Could Colonel Gaddafi not only survive the current uprising in Libya but actually win? It's the fear that increasingly haunts Western governments. Having committed themselves to outright calls for his ousting, they're now having to ramp up the threat of military intervention to prevent the worst.

The odds on Gaddafi's survival are still against, but it could happen. No one should be in any doubt of that. Weathering the first shock of the uprisings last month, the Libyan leader has rallied his security forces and those troops still loyal to him and has undoubtedly regained some of the military initiative. He has the weapons. He has the money. And he has sown the thought of failure among his opponents.

The world cannot "stand aside" and let Gaddafi "do terrible things to his own people," declared an increasingly helpless (and hapless) David Cameron this week. No doubt we can't, but it's not as easy as that.

Western leaders keep underestimating the Libyan dictator. He may be a fantasist, he may behave and act as if he was in opera buffa. But he hasn't survived in power for more than 40 years by being a buffoon. He is shrewd about power, clever about dividing his rivals (and his own family) and ruthless in his removal of opponents.

If he was the complete tyrant of outside accusation, and was now using the full force of his weaponry and airpower to wage war on his own people, questions of outside intervention might be much clearer. But he is too clever for that. His worst moment was at the beginning. Had the revolutionaries been able to sustain the momentum, he would have gone, like Hosni Mubarak in Egypt, and quickly. But his opponents didn't have the organisation, or the weaponry, or the degree of support in Tripoli, they needed.

Since then Gaddafi has moved quite cautiously – gauging the depth of his support, the strength of the opposition and the will of the international community, and then developing his tactics in consequence. He has lost the east. He hasn't yet been able to regain the oilfields and the whole of the west. He knows, even in his most delusional moments, that he can't really afford to totally oppress his people or cause too many civilian casualties if his authority among his own people is to be maintained, and recognition by the international community regained.

Hence he has upped the ante of heavy weaponry and bombing only very gradually. Which is not to say that – desperate to turn the military tide and end the revolution decisively – he won't do so now. He's perfectly capable of it. But if the outside world hopes to see massacres that will turn the stomachs of even the hard men of Beijing and Moscow, they may well be disappointed.

Which leaves the West in a dilemma. At the moment the position in Libya is in balance. The Libyan leader doesn't quite have the strength to win outright. It's very difficult to see him reconquering the eastern provinces, whatever his superiority in military hardware. International sanctions leave him confined to his own country, and not even all of it. But without a development that could change the balance of advantage for either side, he does look very difficult to oust.

Which is where Washington, London and Paris (although not necessarily all of Europe) come in with all the talk of no-fly zones and arms supply to the rebels. You can see the temptation. Even if the Libyan regime has not exercised to the full its air advantage, the threat of air attack has a huge impact on the morale of civilians and solders on the ground. The sight of Libyan jets being blown from the sky by Nato forces or being forced back into their bunkers would do much to stiffen revolutionary resolve.

Which is the reason we shouldn't do it. It is not our job to intervene to determine the outcome of internal conflict. We don't have UN sanction. We can't control the course of events on the ground. We are only too prone – as we can see from William Hague and the Foreign Office's farcical helicopter trip to deal with the new powers – to get things wrong. And in this case, if we ended up having to take out Libyan air defences and shoot their planes down, we might only confirm Gaddafi's accusation that this is all a neo-colonialist plot from the outside.

For the moment we're best doing what we're already doing, which is to squeeze the regime in financial and commercial terms. Victory for Gaddafi is meaningless unless he can trade with Europe and find an outlet for his oil.

Give the revolutionaries cash on the sly if you want. The £100m in Libyan notes that we sequestered from a German ship en route to Libya last month would do very nicely. But keep off the military posturing. We've done that, got the T-shirt, and it nearly always proves self-defeating.

It's Egypt where it really matters

While all eyes are on Libya, it is neighbouring Egypt where the success or failure of this wave of protest will really be decided. Results so far are mixed. The tainted Ahmed Shafiq has gone as prime minister. His replacement, Essam Sharaf, looks a much better figure to steer the country to the elections, which now have a firm timetable.

On the other hand, the harassment dealt out by men to the women demonstrating for better rights on International Women's Day suggests Egyptian society remains unbalanced. A novel feature of this revolution is the presence of women at the forefront of protest in almost every country. They – and Egypt – could do with our support. Libya may have turned more violent, but in the wider sweep of affairs it's just a sideshow.

a.hamilton@independent.co.uk