The War on Terror (as we are not supposed to call it any more) is both the elephant in the room and the MacGuffin.
The government know that most people do not think there is a real threat to any degree or of any variety of difference from the one which has always been there and always will be.
The government knows we know they are lying, so the poor things who are given the job of making the lie plausible obviously start to look more stupid than is their natural condition, as they have to try to make the fantasy credible.
It is just like watching a boring film with a bad plot and script, acted by useless actors, who are out of their depth in anything beyond the village-hall amateur-dramatics production.
However, it is imperative for the government to maintain the fear and the simmering hysteria in order to be able to pursue and push through repressive legislation.
Since this is apparently failing, expect there to be some concoctions of threats and exaggerations of the capabilities of these otherwise hazy and murky terrorists in the months ahead.
New Labour will never give up the extra powers which will ride on the back of terrorism. It is the best excuse they will ever have to seize absolute power without a military coup, with people being almost willingly duped, as long as they keep saying "Bang!"
The threat of the undefined, vague plot is what drives the "narrative", the plot. It just has to be mentioned in passing, referred to obliquely and kept simmering to become an unquestioned element of our collective culture and psyche.
We will get to the stage where we are eternally grateful for being protected from something which never really existed.
We will love the feel of the boot stamping on our faces because we will think that it must be better than the one thing which we all know must be worse.
Terrorism is also Bertrand Russell's Teapot in Space:
If I were to suggest that between the Earth and Mars there is a china teapot revolving around the sun in an elliptical orbit, nobody would be able to disprove my assertion provided I were careful to add that the teapot is too small to be revealed even by our most powerful telescopes.
The government will always be able to trump us with the, "Ah, yes, but you are not privy to what we know" excuse.
Governments are not afraid of terrorism. It is simply the bogeyman du jour, which they have to use to keep the one thing of which they are truly afraid quiet and passive:
The People.
"...I saw a little boy, perhaps ten years old, driving a huge carthorse along a narrow path, whipping it whenever it tried to turn. It struck me that if only such animals became aware of their strength we should have no power over them, and that men exploit animals in much the same way as the rich exploit the proletariat."
George Orwell on what inspired Animal Farm.