Hezbollah beat Israel in the latest war in Lebanon, and if you have any doubts, listen to what a certified expert on defeat, Syria's President Bashar Assad, had to say: "We tell [Israel] that after tasting humiliation in the latest battles, your weapons are not going to protect you—not your planes, or missiles, or even your nuclear bombs... The future generations in the Arab world will find a way to defeat Israel."

Some pundits agreed. This unqualified, air-punching evaluation is from one Amal Saad-Ghorayeb, a professor at the Lebanese-American University and author of a book on Hezbollah: "In military terms this is a victory that the Arabs haven't tasted in decades by Israeli standards even. Hezbollah is fully aware that it has emerged victorious. The Lebanese government has called it a victory and it is a victory that is unprecedented and if anything it is going to change the balance of power here."

Iran's ambiguous response on Tuesday to an international request to cease uranium enrichment, underscores the regional dimension of the recent Lebanese conflict. The author of a New York Times story on the Iranian counteroffer, Helene Cooper, offered up this assessment: "Iran has emerged stronger from the Lebanon crisis by showing the world that it is capable of wreaking havoc through its support of the Hezbollah militants"—a view echoed by George Perkovich, the director for nonproliferation at the Washington-based Carnegie Endowment for International Peace.

Well, since it's all settled that Hezbollah has won, let's just open a six-pack of non-alcoholic beer and drink to the health of the party's secretary general, Hassan Nasrallah, the Arab world's latest Che Guevara.

But what kind of victory is this that, even by Hezbollah's unexacting standards, must qualify as a major setback? In its public appraisals of the conflict, Hezbollah has ignored what Israel did to those parts of Lebanon the party cannot claim as its own. Its cries of triumph have been focused on the stubborn resistance put up by Hezbollah combatants in south Lebanon. Nothing has been heard from party leaders about the billions of dollars of losses in infrastructure; about the immediate losses to businesses that will be translated into higher unemployment; about the long-term opportunity costs of the fighting; about the impact that political instability will have (indeed has already had) on public confidence and on youth emigration; and about the general collapse in morale that Lebanon faces.

Let's forget such trifles for a moment and use Hezbollah's own benchmark. Even there, the evidence points to a net loss for the Shiite militia.

Take the rationale for Hezbollah's rockets. For some time it has been obvious that the weapons, estimated to number between 10,000 and 15,000, were mainly there to help deter an American or Israeli attack against Iran's nuclear facilities. Nor did the Iranians distinguish between aggressors. Last May, Iranian Revolutionary Guards Rear Adm. Muhammad-Ebrahim Dehqani stated, "We have announced that wherever America does something evil, the first place that we target will be Israel." He didn't mention Hezbollah or Lebanon, but it didn't take much discernment to see that Iranian retaliation would at least partly come from across Israel's northern border.

Does that deterrence option still exist? Yes and no. Hezbollah is believed to have many more rockets in storage and its network of bunkers in south Lebanon is probably mostly intact. However, it cannot initiate a conflict without facing the political fallout of imposing new suffering on its already traumatized Shiite community. Almost a million Shiites were thrown into the streets by Israeli bombardments between July and August. Hezbollah has started distributing money to the community, but that won't pay for much of the horrendous suffering—lives lost, profitable businesses closed, self-respect gone for those without homes or livelihoods, and much else that cash handouts cannot remedy.

Nasrallah would likely obey an Iranian request to attack Israel once again if the Tehran regime deemed that to be necessary. However, Shiites making up Hezbollah's base of support may not be so eager to be turned into cannon fodder for a country thousands of miles away. That's why the party's deterrence capacity has suddenly become very costly.

It has also become more costly because the month-long fighting brought the Lebanese Army into south Lebanon, after an absence of several decades—soon to be accompanied by an expanded United Nations force. Nasrallah, in order to protect Hezbollah's autonomy in the south, has sought in recent weeks to empty those deployments of their meaning, even as he has pretended to welcome the army. That is hypocritical. Hezbollah had repeatedly refused to allow the army to go south, and only agreed to do so because this was seen by an increasingly impatient Lebanese public as a means of ending the Israeli onslaught. If Hezbollah brings out the rockets again, however, it will mean not only confronting the Lebanese consensus, but also the international community, and that's before a shot is fired in anger against Israel. Again, the party's deterrence capacity, while still there, will be much tougher to revive.

Nasrallah also has accounts to settle with Iran. The regime in Tehran has not only seen its main reason for supporting Hezbollah go up in smoke in a largely futile endeavor, but must now dole out large sums of compensation money to Lebanese Shiites so the party can hold on to its base of support, even as Iran's poor complain their regime has left them by the wayside. Iran will probably pay out the money (though I've heard unconfirmed reports of delays), but of what value is this if Hezbollah cannot fire on Israel in the event of an attack against Iran's nuclear facilities? Or, to the contrary, of what value is the compensation if, by firing on Israel at Tehran's behest, Hezbollah only brings new destruction down on the heads of Shiites, who might then turn against Nasrallah?

Some analyses suggest Iranian officials are livid with Nasrallah for having squandered massive Iranian investment in Hezbollah. Missing from this, however, is that the party has also managed to turn the Lebanese consensus squarely against the party. Despite Saad-Ghorayeb's assertion that the balance of power will change in Lebanon, in the past week the opposite seems to have been true, as both the government and the parliamentary majority, made up of the so-called March 14 forces hostile to Syria and critical of Hezbollah, have worked to curtail any effort by Nasrallah to transform his so-called victory into political gains. Indeed, as the costs of the war are tallied, there has been a noticeable lack of enthusiasm in Lebanon to see the war as anything but a calamity. With the party itself deeply occupied with the Shiites' rehabilitation, it has not been able to reverse this mood.

So perhaps a victory it is, but in that case Hezbollah's victory is no different than most other Arab victories in recent decades: the "victory" of October 1973, where Egypt and Syria managed to cross into Israeli-held land, their land, only to be later saved from a thrashing by timely United Nations intervention; the "victory" of 1982, where Palestinian groups were ultimately expelled from West Beirut, but were proud to have stayed in the fight for three months; the Iraqi "victory" of 1991, where Saddam Hussein brought disaster on his country but still held on to power. Now we have the Hezbollah "victory" of 2006: the Israelis bumbled and blundered, but still managed to create a million refugees, to kill over 1,000 people, and to kick Lebanon's economy back several years. One dreads to imagine what Hezbollah would recognize as a military loss.