Iraq is one of the world's least likely sites for a transition to democracy. Virtually all of the classic preconditions for liberal government are lacking. And yet, with its decades-long despotism shattered, Iraq is now better positioned than any of its Arab neighbors to become a democracy in the next few years. That achievement, however tentative and imperfect, would ignite mounting aspirations for democratization from Iran to Morocco.

On the ground in Iraq, the picture is quite different from the news we see at home. Yes, there are bloody acts of terrorism every few days. But it is not Iraqis who are staging the suicide bombings. Increasingly, Iraqis are fed up with this violence and turning in the criminals who are waging it. The dwindling ranks of saboteurs and dead-enders, in cahoots with al Qaeda and other jihadists, can blow up buildings and kill people. But they cannot rally Iraqis to any alternative political vision. They can only win if we walk away and hand them victory. Fortunately (for now), the administration, Congress, the American people, and key elements of the international community are not wavering. They are supporting an ambitious agenda for democratic transformation and reconstruction.

Led by liberal-minded Iraqi drafters designated by the Iraqi Governing Council, work is nearing completion on a Transitional Administrative Law that will structure government and guarantee rights from the transfer of sovereignty on June 30 to the seating of a democratically elected government under a new constitution. With its provisions for civil liberties, due process, separation of powers, devolution of power and other checks and balances, this will be the most liberal basic governance document anywhere in the Arab world.

Civil society is springing up. Associations of women, students, professionals,journalists, human-rights activists and civic educators, along with independent think-tanks, are building organizations, holding conferences and crafting the grant proposals that will enable them to work for democracy on a larger scale. In one university, a team of eight translators is at work full time translating works on democracy into Arabic.

Iraqi women -- organized in part into an Iraqi Higher Women's Council -- have come together rapidly across ethnic, regional and ideological lines to craft an impressive agenda for political inclusion and empowerment of women. Some new civic associations -- including a gifted group of democratically minded young people with skills in the visual arts -- are helping the Coalition Provisional Authority to produce an ambitious civic education campaign. Once each week, for the next several months, this campaign will distribute throughout Iraq a million leaflets, each batch explaining in simple terms a different concept of democracy: human rights, the rule of law, free and fair elections, participation, accountability, transparency, minority rights and so on. These will be reinforced with similar messages on radio and television.

Iraqi democrats of all ages believe passionately in the need to educate for democracy, from both secular and religious perspectives. They stress that democracy cannot be secure until "we get rid of the little Saddam in each of our minds." Hundreds of Iraqis are now being trained to facilitate "democracy dialogues" that will bring Iraqis together to talk about (and practice) these concepts of democracy. During the next year and a half, these town hall meetings will also provide a forum for Iraqis to participate in the drafting of their permanent constitution.

Over the next few months, Iraq will witness the most intensive flow of economic reconstruction and democracy-building assistance of any country since the immediate aftermath of World War II. New construction alone will dramatically reduce unemployment. Before long, a new Iraqi electoral administration will begin preparing the country for its first free and fair elections. And Iraqi political parties will receive training in democratic organization,recruitment, communication and campaigning.

The quest for a decent and democratic political order could founder on the shoals of intolerant, exclusivist identities. But recent developments generate cause for hope. In the negotiations on the transitional law, contending groups are working hard with one another (and with the CPA) to find formulae that will manage their differences and give each section of Iraq a stake in the new system. Public opinion polls show that almost half of Iraq's Muslims identify themselves not as "Sunni" or "Shia" but as "just Muslim." Fewer than one in five favor a party ideology that is "hardline Muslim."

Political leaders are beginning to reach out across traditional divides. A leading moderate Shiite Islamist on the Governing Council, Mowaffak al-Rubaie, recently delivered an eloquent public endorsement of a federal system for Iraq. Denouncing the long history of oppression of the Kurds, as well as other peoples, he declared, "Centralization is the source of our division. Either we engage in a bitter conflict over power or we devolve power to the fringes of society."

