TRIPOLI, Libya — During the years when Libya was an international pariah, Ali Ayoob lived in self-imposed exile in Dubai and Paris, working for a succession of companies and hoping to return when things at home changed.
Now Libya's ruler, Moammar Gadhafi, has renounced nuclear weapons and terrorism, begun cooperating with the United States against Islamic militants and abandoned his quixotic crusade to create what he called a Jamahiriya, a socialist "state of the masses."
International economic sanctions have been lifted, oil-rich Libya is enjoying an economic boom and Ali Ayoob has come home.
A French firm has designed a bold new international airport for this sleepy Mediterranean capital, and Ayoob is the project's head of logistics. On a recent afternoon, the 39-year-old Ayoob, a black suit stretched over his stout frame, boasted about the free-market policies that are supplanting Gadhafi's Third Universal Theory, his alternative to capitalism and Marxism.
"There are new banks, new infrastructure, a new system," Ayoob said. "We have to renew our country. It's very important for us, and it's very important even for the American and European countries to come here and supply what Libya needs."
So besides investment, what does Libya need? The open-ended question made Ayoob's ruddy face turn cold and suggested that Libya's free-market policies don't extend to politics.
"Look," he said stiffly, "there are many things I cannot tell you right now."
That was the end of the conversation, and a reminder that for all the economic reforms and optimism, fear and secrecy built up over decades still blanket this desert nation. Gadhafi's all-powerful regime continues to suppress free speech and dissent to the point that few people dare utter his name in public, let alone talk politics.
Many simply call him "the Leader," a moniker that — along with the posters of him that are plastered at every intersection, his face fixed in the heroic gaze of a matinee idol — reflects Gadhafi's 38-year cult of personality. He remains a mystifying figure even to longtime Libya watchers, who aren't sure whether his recent flirtation with openness will last.
In Tripoli, where construction cranes are reshaping the skyline and gleaming showrooms now hawk designer watches and American-made SUVs to a wide-eyed public, many residents said they welcomed the changes. But no one can say for sure how far Gadhafi, who's in his mid-60s, plans to take his country on the road to reform.
"The challenge is whether these really positive steps are going to mature into having the rule of law, internal reconciliation, building infrastructure and allowing accountability and transparency," said Ali Abdullatif Ahmida, a Libyan-born political scientist at the University of New England in Biddeford, Maine.
"Otherwise it's just a clever way of dealing with international isolation and ensuring investment and the security of the elite that has dominated Libya for a long time."
For the Bush administration, Gadhafi's apparent transformation presents another diplomatic choice between fighting terrorism and promoting democracy in the Arab world.
In the 1980s, long before al Qaida, Gadhafi was the Reagan administration terrorist bete noire, a principal backer of an array of militant groups from the Abu Nidal Organization to the Irish Republican Army in Northern Ireland. But now he and the Bush administration are fighting a common enemy: Islamic fundamentalists, whom Gadhafi considers a threat to his regime.
According to U.S. officials, Gadhafi is holding some Libyan terrorism suspects who were released from the American military prison at Guantanamo Bay, Cuba. Human rights groups say that Libyan security forces often abuse prisoners, but American officials in Tripoli said they had assurances from Libyan authorities that the former Guantanamo inmates were being treated humanely.
The Bush administration has rewarded Gadhafi by re-establishing an embassy in Tripoli, which occupies a floor of a five-star, $400-a-night hotel. A State Department spokesman recently said that Secretary of State Condoleezza Rice was planning a visit "to mark the fact that this is a very changed relationship."
Libya has been "very helpful on counterterrorism," said William B. Milam, the ranking U.S. diplomat in Tripoli. Democracy, he said, "is a work in progress. At some point, that will be too slow. But for the moment we're following it closely and we hope that it evolves."
Since giving up his nuclear-weapons program in 2003, Gadhafi has taken some steps that even longtime critics applaud. He's released scores of political prisoners, dissolved the People's Court — which routinely violated the rights of the accused — and agreed to compensate the victims of the 1988 bombing by two Libyans of a Pan Am jetliner over Lockerbie, Scotland.
He hired the Monitor Group, a high-powered management-consulting firm, to advise him on economic and political reforms, and over the past year he's flown several leading American thinkers to Tripoli to advise him on loosening the reins on the economy. The regime has begun to reinstate private-land ownership, giving families the confidence to build hotels and other businesses.
"I think they definitely want to make changes. They realize the path they were on in the past was something of a dead end for them," said Joseph Nye, a Harvard University professor of international relations who, in February, met with Gadhafi for three hours in a huge, Bedouin-style tent where the leader prefers to conduct his business.
"It's not easy when you have so many people dependent on the government for employment . . . to make that structural change," Nye said. "They're sort of in the middle of trying to do that."
Analysts say that a battle is raging in Gadhafi's opaque inner circles over how much to change and how fast. The public statements are often contradictory.
Last year, Seif al Islam Gadhafi, the ruler's British-educated son who's considered a possible successor, called openly for more transparency and greater press freedom. A few weeks later, Moammar Gadhafi pledged to "kill enemies" who demanded political reforms.
For the moment, however, those questions seem academic to average Libyans, many of whom have known only one leader. Mohamed Ahmed Alchabtoun, a 46-year-old accountant who registers trademarks, said his business was buzzing as more Libyans started to launch businesses.
"Everything is better than before," Alchabtoun gushed. "More private cars, more technology, imported clothes. For 20 years, the economy was very closed. Now you can find anything you want."