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.

JAKARTA, Indonesia - Even here in Indonesia, where there is a strong tradition of tolerance, there is a war going on between radicals and moderates for Muslim hearts and minds. You can see that war in the police armed with automatic rifles, manning anti-vehicle barriers in front of my hotel and every other large Western-linked building in Jakarta. In August, Islamist terrorists blew up a suicide bomb in front of the Marriott Hotel here and are threatening to hit a long list of targets that includes schools attended by Western children. These are the same bombers who killed more than 200 people in Bali last November. The war is being fought on Indonesia's campuses, particularly secular universities where students are intrigued by radical Islam. Activists from Indonesia's liberal Islamic movement disdainfully call them "born-again Muslims'' and hold provocative campus forums with titles like ``There is no such thing as an Islamic state.'' At a religious boarding school in Yogjakarta, one of tens of thousands of pesantran spread across this vast country, they teach that the Koran is to be understood, not just rotely chanted in Arabic. "We are not frozen in those Koranic verses,'' director Tabiq Ali said. ``Interpretation depends on our own thinking.'' You can even see the war in a steamy best-seller about a Muslim woman whose faith was shattered by the hypocrisy of Islamic radicals who preached righteousness while sleeping with her. The subject of the book, a Yogjakarta university student, now fears retribution. This is a war we cannot afford to see lost. Indonesia is not only the largest Muslim nation in the world, but it could also become a base for radical Islam to spread throughout Southeast Asia. Alternately, Indonesia's struggling democracy could set an example for others in the Muslim world. "You have all the ingredients that could make this place the first Muslim majority democracy that works,'' says Sidney Jones, a leading expert on Islamic terrorism in Southeast Asia. ``And you have all the dark forces eager to push Indonesia in the opposite direction. The question is where does it come out.'' What can the United States do in this war? So far our efforts have focused almost entirely on aiding the pursuit of Jemaah Islamiyah, a Southeast Asian terrorist group linked to al-Qaida. Initially, the government denied it had a home-grown problem and was wary of seeming to follow American dictates. But after the shock of the Bali and Marriott bombings, the authorities have captured many of the terrorists and successfully prosecuted them. Ultimately, however, Indonesia needs to build a modern society. While the rest of Asia, from India to Vietnam, vibrates with the energy brought by the information technology revolution, Indonesia feels like a stagnant backwater. Its economy limps along, plagued by poverty and corruption. The key is a woefully underfunded educational system. Unlike Pakistan's madrassah system, the religious schools are integrated into the state system, and many offer a secular curriculum along with religious teaching. But in the pesantran that I visited, one in a city center and the other in the countryside, I found classrooms that offered little more than whitewashed walls and wooden desks. Computers are few in number and science labs primitive, if even existing. State schools are better equipped but still backward. Why not wire every school to the Internet, build science labs and, most importantly, train teachers? A recent report on U.S.-Indonesia relations by the U.S.-Indonesia Society and Stanford University's Asia-Pacific Research Center urged a significant effort to fund education. President Bush picked up on that idea, announcing a U.S. educational aid program during his October stopover here. But he alarmed Indonesians by tying the initiative to the war on terror. The U.S. ambassador had to make the rounds assuring Indonesians that the U.S. was not out to dictate curriculum in its religious schools. More troubling is the pathetic amount of money he offered -- most of it funds shifted from existing programs -- only $157 million over 6 years. Says former Ambassador Paul Cleveland, who heads the U.S.-Indonesia Society: "You would get more democracy out of $1 billion spent in Indonesia than $20 billion spent in Iraq.''

WASHINGTON - Take Jamey Bennett. When he first began selling his LightWedge personal reading lamp a few years ago, everything was made in China. Then the headaches began: Numerous conference calls in the middle of the night. Shipment delays because of a dockworker strike in California. And many problems related to language differences. The problems became so acute that Bennett transferred the manufacturing to Virginia two months ago.

"Managing a significant manufacturing effort in China remotely with a business of our size is very difficult," Bennett says.

"Firms that just believe that this is going to be simple ... very often get burned," says Martin Kenney, a University of California-Davis professor who recently completed a study of firms doing work in India. "This is a very, very complicated business activity, and there are a thousand ways it can go wrong."

Examples of the perils of moving work abroad keep cropping up. Last month, Indiana said it was halting a contract with an Indian company to upgrade its computer system for its unemployment benefits office after politicians and others started an uproar about the work leaving the state, not to mention the country.

Dell recently shifted some of its computer call center work from India. After moving some of its appliance call center work to India a few years ago, GE in May moved the work back to the Phoenix area. It found that workers in India, who don't own many appliances, couldn't relate to the customers' problems. U.S. workers can take more calls because they resolve issues faster, boosting productivity.

Highlighting how sensitive the topic of moving work outside the USA is, spokesmen for Dell and GE declined to comment. But Dell CEO Michael Dell recently told USA TODAY his company sticks with U.S. employees for many jobs for their skills.

