Man hasn't done Bangladesh many favors either. The country was born from the ruins of East Pakistan 35 years ago after a war of independence in which India-backed nationalists—unhappy at being ruled from what was then West Pakistan—fought Islamists loyal to Islamabad. Three million people were slaughtered in eight months before the Pakistanis conceded. Those were the days before truth and reconciliation commissions and international criminal tribunals, and the world left Bangladesh largely alone to heal and rebuild. Success has been limited. Democracy is strangled by a poisonous political war between Zia's right-of-center Bangladesh National Party (B.N.P.) and the left-leaning Awami League. Rejecting any notion of bipartisanship, both parties seem to keep the nation perpetually on the verge of chaos, alternating between state repression or crippling national strikes aimed at toppling the government, depending on who is in power. With politics often reduced to little more than a big brawl, violence infects much of daily life. Gangs armed with barbers' razors roam city streets, extortion is widespread, beatings are routine. A TIME reporter who traveled to Rajshahi to interview a lawyer found on arrival that the man had been murdered. Bangladesh's courts, police and bureaucracy, moreover, are so weak that the country has come last in Transparency International's world corruption index five years in a row. Zia's most popular initiative has been forming the R.A.B., a police force that draws support in part for its willingness to kill. "It's been a crazy few years since I've been here," says Larry Maramis, the U.N. Development Program's deputy resident representative. "The country could easily have fallen into being labeled a failed state."

The scale of the Aug. 17 blasts—when hundreds of bombs were detonated in an hour—demonstrated how close Bangladesh could have come to falling apart. The ingredients for disaster were all there. While the country was founded on secular principles, a Western diplomat in Dhaka says it "has become noticeably more pious in the last few years" due to an explosive growth in radical madrasahs funded by Middle Eastern charities. It doesn't help that Bangladesh lies on a gun-smuggling route from East Asia; in April 2004, police discovered a boat in the southern port of Chittagong unloading enough AK-47s, grenades and ammunition to fill 12 trucks that were presumably destined to deliver the ordnance to insurgent groups in Bangladesh and possibly beyond. Responding to scattered reports of Islamic fighters from overseas using Bangladesh as a safe haven, the then U.S. State Department coordinator for counterterrorism, Cofer Black, warned in the fall of 2004 that the country could become a "platform to project terror."

Until the August bombings, however, Zia's government had denied the presence of Islamic extremists in Bangladesh. The opposition accused her of avoiding the issue because two hard-line Islamic parties, the Jamaat-i-Islami and Islami Oikya Jote, were partners in her ruling coalition. Zia insists the government's inaction was merely due to a lack of information. "We did not know they were there," she says of the militants. "After the Aug. 17 bomb blasts, we knew."

And they acted. Zia made combating the insurgency the defining mission for Home Minister Babar and the R.A.B., formed in 2004 from 9,000 top officers in the military and police. The Bangladeshi authorities solicited forensic help from the FBI and Scotland Yard, which was particularly interested in a May 2004 bomb attack that injured British High Commissioner Anwar Chowdhury; the R.A.B. also exchanged information with Interpol and Western intelligence agencies. Meanwhile, Zia demanded, and received, public support for an antiterror drive from Bangladesh's religious leaders and from her Islamist coalition members. The government also targeted bank accounts operated by suspect Islamic foundations in order to cut off funding to terrorists.

In addition to Bhai's capture, this antiterrorism campaign has led to nearly 1,000 arrests over the past eight months. Five of the seven top leaders of one terror group, the Jama'atul Mujahideen Bangladesh, have been caught, including Bhai's alleged co-conspirator Sheikh Abdur Rahman. Only two months ago, says the Western diplomat, "I was telling people back home it was just a matter of time before we had the first car bomb or first attack on a foreigner." The "nightmare scenario that could have unhinged the entire country," he adds, was for terrorist attacks to escalate during what is already expected to be a tense general election in early 2007—but that now seems "pretty remote. What we're seeing looks like the implosion of the entire [militant] organization."

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	State Of Disgrace [Apr. 5, 2004] Bangladesh is reeling from violence, corruption and political turmoil. Inside Asia's most dysfunctional country Reining in the Radicals [Feb. 28, 2005] Bangladesh is finally starting to crack down on Islamic extremism. But is it doing enough? Hanging by a Thread [Oct. 25, 2004] Textile factories throughout Asia face extinction as a long-standing global trade pact is set to expire A Democracy is Shaken [Aug. 30, 2004] In a divided nation, an attack against Bangladesh's opposition party leader marks a new low More Related Items | Search all issues of TIME Magazine