led to an obvious double standard: we sent our troops to the other side of the world to strike at al-Qaeda terrorists, but we denounced Israel every time it crossed the street to strike at Palestinian terrorists.

This policy was about to reach its obscene climax with the misnamed Saudi "peace plan" formally unveiled at the Arab summit to universal acclaim from Western governments. As the reward for a massive escalation of terrorism over the past 18 months, Arafat was about to achieve the forced withdrawal of Israel to its pre-1967 borders--a precarious, indefensible frontier aptly dubbed the "Auschwitz borders."

This policy was the signal of a broader capitulation in the administration's war policy: their willingness to surrender America's vital interests to appease Arab opinion. The Arab Summit showed the folly of this policy. The administration's intent was to sacrifice Israel to gain support against Iraq. But our strategy of appeasement was merely interpreted, correctly, as a sign of weakness, emboldening Arab leaders to express unanimous support for Iraq.

But Palestine is more than just a symbol of American appeasement. It is also a real and growing center of Islamic terrorism. Last week's reports of a "secret" alliance between Arafat and Iran merely made official a trend that was no secret at all: the growing Iranian influence on the funding, training, and tactics of Palestinian terrorism. Yasser Arafat has been transforming his country into a giant Iranian terrorist training camp, but America declared this terrorist nerve center to be off-limits to any level of retaliation. America's Israel policy was creating a vast, US-sponsored haven for terrorists.

President Bush's perverse policy--fighting a war against terrorists in Afghanistan while rewarding and protecting terrorists in Palestine--threatened to reverse any other victory we have won, or might hope to win, in the War on Terrorism.

The Passover Massacre demonstrated too clearly to the Israelis where this policy was leading. The unilateral cease-fire forced on them by the US over the past few weeks had led to nothing but the continued mass slaughter of their fellow citizens.

The same is true of this administration's Israel policy. Our attempts to sacrifice our ally have led to nothing but the continued destruction of our interests.

The past week has seen the spectacular failure of President Bush's policy of appeasement in the Middle East. But to create a proper strategy, all the president needs to do is to stop exempting Palestinian terrorism from the principles he has announced against America's other terrorist enemies. America must make the same choice we have presented to the rest of the world: we are either with Israel, or we are with the terrorists.

Robert W. Tracinski was a senior writer for the Ayn Rand Institute between 1997 and 2004. The Institute promotes Objectivism, the philosophy of Ayn Rand--author of Atlas Shrugged and The Fountainhead.