WHERE FEUD AND FOLLY RULE

Nothing is more divisive than power and money. Only four years after the U.S. and its allies set up an enclave in northern Iraq to protect 4 million Kurds from annihilation by Saddam Hussein's vengeful army, the Kurds are threatening to annihilate themselves--because two rival leaders each hope to establish and control an independent Kurdistan overlapping the borders of Iraq, Turkey, Syria and Iran. Massoud Barzani, who leads the western half of the enclave, is shy, soft spoken and uncomfortable around foreigners. Jalal Talabani, who controls the east, is a garrulous jet-setter who mixes well at embassy parties. The only thing the two have in common is a long-standing hatred for each other. In an increasingly bitter showdown that has turned Kurd against Kurd, they are, says a Western diplomat in Ankara, willing to "risk committing national suicide."

Most of the fighting is taking place around the city of Erbil, which Talahani's forces seized last December. Barzani's army now surrounds the city, exchanging small-arms and mortar fire with the enemy and biding its time before launching a full-scale attack. Elsewhere in Kurdistan, the two factions skirmish and engage in terrorist acts. Three weeks ago, for example, a car bomb exploded in Zakhu, near the Turkish border, injuring 50 people. U.S. intelligence analysts haven't pinned down which side carried out the bombing or whether it was the work of Saddam's agents trying to incite more trouble between the two factions.

The Kurdish leaders ought to be joining hands to secure their independence from an increasingly shaky Saddam, who escaped yet another coup attempt earlier this month. Instead Kurds are killing one another, and northern Iraq and beyond are growing dangerously unstable. Meanwhile, neighboring Turkey, at war with rebellious Kurds in its provinces, was in turmoil last week from rioting by extremist Islamic and nationalist groups. "The area is extremely volatile--all of it," says a worried senior Clinton Administration official. Still more tinder piled up last week after Saddam seized two American civilians who seemed to have accidentally wandered across the border from Kuwait.

For the Kurds who had turned their enclave in northern Iraq and parts of Turkey, Iran and Syria into a virtual semiautonomous state, the infighting is tragic. It is almost entirely the product of animosity between two men leading rival parties who are deeply jealous of each other. "This struggle for power is as personal as it can get," says a Pentagon analyst. When the Kurds held an election for an autonomous government to run Kurdistan in 1992, Barzani's Kurdistan Democratic Party and Talabani's Patriotic Union of Kurdistan split the vote, forcing them to accept coalition rule. Last May open warfare broke out between the rival leaders over a land dispute. In the ensuing free-for-all at least 2,000 Kurds were killed before the two sides agreed in November to hold new elections this May. But then Talabani's army seized the coalition government's capital, Erbil, and kicked out Barzani's parliamentarians and ministers.

Barzani has accused Talabani of stealing $14 million from the Kurdish treasury and being a "jash," or donkey, as Kurds label collaborators with Baghdad. Talabani claims Barzani is pocketing cash from customs fees the Kurds levy on the 10,000 bbl. of diesel fuel Iraq secretly ships through Kurd territory to Turkey every day.