Pick up any newspaper today in Britain or elsewhere in Europe, switch on the TV or tune in to any radio station, and you're very likely to get the impression that "our societies" - if not western civilisation in its entirety - face an imminent Islamic threat, on a par with the old dangers of fascism. Since the terrorist bombings of New York, Madrid and London, the "fundamentalist peril" has become part of the air we breathe. It has become a rhetorical crutch for everyone from rightwing bigots to opportunistic politicians and repenting "former extremists", each with their own agenda.

Today we live amid an explosion of discourse and imagery around Islam and Muslims. Sparked by al-Qaida's lunatic atrocities, it has since fed on the politics of fear and suspicion. The victims have included objectivity, balance, and the ability to judge issues calmly and rationally. Flawed material is endlessly reproduced and recycled, so it is little wonder that the public's understanding of Islam and the complex political problems of the Muslim world are limited at best.

Years of peddled fear and demonisation have had severe consequences: a widening of ignorance and bigotry, deepening mistrust between individuals and communities, and the resurrection of the pernicious language of racism and fanaticism - as journalist Peter Oborne illustrated in his Channel 4 Dispatches documentary earlier this week.

It is probably no exaggeration to say that Islam is now the religion closest to Europe and remotest from it. Islam is no longer an alien, distant religion. It is now woven into the very fabric of European society. Muslims are the largest of the continent's minorities. Yet their physical proximity does not appear to have made them more familiar or better understood. If anything, to most European eyes they seem stranger, more distant, more ambiguous than ever.

The much hyped Islamic threat is one of the greatest lies of our time. The "Muslim world" - though no such bloc really exists - is politically fragmented and economically impoverished. It is reeling under the weight of crises and a long colonial legacy. Militarily, it is of scant significance. It is laughable that we should be discussing the Islamic threat when in the past seven years alone two Muslim countries have come under direct military occupation, ending hopes that the world had firmly closed this chapter of history decades ago.

I suspect many military experts must struggle to keep a straight face every time the subject of the "Islamic threat" is broached. They know that strategic threats are not founded on mere anxieties, imagination and illusions, but on concrete military and political facts. This is not to play down the seriousness of the dangers presented by al-Qaida and other violent groups. But these constitute a security problem to be dealt with through the intelligence and security services. Whatever its braggadocio, al-Qaida does not amount to a strategic military threat, let alone a menace to "western civilisation".

The security risks posed by al-Qaida, moreover, face Muslims and non-Muslims alike. After all, al-Qaida has perpetrated more atrocities in Muslim countries than western capitals. Attacks in Casablanca, Bali, Riyadh, Algiers, Tunisia, Istanbul and Iraq have outnumbered those in New York, Madrid and London.

In the fog of the so-called war on terror, al-Qaida, terrorism, extremism and Islamism - the list of -isms goes on - have been employed as potent weapons in a range of battles. They have been deployed to demonise vulnerable minorities - their community groups and their leaders, mosques and faith schools. They have been adopted to eat away at civil liberties. And they have been exploited to target mainstream Islamist political parties. Turkey's ruling Justice and Development party; the Muslim Brotherhood - the largest opposition in the Egyptian parliament; and Anwar Ibrahim's People's Justice party in Malaysia, are among the movements cast in one terrifying category labelled "Islamism", alongside al-Qaida. The huge differences are wilfully ignored to justify this strategy of unrelenting confrontation. The consequences have been devastating for social stability and community coexistence, as well as for relations between the "Muslim world" and the "west" - something which, ironically, has been recognised by President Bush recently.

Political expediency and scaremongering has seen the propagation of the idea of a grave Islamist threat to the status of orthodoxy. But however easy it might be to surrender to this fiction, it remains just that: a myth fabricated by a few, exploited by a few, and consumed by many. No matter how widely circulated, or endlessly regurgitated, a myth remains a myth.

· Soumaya Ghannoushi will join John Esposito, Alastair Crooke, Martin Bright and Robert Leiken to debate "The Islamic threat: myth or reality?" at IslamExpo in London tomorrow. The expo runs from today until Monday at Olympia in Kensington

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