The gloomy election-year refrain is that America is mired in Iraq, took its eye off Afghanistan, empowered Iran and is losing the war on terror. But how accurate is that diagnosis?

First, the good news. For all the talk of a recent Tet-like offensive in Basra, the Mahdi Army of radical Shiite cleric Muqtada al-Sadr suffered an ignominious setback when his gunmen were routed.

This helped the constitutional — and Shiite-dominated — government of Prime Minister Nuri Kamal al-Maliki renew its authority, and has encouraged Sunnis to re-enter government. Two threats to Iraqi autonomy — Iranian-backed Shiite militiamen and Sunni-supported al-Qaida terrorists — have now been repulsed by an elected government and its supporters.

Our armed forces are stretched, but Gen. David Petraeus, the top U.S. commander in Iraq, and his colonels are transforming a top-heavy conventional colossus into more mobile counterinsurgency forces.

Petraeus' recent nomination to Centcom commander suggests that, like the growing influence of Gens. U.S. Grant and William Tecumseh Sherman in 1863, or of George Marshall when he reconfigured the Army in 1940, we at last are beginning to get the right officers in the right places at the right time.

The despairing enemy seems to sense this as well. The more al-Qaida mouthpiece Ayman al-Zawahiri threatens the West, the more he sounds like Hitler's shrill propagandist Joseph Goebbels in his bunker as the Third Reich was crumbling.

In his latest desperate rant, a suddenly "green" Zawahiri was reduced to appealing to environmentally conscious Muslims to fault the United States for our supposed culpability for global warming! No wonder polls across the Middle East show a sharp decline in support for his boss, Osama bin Laden.

We haven't been attacked in over six years since Sept. 11, while the FBI has arrested dozens of jihadist plotters. Our elected officials squabble over the Patriot Act, Guantanamo and the loss of constitutional liberties. Yet, the odd thing is not the nature of such a necessary debate, but the inability of critics to muster enough support to repeal post-9/11 legislation and policies — a tacit admission that these measures have worked and saved thousands of American lives.

But is the war then nearly won? Hardly.

And that brings us to the bad news. We still censor ourselves in fears of terrorist threats, mortgaging the Enlightenment tradition of free and unfettered speech. In Europe, cartoonists, novelists, opera producers, filmmakers and even the pope are choosing their words very carefully about Islam — in fear they will become the objects of riots and death threats.

Here at home, our State Department is advising its officials to avoid perfectly descriptive terms for our enemies like "jihadist" and "Islamo-fascist" in favor of vague terms like "violent extremist" or "terrorist" — as if we could just as easily be fighting Basque separatists.

Even more worrying, Americans cannot find a substitute for imported oil. The result is that $110-a-barrel petroleum is slowing our economy, weakening our international financial clout — and sending billions in capital into the hands of our otherwise unproductive enemies.

The way to shut down Iran's reactor or its subsidies for Hezbollah is not necessarily through bombing but by getting oil back down below $50 a barrel, which would cut the value of Iranian petroleum production by nearly $100 billion a year and weaken an already weak economy.

Saudi Arabia largely ignores our pleas to help rebuild Iraq and cease its money flowing into the hands of radical Islamists. And why should they listen to us? After all, at present astronomical prices, their oil production is worth nearly half-a-trillion dollars a year — with Chinese, Europeans and Indians waiting in line to pay even more.

After years of learning how to fight an unfamiliar war in Afghanistan and Iraq, and to protect us at home, we are finally getting most things right. But if our soldiers and intelligence agencies have learned how to win, our politically correct diplomats and the American consumer haven't — and are doing as much at home to empower radical Islam as those on the front lines are to defeat it.

Victor Davis Hanson is a senior fellow at the Hoover Institution and a recipient of the 2007 National Humanities Medal. Reach him at author@victorhanson.com.