All of us in the free world owe Israel an enormous thank-you for defending freedom, democracy, and security against the Iranian cat’s-paw wholly owned terrorist subsidiaries Hezbollah and Hamas. Israel is doing the Lord’s work. They are defending their own homeland and very existence, but they are also defending America’s homeland as our frontline democratic ally in the Middle East. Commentary’s Norman Podhoretz was exactly right when he coined the term World War IV to describe the global terror conflict. Repeatedly hostile actions by the totalitarians in Iran, Syria, Hezbollah, Hamas, and North Korea are all connected. So are the recently foiled terrorist-cell-block plans in Canada, America, London, and elsewhere around the globe. We are fortunate to have a staunch ally like Israel to assist us in this fight.

As Ben Stein recently put it, “God bless Eretz Israel. God bless Israel for having the cojones to stand up for herself.” But supporters of freedom and democracy must also say a prayer for President Bush, who has steadfastly stood up for Israel. He outright refuses to publicly ask Israel to stand down.

As expected, France, Spain, and Italy have responded to recent events with pacifist posturing. In the smoking rooms of Western Europe and around the coffee tables of the United Nations, we hear more lofty calls for restraint. But the terrorist groups that started this fight have shown no restraint. Rather than pull back, Israel should move forward, cleaning out all the terrorist sanctuaries, training camps, weapons caches, and missile systems it can find.

Remember, it was Israel that pulled out of southern Lebanon and Gaza. Later, when terrorist gangs kidnapped Israeli soldiers, Israel appropriately fought back. That is what sovereign nations do, and Israel’s recent military actions deserve our unyielding support. Israel has the right to put the terrorist armies of Hezbollah and Hamas out of business.

Importantly, so called moderate Arab governments Egypt, Jordan, Saudi Arabia, Bahrain, Dubai, and the United Arab Emirates are not taking the Hezbollah or Hamas side. This is undoubtedly a function of the American effort in Iraq, where a forward beachhead has been established for liberalization and representative government. No matter how difficult that effort remains, the center of gravity in much of the Middle East is shifting away from totalitarianism and toward some form of homegrown democracy.

And we cannot delude ourselves about the role of Iran in recent Middle East events. Iran sent Hamas and Hezbollah to attack Israel in the hope of inflaming the Middle East against Israel and the United States. The plan was to divert attention away from G8 and U.N. sanction efforts to derail Iran’s nuclear weaponization program. Iran miscalculated.

Israel’s next front may indeed be Syria, which is also directed by Iran and is a safe haven for terrorists – including former Saddam Baathists and others who move freely between Syria and Iraq in order to cause trouble. Many experts still believe that Syria is safe-harboring Saddam’s unfound inventory of weapons of mass destruction.

According to news reports out of London, senior Pentagon sources say Israel has given Syria 72 hours to bring about the release of the IDF troops kidnapped by Hezbollah. Many strategists also believe Israel should clean out the numerous missile sites, military camps, and terrorist sanctuaries that exist in Syria. It is doubtful the America will interfere. Now is the time to really put the squeeze on Syria’s dictator, Baby Assad.

Back at home, doomsayers are virtually blaming Israel for higher oil prices, slumping stocks, and a potential recession. But there will be no recession. The jittery oil-price jump is a short-term event, and when military actions are completed in the Middle East, prices will plummet. If need be, America can tap into 688 million barrels of strategic oil reserves, at least two months of import protection. And if Iran attempts to stop the oil flow in the Strait of Hormuz, it will take America and Israel about 35 minutes to knock out the entire Iranian navy and air force.

Recession? American businesses have never been healthier or more profitable. Lower tax rates have spurred a tremendous boom in private investment, while new job hires continue to lift family incomes. Today’s wartime uncertainty and geopolitical risk will not turn these fundamentals around. Indeed, strong world economic growth will continue, spurred by the spread of the very-American-style free-market capitalism that the Axis of Evil and its terrorist divisions are unsuccessfully trying to overthrow.

When the dust clears the world will applaud Israel for its courage. Sensible freedom-loving people everywhere will realize that Israel’s furious response in the face of senseless terrorist attacks will have made the world a better place.

In fact, we are all Israelis now.

Mr. Kudlow is host of CNBC’s “Kudlow & Company.”