INSIDE THE JIHAD: How Al-Qaeda Got Back On The Attack

The Sari Club, in the town of Kuta on the Indonesian island of Bali, was one of those places where the world comes out to play. By 11 p.m. on Oct. 12, it was packed with the usual crowd--tanned Australian kids in shorts and halter tops dancing to house music, surfers in from the beach downing beers and Jell-O shots, expat sports teams from Hong Kong and Singapore, backpackers from around the world--the children of globalization, mobile phones in hand, making out before heading back to their cheap hotels. David Fielder, 46, a British rugby referee in town from Hong Kong for a game, was standing with a group of friends, having what was planned to be the night's last drink, when he heard an explosion. Ten seconds later, he says, came something more. "There was a huge bang, and I felt I was lifted up. There was just light and sound--it was like someone knocked me out." Fielder remembers hearing screams and noticing that he could see the sky: the roof of the club had been blown off. Picking himself up from the rubble, he tried to stumble out of the bar, only to fall into a mess of blackened dead bodies.

Investigators with the Australian Federal Police, assisting local Indonesian authorities, think there were three bombs in Bali synchronized to wreak maximum havoc. The first explosion--quite small--was inside Paddy's Irish Bar, a popular watering hole. A few seconds later, a slightly more powerful bomb exploded in front of the Sari Club. Then, as terrified customers poured into the street from the bars, came the real thing; a Mitsubishi L300 minivan had pulled up to the sidewalk, packed with C4 high explosive and ammonium nitrate--around the world, the car bomber's favorite recipe. The van blew up. Survivors tell of the familiar horrors of terrorism: bodies with legs and heads and breasts blown off, roasted skin peeling away from arms, daughters crying for their mothers, mothers desperate to find their kids, a place that only two weeks ago was a byword for beauty, friendliness and fun turned into a scene from Hieronymus Bosch. "Why Bali?" asked Fielder. The only answer is another question: Why anywhere?

Though the Bali bombing was particularly sickening, it was part of a greater spasm of violence that has counterterrorism officials bracing for more. The CIA believes that the outrage was the work of Muslim extremists belonging to the Southeast Asian group Jemaah Islamiah, which the U.S. believes is closely linked with al-Qaeda, the terrorist network headed by Osama bin Laden. And al-Qaeda, CIA Director George Tenet said in congressional testimony last week, is now in "execution phase." Indeed, senior U.S. intelligence sources tell TIME that they fear a recent spate of terrorist attacks around the world may be a warm-up for a much bigger strike against American interests. Al-Qaeda prisoners now being interrogated, says a senior U.S. counterterrorism official, "keep talking about a spectacular event. And I don't think we saw that event in Bali."