"Most of our (employees) are in the U.S., and it's probably going to remain that way for a long time," Dell said. "The fear of jobs moving from one country to another, at least in our case, is probably greater than the reality."

That doesn't mean the trend will go away. Repetitive and low-skilled manufacturing and services work will likely continue to be sent abroad. But some firms' experiences suggest the hysteria about work going outside the USA may be overblown.

'Lost in the translation'

Several major issues confront businesses when they shift manufacturing outside the USA:

?Culture, language. U.S. firms are finding the do-it-now culture of the USA and some American tastes don't easily translate overseas.

Wells Fargo chief economist Sung Won Sohn says companies he has come in contact with have complained of productivity problems. A U.S. furniture importer has had a tough time persuading his overseas manufacturers to "distress" furniture, a popular style in some U.S. markets that evokes an antique feel. His workers don't see the point in taking a new product and making it look older.

And there are language issues. Although many people overseas speak English, phrasing and other issues can crop up when English is not the first language.

"Quite a bit was sort of lost in the translation," LightWedge's Bennett says.

A Dell spokesman told the Associated Press the company was shifting some corporate clients from Bangalore, India, to Texas, Idaho and Tennessee after receiving service complaints.

Gary Beach, publisher of CIO Magazine, recently was on the phone with a Dell agent in Bangalore for 11/2 hours after having problems with a notebook computer. "The guy was very polite, but he had to go to his supervisor after 65 minutes," Beach says. "It was a change in power options in your control panel. You had to switch to 'always on.' ... Duh!"

-Expertise. Many countries are churning out well-educated engineers, scientists and others while some foreigners are coming to the USA to be educated and then return home. But such education often does not replace experience.

Bethlehem, Pa.-based Air Products and Chemicals makes liquefied natural gas machinery in Wilkes-Barre, Pa. The firm has no plans to move the factory, even though none of the products is sold in the USA.

"We have spent a number of years building up this plant, making major investments and also building up a skilled workforce," spokeswoman Kassie Hilgert says. "Both the workforce and the technology are not transferable to anywhere else in the world."

Kenney notes that some of the businesses overseas are so new that there are few trained managers who know how to properly oversee both service and manufacturing operations.

-Shipping. Some manufacturers are finding the time, money and extra regulatory burdens associated with shipping products to the USA prohibitive. Those issues were compounded after the Sept. 11 attacks, because import regulations were strengthened.

Sanjay Chandra, co-founder of American Leather, a furniture producer in Dallas, does all manufacturing in-house. With hundreds of combinations of styles and fabrics and other attributes to choose from, the firm waits to produce the furniture until orders are received and prides itself on getting the products shipped out in a matter of weeks. Shipments from China are estimated to take about six weeks, after production, according to manufacturers.

"Special order, quick ship doesn't really lend itself to foreign manufacturing because of the time issues," Chandra says.

The shipping headaches may grow. Under rules starting this month, importers are required to electronically send lists to the government in advance of shipments, to help Customs and border protection agents identify high-risk cargo that deserves special attention because of terrorism fears. That is upsetting some importers who say the lists will cost them time and money if there are delays at the borders.

The challenges of importing were also highlighted a little more than a year ago when dockworkers in California were locked out during a labor dispute, stranding Asian imports at sea. The 10-day action that led to the closure of 29 docks was estimated to cost the U.S. economy up to $2 billion a day and forced some manufacturers who rely on foreign parts to shut down.

Keeping supplies flowing

The dockworker strike persuaded Alan Schulman, owner of Glentronics, to stick to his supply method. Schulman, who sells battery-operated, backup sump pumps, has suppliers both overseas and near his headquarters in Wheeling, Ill. When the dock strike started, he was able to switch to his local supplier and continued without any interruptions.

"I always want Plan B."

There are numerous other issues that U.S. firms are bumping into when it comes to working abroad. Many companies find themselves holding more inventory in case there is a supply disruption. That means added costs, because more inventory requires extra space, financing and, sometimes, employees.

"Supply Chain 101 says the most important thing is continuity of supply," says Norbert Ore, who organizes a regular survey of manufacturers for the Institute for Supply Management. "And when you establish a supply line that is 12,000 miles long ... you have to weigh the costs of additional inventory and logistics costs vs. what you can save in terms of lower costs per unit or labor costs."

Shipping business abroad also means relinquishing some control, which for some business owners is easier said than done. And, unless you own the facility and have an employee on-site, fixing any problems that require in-person work involves a lot of time and money. The contracts to set up facilities abroad can also be lengthy, involving months of negotiations and lawyer and consultant costs.

Regional conflicts, such as the periodic clashes between India and Pakistan, also must be considered.

Some move despite challenges

Despite all those issues, for some, moving work abroad is the way to go.

Wall Street giant Goldman Sachs estimates that of the 2.7 million U.S. factory jobs cut in the last three years, 1 million have been relocated abroad.