One of the most serious problems has been the deadlock over the Nov. 15 plan for indirect elections (caucuses) to choose a Transitional National Assembly(TNA). Grand Ayatollah Ali Sistani and most of his devoted Shiite followers have instead demanded direct elections before the handover of power on June 30. However, with the recent U.N. fact-finding mission to Iraq, led by Special Representative Lakhdar Brahimi, a compromise resolution now seems imminent: direct elections for a TNA, but only by a timetable that would enable the country to attain the minimum administrative, security, technical and political conditions necessary for free and fair elections. Most experts think it will take at least nine to 12 months to prepare elections that will not be perfect but at least, in Mr. Brahimi's words, "reasonably credible."

It is going to take a lot longer than a year to build democracy in Iraq. Even after a new government is elected under a permanent constitution, the country will need extensive international assistance for many years to come to strengthen central and local government capacity, support civil society, and help fight crime, corruption, and terrorism.

Americans are not generally a patient people. We stayed the course to victory for four decades during the Cold War, but when it comes to nation-building, our impulse is to get in and get out quickly. That will not work in Iraq.

A democracy can be built in Iraq. No one who engages the new panoply of associations and parties can fail to recognize the democratic pulse and possibilities. But these new institutions and ways of thinking will only take root slowly. In the early years, they will be highly vulnerable to sabotage from within and without. The overriding question confronting the U.S. -- as the inevitable leader of a supporting coalition for democracy -- is whether we have the vision and the backbone to see this through.

A failed transition in Iraq will not see the country slip back into any kind of "ordinary" Arab dictatorship. The power vacuum in the country is too thorough, and the well of accumulated grievances too deep, to allow for that.If we withdraw prematurely and this experiment fails, religious militants, political extremists, external terrorists, party militias, criminal thugs, diehard Baathists and neighboring autocracies will all rush in to fill the void. Iraq could then become a new base for international terrorism -- Afghanistan with oil -- or fall victim to a regionally driven civil war, a hellish combination of Lebanon and the Congo. Any such scenario would suck the hope for democratic progress in the Middle East into its destabilizing vortex.

The thugs and terrorists are betting that if they generate enough terror and kill enough Americans, we will cut and run, as in Lebanon and Somalia. This is the one thing that Iraqi democrats fear more than anything else. I have repeatedly assured them, from my own conviction, that we will not abandon them. I hope I will not be proven wrong. Nothing in this decade will so test ourpurpose and fiber as a nation, and our ability to change the world for the better, as our willingness to stand with the people of Iraq over the long haul as they build a free country.

Russia's richest oilman and former head of Yukos Oil, Mikhail Khodorkovsky, sits in jail as a Moscow City Court denied him bail in January. Proponents of renationalizing Russia's oil reserves continue to rejoice, as legal proceedings have started against some of the former top executives at Yukos for tax evasion.

Those events follow December's Duma elections in which the supporters of Russia's privatization program of the 1990s were dealt a decisive blow. With Mr. Khodorkovsky behind bars since October, hopes of the Putin government reaping a larger share of windfall profits from Russia's oil companies and redistributing them among the masses continue to grow.

Yet the survival of private oil companies in Russia is critical for sustaining and pushing forward broad-based economic and energy sector reforms. A return to state ownership could lead Russia down a similar path to other oil-rich states in the developing world that are plagued by weak institutions, centralized growth and unbalanced growth.

The government's recent freezing of billions of dollars of Yukos stock sent the

Russian stock market tumbling. It may have marked the first step toward redefining business-state relations ? through either a renationalization of the oil industry or unbridled government access to the oil companies' profits ? in directions dangerous to economic stability.

Russia is unique among resource-rich countries in the developing world, since it has privatized its oil sector. The oil sector in most other developing countries, such as Nigeria, is state owned. As a result, the Russian state doesn't accrue revenue from its abundant oil reserves directly but, rather, must negotiate with private domestic owners to receive its cut.

The existence of the private oil companies is responsible for spurring economic reform in Russia. Over the last few years, they have pushed for stable property rights, transparency, corporate governance and a new tax regime ? in order to maximize their profits, attract foreign partners and secure their investments over the long term.

