This paper addresses problematic aspects of the concept of "terrorism" from within its present-day setting, exploring the futile conflict between "terrorism" and "counter-terrorism" which has been utilized to marginalize the discourse on democracy, justice and national liberation. The paper argues that the categorization of an event as a terrorist act based on the identity of the perpetrator, and regardless of the victims, leads to a logical fallacy. One consequence of categorizing all armed acts by non-state actors as "terrorist" is the erosion of distinctions between terrorist acts and acts of national liberation, resistance to foreign occupation and armed opposition to state violence against civilians. One conclusion of the paper is that blurring the distinctions between terrorist and legitimate acts is counterproductive to the war on terror.