A wide range of service jobs, such as customer call centers, medical billing and architectural drafting, are also moving outside the USA. In the next 15 years, U.S. employers will move about 3.3 million white-collar jobs abroad, Forrester Research predicts.

The main motivation: money. UC-Davis' Kenney and co-author Rafiq Dossani of Stanford University estimate a call center worker who costs clients $12.47 an hour - including equipment and other costs - in Kansas City costs $4.12 an hour in Mumbai, the Indian city formerly known as Bombay. Indiana originally went with the Indian company after its bid for the computer work came in at $15 million, $8 million below the closest competitor.

After working in Asia and Europe for 15 years, Philip Ison, president of Ison International, bought an upholstery factory in Tennessee in 1999 and shut it down after two years.

"There was just no profit margin to be made," he says. "With all of the headaches between health insurance, workman's comp, OSHA, you can just keep on going down the list. It's not economically feasible to produce something here that takes a lot of labor."

Ison now produces furniture in Romania and ships the products to Norfolk, Va., before selling in the USA.

"With the Internet and the communication systems that are available at this point in time, it's no big deal to sit here and run the factory," he says.

But while some jobs may continue to be sent overseas, it's clear that others - especially those requiring special skills, quick turnaround times or customer contact - will stay in the USA.

"Most companies believe it's going to be easier (to shift work)," says Rudy Puryear of Bain and Co., who has consulted with clients on setting up operations abroad. He says he's seen some firms pull back two or three years after shifting to foreign workers or suppliers. "It is a buyer beware situation."

President Bush's week-long swing through six Asian nations is long overdue. Despite being home to half the world's population and the globe's most dynamic economies, Asia has received scant attention from this administration. Unfortunately the president has only one subject on his agenda -- the war on terrorism. The president is touching lightly, if at all, on the other issues that matter most to this region -- economic globalization, China's growing presence, and political instability fed by economic disparities. This is not surprising. The Bush administration doesn't seem to think much about global economic issues. And when it does speak, as it has recently on the issue of currency manipulation by China and Japan, the administration's policy is confusing and contradictory. In Asia, the single-minded focus on terrorism leaves an opening for others -- China first of all -- who are more in tune with the region's concerns. "I've never seen a time when the U.S. has been so distracted and China has been so focused,'' Ernest Bower, the head of the U.S. business council for Southeast Asia, told a business magazine.

Regional economic bloc

Faced with multiple challenges, the countries of Southeast Asia have accelerated plans to create a regional economic bloc like the European Union. The Chinese, followed closely by India and Japan, are embracing the idea, proposing the creation of a vast East Asian free trade area that would encompass nearly 2 billion people, but notably not include the United States. When national security adviser Condoleezza Rice briefed reporters on the president's trip, the focus was almost entirely on security issues. Bush's itinerary is designed to highlight the nations working closely with the United States to combat Al-Qaida-linked Islamist terror groups in Southeast Asia -- Singapore, the Philippines, Indonesia and Thailand. Or to reward those who are backing the war in Iraq -- Japan and Australia. Even at the annual Asia Pacific Economic Cooperation summit in Bangkok, Bush plans to `"stress the need to put security at the heart of APEC's mission because prosperity and security are inseparable,'' Rice said. No one can argue with that basic proposition. The example she cited was the terrorist bombing a year ago in Bali, Indonesia, which shut down tourism, a vital source of income for Indonesians. But let's not look at that link through the wrong end of the telescope. We need to grapple with the poverty and income inequality in Indonesia, the world's largest Muslim-populated nation, which feeds growing Islamic radicalism.

China drives growth

East Asia has largely emerged from the financial crisis that swept through this region in 1997-98 and sent countries such as Indonesia into economic collapse. Economic growth should pick up to almost 6 percent next year, the World Bank has predicted. But much of this is driven by China's rapid growth, which is in turn sparking a sharp rise in trade within the region, much of it between countries in the region and China. These countries look warily on this rising giant. China is sucking away foreign investment from places like Silicon Valley that used to flow to them, and with it, jobs. At the same time, progress toward a global free market that ensures fair competition has stalled. The world trade talks in Cancun last month collapsed in rancor, and the United States seems content now to pursue its own bilateral trade deals with favored countries such as Singapore and Australia.

10-nation association

This has encouraged the 10-nation Association of Southeast Asian Nations to accelerate plans to create a European Union-style economic community. The Chinese sent a huge, high-powered delegation led by their premier to their recent meeting, signed a friendship treaty with the group and pledged to negotiate a free-trade zone with the group. "The Chinese are moving in in a big way,'' says Stanford University expert Donald K. Emmerson. Where is the United States in all this? "We're outside, and our businesses are going to be outside,'' says Brookings Institution global economic expert Lael Brainard. "The Bush administration needs to get a handle on this.'' If it doesn't, the United States will wake up one day from its infatuation with unilateralism and return to Asia to find that the furniture has been rearranged and the locks have been changed.