Osama Bin Laden's house has made the Turner Prize shortlist. In a tame year, Ben Langlands and Nikki Bell's virtual tour of its subterranean rooms has provoked none of the outrage inspired by the Tate's last venture into real estate: Rachel Whiteread's inside-out 'House', the 1993 winner, caused much more fuss, mostly among fans of neo-classical villas with up-and-over garage doors. Chez Osama does not compare, either, with Saddam's rat hole or Hitler's bunker. Rather, it has the look of the sort of over-priced Cretan folly featured in Channel 4's No Going Back. Just as the show's exiles renounce Droitwich or Scunthorpe, so bin Laden left his rural retreat for Kandahar and, most recently, a mountain bolthole on the Afghan-Pakistan border. Even if unaware of his entre into Britart, he cannot be ignorant of his diminishing profile in less cultural circles. Once, the West was so fixated by the power, psyche and presence of the supreme sponsor of Islamic terrorism that he was treated like a monstrous mutant of David Beckham. And then it all went quiet. In the way of a fading rocker, the world's most wanted man normally has to release a video or recording in order to attract publicity. Otherwise, the roster of international atrocities - Saudi Arabia, Turkey, Morocco, Madrid - elicits horror of al-Qaeda, and fewer references to its darkest agent. That is partly because the notion of al-Qaeda as an idea, rather than a Marks &amp; Spencer of terrorism with bin Laden at the corporate apex, is better understood. In addition, as Simon Jenkins has suggested, he has collected scalps beyond his dreams. With Greg Dyke, Piers Morgan and Jos Maria Aznar gone, and George W. Bush and Tony Blair vulnerable, few choose to emphasise bin Laden's shrewdness. Early drafts of history underline his luck. The US national commission into 9/11 has, in the past days, thrown up such evidence of rivalry between police and firefighters that bereaved families are now turning on the authorities. Former Mayor Giuliani's suggestion that New Yorkers should save their fury for the terrorists alone has been greeted coldly by the media. On the international bagatelle board, the ball unleashed by bin Laden crashes on, with George Bush's hand on the flipper as the scoreline of destruction flashes higher. A wedding party in Mukaradeeb is bombed by US troops, and 40 die. Children are gunned down by Israeli forces in Rafah. Every step to nemesis underlines the hunch that the smart political thinking is being done in a cave in the Hindu Kush, rather than Crawford, Texas. Gloom about Iraq is no longer just for peaceniks. The former head of US Central Command told the Senate foreign relations committee last week: 'We are looking into the abyss.' As the coalition continues to dig that gulf, it is time to reconsider the man who provided the spade. Osama bin Laden is nowhere near as alien as he looks. His creed, and his actions, are unthinkable, but he is also our invention. History, the nightmare from which James Joyce was 'trying to awake', is being widely invoked now, but politicians' bad dreams are not of the past. If they knew much about it, they might never have blundered into such a crucible of rebellion. The Iraq adventure was built on other foundations. An enlightened occupier would remove tyranny and enable a secular democracy, while smashing the jihadists' notion, equally far-fetched, that the world can be shaped to their vision by grand-scale massacres. Bush's war on terror, never a clash of civilizations, was really a collision of two myths. Bin Laden fitted this scenario. As Marina Warner has written, combat leg ends, detailing the struggle between a hero and a diabolical enemy, have gained new energy from the current world crisis. From Theseus, Hercules and St George to the fables of J.K. Rowling or Philip Pullman, every slayer needs a dragon. Bush's reworking of the old story of good versus evil was built round a doe-eyed destroyer repellent to all reasonable people of every faith and none, and therefore doomed. Fairytales have vicious undercurrents, as the Grimm Brothers knew. They also tarnish easily. When exposed to real life, stage coaches become pumpkins, and the mythic melts into the mundane. Saddam, a monster on the run, became a hood with a bad beard, the bleary-eyed recipient of flossing tips from a US orthodontist. His regime retains its legendary horror, but its creator, stripped of lustre, has been shuffled off to some obscure cell. No one talks about him much any more. No doubt bin Laden, exemplifying Hannah Arendt's 'banality of evil', would seem equally diminished by captivity. He would not, obviously, be more wholesome. In reality, pathologically murderous tyrants are fairly irredeemable. The etiquette of fantasy, a little kinder, decrees that, while the bad mostly remain so, there is some capacity for role reversal. In Beauty and the Beast, the villain is transformed by the heroine's charm and beauty. In the latest parody unveiled at Abu Ghraib, the 'beast' is an Iraqi prisoner, his peaceful face belying a grim death. The 'beauty', gloating as rubber-gloved fingers dance above his corpse, is Sabrina Harman, a young American guard. The heroes have become the monsters, in a twist made possible by the fact that the good guys, or their string-pullers, had no automatic claim to virtue. Bush and Blair's error, noticeable to any Listen with Mother audience, was not to notice that compromised regimes make poor fairy godmothers. The idea of Saddam as too monstrous to exist never sat easily with the West's role in his survival. We are seeing now what happens when interventionists substitute their own mythology for other people's histories. Such distortions turn dangerous zealots into icons. A poll conducted for the Iraq Center for Research and Strategic Studies, reports that Moqtada al-Sadr, the Shia fundamentalist regarded until recently as a low-grade thug by his fellow-believers, is suddenly the second most popular figure in Iraq. No wonder Osama bin Laden is chiefly mentioned as a 7/2 shot for the Turner. The West wants to downplay his role in a soured crusade. And still, despite the evidence of failure, new fables emerge. Against all appearances, the story goes, the war on terror is being won. In Iraq, the magic wand of handover will turn today's debacle into tomorrow's democracy. It is time to go back to chapter one. Bin Laden, far from being a storybook lord of darkness assured of a sticky end, was, and is, a ruthless political foe well on the way to fulfilling his stated aims. The US has pulled its troops out of Saudi Arabia, as he wished, and the regime is unstable. A polarised world, his number one ambition, looks more inevitable by the day. A new Iraqi leader is about to be named, and a new security council resolution tabled. What happens next will determine the future of Iraq, the region and perhaps the world. The fantasy of Osama bin Laden may be forestalled only if the US coalition, in thrall to myth, can finally sift the real from the imagined.