THOSE two brave military generals, Tony Blair and George W Bush, make quite a team. Tony creates a diversion with his global song and dance act, and while we're all distracted, George goes and invades a country or two.

But while they have won the battles, they are losing the war. The war on terror that is.

It was that most respected political commentator Miss Cilla Black who convinced me of this. Unhappily her home was broken into this week, and the burglars handcuffed her 22-year-old son Jack, threatened him with a knife and hit him with a crowbar.

This was a horrible ordeal, but it had no link to Osama bin Laden, al Qaida, the IRA or the Black Hand Gang. I point that out only because Cilla told waiting reporters: "You wouldn't treat a terrorist the way my son has been treated."

The sentiment is understandable, the choice of word revealing. Until a few years back, the singer would have complained that you wouldn't treat a criminal - or even a dog - "the way my son has been treated".

But as symbols of menace and horror, criminals and dogs (even those toddler-mauling Rottweilers which had us all in such a tizz a few years back) are no longer the most potent. What really scares the willies out of us now are terrorists. They are lurking on every street corner, plotting to do us in. Or so we believe.

Not surprisingly New Yorkers are more paranoid than most. Since 11/9 (as the British calendar would have it), they have had a collective case of the jitters, not helped by a series of events that might have been concocted by a malevolent god to send them back into therapy. First there was that plane crash, then the power blackouts. Both were cock-ups, not conspiracies.

Our own reporter Charlotte Percival was caught up in the chaos that followed the world's biggest power failure last week. Her evocative report on Monday captured the weary sense of persecution hauled about by most New York residents these days. "You know what it is, it's obvious, it's terrorism. It's happened again," said one man, summing up the general mood.

Yet it turned out to be something far more unthinkable than sabotage: the world's greatest superpower couldn't keep the 'leccy running.

Our dread of terrorism is costing the Western world billions in counter measures. It has wrecked tourism and generally made us even more suspicious, hostile and insular than we were before. As the terrorists' aim is to create maximum fear for minimum effort, they are clearly winning the war waged against them. We're running scared.

The Anglo-American response has only helped the terrorists. British MPs acknowledged this when the foreign affairs committee reported that "the war in Iraq might, in fact, have impeded the war against al Qaida", partly by boosting its recruitment.

Ministers' confused response to global terrorism is making it harder for Britain to formulate a proportionate response. The Hutton Inquiry on Dr Kelly's death shows that the politicians will not be honest with us. They prefer to justify their aggressive stance by issuing general, possibly exaggerated, certainly nightmarish reports about unspecified threats.

More locally, the Ministry of Defence tell us the Son of Star Wars upgrade will not make RAF Fylingdales a terrorist target - yet the Home Office has given extra funding to North Yorkshire police to tackle terrorism.

These muddled messages leave us in a state of permanent alarm. We are led to believe half the world is out to get us, rather than a band of desperate, cunning men. That is terrorism on top.

Updated: 10:16 Wednesday, August 20, 2003