INTELLIGENCE ANALYSTS woke up on September 5 to unsettling news. The government of Pakistan, they learned, had entered into a peace agreement with the Taliban insurgency that essentially cedes authority in North Waziristan, the mountainous tribal region bordering Afghanistan, to the Taliban and al Qaeda. Just ten days later, the blow was compounded when the government of Pakistan released a large number of jihadists from prison. Together, these events may constitute the most significant development in the global war on terror in the past year--yet the media have taken little notice. For four years, the Pakistani military engaged in a...