Yet business-state relations in Russia are at an all-time low. A power struggle between Mr. Khodorkovsky and President Vladimir Putin may lie behind Russia's private oil sector troubles. Specifically, Mr. Khodorkovsky's foray into politics challenged an unofficial agreement between Mr. Putin and Russia's powerful business elite, known as the oligarchs: If the Russian oligarchs stayed out of politics, the Russian government would stay out of their businesses. By providing financial support for opposition political parties and revealing his own presidential ambitions, Mr. Khodorkovsky overstepped the boundaries of what was considered the proper role of the Russian business community. In many ways, Russia's struggle with Yukos and Mr. Khodorkovsky is analogous to the U.S. government's battle with John D. Rockefeller at the turn of the 20th century.

The Putin administration's legal actions against Yukos are driven primarily by its desire to prevent the giant from monopolizing the oil industry and thereby amassing greater political power. The recent collapse of the merger between Yukos and Sibneft is seen as a giant step toward curtailing Yukos' power. The Roosevelt administration was motivated by similar concerns when it sued Standard Oil in 1906 for violating the Sherman Antitrust Act. In particular, it helped to define the respective roles of private business and government in the United States that have propelled its unprecedented economic growth -- the former as responsible property holders and reliable taxpayers and the latter as the chief regulator that protects property rights and ensures fair competition.

The Russian government's confrontation with Yukos is likewise a single episode in a drama that still is unfolding but ultimately could serve to bolster Russia's transition to a market economy by determining both the appropriate role of the state in the economy and of businessmen in politics.

Erica Weinthal is a visiting fellow at Stanford University's Institute for International Studies. Jones Luong is an associate professor of political science at Yale University.

With the next round of presidential primary elections coming up Tuesday, billboards are popping up across South Carolina with a political message that might resonate with any Democratic contender: "Lost your job to free trade and offshoring yet?"

The issue of employment is high on the agenda in this political season. President Bush can take credit for an economic recovery, but he is vulnerable when it comes to jobs. The stock market is up, but job growth is dismal -- only 1,000 jobs were created in December, a fraction of the 300,000 new jobs the Bush administration projected.

As the temperature rises over disappointing job growth, the practice of "offshoring" -- sending jobs overseas to cheap labor markets -- has worked its way into the rhetoric of the presidential campaign trail.

Sen. John Kerry of Massachusetts, the Democratic front-runner after victories in Iowa and New Hampshire, has been denouncing the Bush administration for rewarding "Benedict Arnold CEOs" who move "profits and jobs overseas." Howard Dean, the populist former governor of Vermont, has told his audiences that America needs a president "who doesn't think that big corporations who get tax cuts ought to be able to move their headquarters to Bermuda and their jobs offshore."

Significance unknown

There's no consensus among economists and experts over the long-term significance of the trend toward offshoring, jargon that combines the words "offshore" and "outsourcing." It generally refers to the export of white-collar jobs in information technology and other professional fields such as accounting and banking services.

But blue-collar workers have borne the brunt of the pain. South Carolina, a key battleground state for the Democrats, has been hit hard by overseas outsourcing in the textile industry, and has lost about 64,000 manufacturing jobs over the past three years, according to the American Manufacturing Trade Action Coalition, the Washington-based lobbying group that paid for the billboard ads.

Offshoring statistics are fuzzy at best. One report estimates that 300,000 of the 2.4 million jobs lost since the beginning of the recession in 2001 can be attributed to offshoring. Future projections are all over the map: One predicts 3.3 million service-sector jobs will go overseas in the next 15 years, while a University of California-Berkeley report estimated 14 million U.S. service jobs are at risk.

"I think the issue is going to be exaggerated and manipulated by both sides in the political debate," said Dean Davison, an analyst at the Meta Group, a technology research and advisory firm in Stamford, Conn. "There are distinct differences of opinion in what corporations should do to take responsibility, and what kind of public policy should be implemented."

Legislation has been introduced in Congress to address the issue, some of it intended to stir up debate rather than win passage. Kerry introduced a bill in November that would require call-center operators to disclose their physical location to consumers who phone in for customer service or technical help, ostensibly to discourage U.S. companies from moving such jobs overseas.

