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Critics of the Bush Administration charge that the U.S. has failed to invest in "public diplomacy" programs aimed at improving the image of the U.S. in Muslim countries. The U.S. will spend $1 billion on public diplomacy this year, a figure that has not increased since Sept. 11 and that amounts to 0.3% of the country's defense budget. Of that amount, about $86 million goes toward cultural-and educational-exchange programs aimed specifically at the Muslim and Arab world. And yet even positive steps--like the creation of its own Arab-language television and radio networks--have been overshadowed by the inflammatory impact of the invasion of Iraq and the U.S.'s overt backing of Israeli Prime Minister Ariel Sharon. "Our policies are objectionable to large parts of the Arab world," says a senior State Department official. "It's very hard to communicate with people when they're shooting the messenger. Our message is often dead on arrival."

"ISLAM IS POLITICS" --Ayatullah Ruhollah Khomeini, Iran, 1979

Even Muslim critics of the Bush Administration's style say that its post-9/11 push for political liberalization has helped rekindle debates that have long simmered across the Muslim world, encompassing everything from sexuality and gender roles to how Islam can accommodate the influence of democratic ideals and Western culture. In this, Ayatullah Ruhollah Khomeini, who led Iran's Islamic revolution in 1979, had it right when he declared that Islam is inseparable from politics. In three Islamic countries whose destinies are vital to the security of the U.S.--Pakistan, Saudi Arabia and the Ayatullah's Iran--the political future is very much up for grabs.

IRAN In 1983 Abdolkarim Soroush, a philosopher named by Khomeini to oversee the "Islamization" of Iran's universities, quit his job. Ever since, he has been a leading thinker in pushing the case for a reformed Islam and a democratic Iran, and slowly but surely the movement has gathered momentum. Today Iran's progressive Islamic thinkers are nothing less than intellectual pop stars among students in Tehran, with heady sales of books on such topics as Islamic reform and democratization.

In Iran, as elsewhere, the students matter. Twenty-five years ago, it was Iranian students who were the vanguard of the revolution that toppled the Shah and seized the U.S. embassy. Now they generally are fed up with a government run by Islamic clerics. Young Iranian women still wear the traditional head scarves, but many now wear them with tight-fitting jeans--at once a religious, political and fashion statement. Students recently packed lecture halls at Tehran University to hear a series of talks straightforwardly billed "Transition to Democracy." One of the speakers was Mohsen Kadivar, a young cleric who talks about Iran's eventually evolving into a democracy, pushing out the ruling mullahs. "I believe Iran is the world's most influential Islamic country," Kadivar says. "We are the model other Muslims look at." The democracy movement in Iran, he says, is not about throwing off or getting rid of Islam. Reformers like Kadivar want to restore Islam to its rightful place, "to give meaning to life [but] not use it as an instrument of power."

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HILLARY CLINTON, Secretary of State, appealing to Iranian authorities, who said they will try the three American hikers who were arrested in July after allegedly crossing the Iran-Iraq border; Iran's Foreign Minister said they had "dubious intent"
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