With Hezbollah’s entry into the war between Israel and Hamas, Fourth Generation war has taken another developmental step forward. For the first time, a non-state entity has gone to war with a state not by waging an insurgency against a state invader, but across an international boundary. Again we see how those who define 4GW simply as insurgency are looking at only a small part of the picture.

I think the stakes in the Israel-Hezbollah-Hamas war are significantly higher than most observers understand. If Hezbollah and Hamas win  and winning just means surviving, given that Israel’s objective is to destroy both entities  a powerful state will have suffered a new kind of defeat, again, a defeat across at least one international boundary and maybe two, depending on how one defines Gaza’s border. The balance between states and 4GW forces will be altered worldwide, and not to a trivial degree.

So far, Hezbollah is winning. As Arab states stood silent and helpless before Israel’s assault on Hamas, another non-state entity, Hezbollah, intervened to relieve the siege of Gaza by opening a second front. Its initial move, a brilliantly conducted raid that killed eight Israeli soldiers and captured two for the loss of one Hezbollah fighter, showed once again that Hezbollah can take on state armed forces on even terms (the Chechens are the only other 4GW force to demonstrate that capability). In both respects, the contrast with Arab states will be clear on the street, pushing the Arab and larger Islamic worlds further away from the state.

Hezbollah then pulled off two more firsts. It responded effectively to terror bombing from the air, which states think is their monopoly, with rocket barrages that reached deep into Israel. One can only imagine how this resonated worldwide with people who are often bombed but can never bomb back. And, it attacked another state monopoly, navies, by hitting and disabling a blockading Israeli warship with something (I question Israel’s claim that the weapon was a C-801 anti-ship missile, which should have sunk a small missile corvette). Hezbollah’s leadership has promised more such surprises.

In response, Israel has had to hit not Hezbollah but the state of Lebanon. Israel’s Prime Minister Ehud Olmert, referring to the initial Hezbollah raid, said, “I want to make clear that the event this morning is not a terror act but the act of a sovereign state that attacked Israel without reason.” This is an obvious fiction, as the state of Lebanon had nothing to do with the raid and cannot control Hezbollah. But it is a necessary fiction for Israel, because otherwise who can it respond against? Again we see the power 4GW entities obtain by hiding within states but not being a state.

What comes next? In the short run, the question may be which runs out first, Hezbollah’s supply of rockets or the world’s patience with Israel bombing the helpless state of Lebanon. If the latter continues much longer, the Lebanese government may collapse, undoing one of America’s few recent successes in the Islamic world.

The critical question is whether the current fighting spreads region-wide. It is possible that Hezbollah attacked Israel not only to relieve the siege of Hamas in Gaza but also to preempt an Israeli strike on Iran. The current Iranian government is not disposed to sit passively like Saddam and await an Israeli or American attack. It may have given Hezbollah a green light in order to bog Israel down locally to the point where it would not also want war with Iran.

However, Israel’s response may be exactly the opposite. Olmert also said, “Nothing will deter us, whatever far-reaching ramifications regarding our relations on the northern border and in the region there may be.” The phrase “in the region” could refer to Syria, Iran, or both.

If Israel does attack Iran, the “summer of 1914” analogy may play itself out, catastrophically for the United States. As I have warned many times, war with Iran (Iran has publicly stated it would regard an Israeli attack as an attack by the U.S. also) could easily cost America the army it now has deployed in Iraq. It would almost certainly send shock waves through an already fragile world economy, potentially bringing that house of cards down. A Bush administration that has sneered at “stability” could find out just how high the price of instability can be.

It is clear what Washington needs to do to try to prevent such an outcome: publicly distance the U.S. from Israel while privately informing Mr. Olmert that it will not tolerate an Israeli strike on Iran. Unfortunately, Israel is to America what Serbia was to Russia in 1914. That may be the most disturbing aspect of the “summer of 1914” analogy.