On the other end of the ideological spectrum, Sen. Craig Thomas, R-Wyo., won passage for his amendment to the Senate's omnibus appropriations bill last week that bans some federal contracts to vendors using offshore labor. News of this caused a furor over the weekend in the New Delhi press, on the assumption the lucrative Indian industry in back-office contracting operations was threatened by congressional sanctions. But that was a false alarm.

Few firms affected

The ban applies only to a relatively small number of U.S. companies bidding for contracts under a Bush administration program to privatize certain federal government services, such as architectural design work, explained John Palatiello, a Washington-based lobbyist representing domestic companies bidding for privatization contracts. The strategy, he said, was to prevent federal unions from claiming their jobs were being sent overseas.

"The motivation wasn't to stop offshoring per se," Palatiello said, "but rather to get it out of the debate on privatizing federal services."

Antipathy to offshoring has deep political roots. Manufacturers in the toy and apparel industries have gone overseas for decades to produce their goods from contractors using cheap labor. Gradually, electronics makers and Silicon Valley's computer brands all followed -- and more recently software and professional services.

Presidential wannabe Ross Perot immortalized this inexorable force of globalization as the "giant sucking sound" from Mexico when he campaigned against the North American Free Trade Agreement in the 1992 election. Twelve years later, many of those Mexican manufacturing jobs have moved to China.

The fuss over job loss in this presidential election year is of particular concern in India, the nation that is benefiting most from the offshoring boom. A Jan. 19 article in the Times of India, headlined "Why is the U.S. running scared?" captured the dismay: "The issue has become a political hot potato. It has even entered the presidential debate, with Democrat Howard Dean attacking his rival contender Wesley Clark for being soft on it. Why the big hoopla over outsourcing?"

Rafiq Dossani, a consulting professor at Stanford University's Asia-Pacific Research Center, published a study of companies moving operations to India last year. He is a proponent of the business efficiencies of offshore labor markets. But even he is concerned about the long-term political consequences.

"This may be a problem in the minds of some politicians now, even before there's been sufficient analysis of what is going on," said Dossani, a New Delhi native. "But I think over the next five years this is going to have a huge impact. The range of jobs that can be offshored is mind-boggling."

Elections year is arriving in a few weeks, greeted with anxiety by some and as a part of a necessary transition by others. A long-time scholar on Indonesia, Donald K. Emmerson of the Asia/Pacific Research Center at Stanford University, shared his views recently on the country's struggle towards reform. The following is excerpts of the interview with the professor, who is writing What is Indonesia?: Question: Politicians, experts and the public differ on how they view Indonesia's achievements in the reform process. Your comment? Answer: Most prominent have been the political reforms: Four constitutional amendments, decentralization, laws on elections, and so on. But how will these work out in practice? That is still unclear. Economic reforms, by comparison, have lagged. And what about corruption? Perhaps the least progress has been made on that front. What are key areas that governments after Soeharto have yet to deal with in the transition process? One could make a list. But another response would be to note the gap between the laws already on the books and their implementation. It will not be easy. But doing so will be crucial for success in the transition process. How would the results of next year's elections affect the process of reform? Optimistically, one can picture a healthy concentration of legitimacy at the top of the system, enabling decisive remedial policies. Pessimistically, one can picture a struggle between a popularly mandated presidency and a popularly mandated legislature to the detriment of effective policies. I slant toward optimism. I doubt that the next president and the next DPR (legislature) will be eager to repeat the circumstances in which president Abdurrahman Wahid was removed from office. Whatever happens, 2004 will be a "Year of Voting Frequently" -- at least two elections (April, July) and possibly three (if a second-round presidential vote in September becomes necessary). Let's hope for the best. What are the basic conditions for Indonesia to succeed with reform and to bring the country of 220 million people out of the current crises? When I was in Jakarta in August, the answer I heard most often from Indonesians was: Leadership. Could there be a whiff of nostalgia for Soeharto's leadership in that response? Among the multiple conditions for success in overcoming the current difficulties, one of the most important will be the actual performance of democratically chosen governments, including the one scheduled to emerge from next year's elections. It is, unfortunately, possible that democracy as a method can succeed but wind up discredited by the failure of resulting governments to provide security, ensure justice, reduce poverty, and so on. And there is a sense in which the competitive electoral process itself tends to raise public expectations as to what can and should be done by government. But I am hopeful. Experience of governmental transition often suggests two options, either success and an emergence of democracy, or failure and a return to a militaristic regime. How do you see this? There are not "always two options" in such transitions. Within the category "democracy" alone there are many types and gradations. As for militarism, it is striking how much the image and therefore potential leverage of the military has changed from the immediate post-Soeharto period. Could it be that by not intervening blatantly, army leaders have built up enough credit to allow for subtler forms of influence? Not to mention the more security-conscious atmosphere since Sept. 11, 2001 and Oct. 12, 2002 (terrorist attacks in the U.S. and in Bali respectively). Interesting, too, is the increasing mention of men with army backgrounds as possible presidential candidates next year. But just as democracy is internally diverse, so should we avoid putting everyone who has had an army career in a single box labeled "militarist." I live in California. The voters of my state just fired one governor and hired another. I may be naive, but I hope that as governor, Arnold Schwarzenegger will not treat complex and intractable socioeconomic problems in the same way that the Terminator treated enemy robots! In any case, it is far too early to predict the outcome of any of next year's national elections in either Indonesia or the U.S. Whatever the result, let's hope it's for the better in both countries.

Question: Politicians, experts and the public differ on how they view Indonesia's achievements in the reform process. Your comment? Answer: Most prominent have been the political reforms: Four constitutional amendments, decentralization, laws on elections, and so on. But how will these work out in practice? That is still unclear. Economic reforms, by comparison, have lagged. And what about corruption? Perhaps the least progress has been made on that front. What are key areas that governments after Soeharto have yet to deal with in the transition process? One could make a list. But another response would be to note the gap between the laws already on the books and their implementation. It will not be easy. But doing so will be crucial for success in the transition process. How would the results of next year's elections affect the process of reform? Optimistically, one can picture a healthy concentration of legitimacy at the top of the system, enabling decisive remedial policies. Pessimistically, one can picture a struggle between a popularly mandated presidency and a popularly mandated legislature to the detriment of effective policies. I slant toward optimism. I doubt that the next president and the next DPR (legislature) will be eager to repeat the circumstances in which president Abdurrahman Wahid was removed from office. Whatever happens, 2004 will be a "Year of Voting Frequently" -- at least two elections (April, July) and possibly three (if a second-round presidential vote in September becomes necessary). Let's hope for the best. What are the basic conditions for Indonesia to succeed with reform and to bring the country of 220 million people out of the current crises? When I was in Jakarta in August, the answer I heard most often from Indonesians was: Leadership. Could there be a whiff of nostalgia for Soeharto's leadership in that response? Among the multiple conditions for success in overcoming the current difficulties, one of the most important will be the actual performance of democratically chosen governments, including the one scheduled to emerge from next year's elections. It is, unfortunately, possible that democracy as a method can succeed but wind up discredited by the failure of resulting governments to provide security, ensure justice, reduce poverty, and so on. And there is a sense in which the competitive electoral process itself tends to raise public expectations as to what can and should be done by government. But I am hopeful. Experience of governmental transition often suggests two options, either success and an emergence of democracy, or failure and a return to a militaristic regime. How do you see this? There are not "always two options" in such transitions. Within the category "democracy" alone there are many types and gradations. As for militarism, it is striking how much the image and therefore potential leverage of the military has changed from the immediate post-Soeharto period. Could it be that by not intervening blatantly, army leaders have built up enough credit to allow for subtler forms of influence? Not to mention the more security-conscious atmosphere since Sept. 11, 2001 and Oct. 12, 2002 (terrorist attacks in the U.S. and in Bali respectively). Interesting, too, is the increasing mention of men with army backgrounds as possible presidential candidates next year. But just as democracy is internally diverse, so should we avoid putting everyone who has had an army career in a single box labeled "militarist." I live in California. The voters of my state just fired one governor and hired another. I may be naive, but I hope that as governor, Arnold Schwarzenegger will not treat complex and intractable socioeconomic problems in the same way that the Terminator treated enemy robots! In any case, it is far too early to predict the outcome of any of next year's national elections in either Indonesia or the U.S. Whatever the result, let's hope it's for the better in both countries.