Who’s The Enemy Now?

Along Pakistan’s border with Afghanistan, there is no shortage of spies and informers. In that mountain lair where al-Qaeda and Taliban fugitives are burrowed in amid local tribes that pay little heed to the government in Islamabad, at least five rival Pakistani agencies run networks in search of Osama bin Laden and his cohort. The snitches seemed to have come up with gold last week. TIME has learned that Pakistani troops, already engaged in an offensive to flush out foreign fighters, pounced on an informer’s tip that al-Qaeda sympathizers were hiding with foreign militants in the village of Kalosha. Before dawn last Tuesday, 400 members of Pakistan’s Frontier Corps swooped in, only to be ambushed by heavy fire; at least 22 troops died. In response, Pakistani President Pervez Musharraf ordered 8,000 troops to converge on a cluster of villages deep in South Waziristan, drawing a cordon around 20 sq. mi. of hills and apple orchards dotted with mud fortresses. Somewhere inside, Musharraf announced, his forces had surrounded a “high-value target.” Soon a variety of sources were giving the target a name: Ayman al-Zawahiri, the No. 2 leader of al-Qaeda and bin Laden’s closest aide.

The Army’s spokesman, Major General Shaukat Sultan, acknowledged that no one had definitively spotted al-Zawahiri in the area since fighting flared on Tuesday. Lieut. General Safdar Hussain, the Frontier Corps commander, told journalists that a vehicle that may have been carrying al-Zawahiri managed to crash through militia roadblocks and escape. Yet what made the military believe they might still have a trophy in their gunsights was that al-Qaeda fighters normally vanish when confronted with a sizable force. This time they resisted fiercely, as if to protect someone special. Somewhere between 200 and 400 militants kept 8,000 Pakistani soldiers half a mile away with a steady barrage of small-arms fire, anti-aircraft guns and rocket-propelled grenades. After a day of battle, the army commander called in helicopter gunships, jets and artillery. By Saturday night a cloud of dust hung over the area, but the army had still not defeated the militants. “We’ve tightened our cordon,” said Sultan. “Nobody will escape.”

As the battle raged, Bush Administration officials played down expectations. Officials said U.S. intelligence could not confirm reports of al-Zawahiri’s whereabouts. But the possibility that he might be cornered sent pulses racing. Since the late ’90s, the Egyptian has served as bin Laden’s chief tactician, personal doctor and spiritual guide. His elimination would mean the al-Qaeda command structure that plotted the 9/11 attacks would be almost completely wiped out.

No one hoped he was caught more than George W. Bush. A picture of al-Qaeda’s second in command dead or in chains would give a boost to the President’s insistence that, even as chaos mounted in Iraq and the world reverberated from the shock of the commuter-train bombings in Madrid, the U.S. is winning the war on terrorism. With Bush’s election campaign picking up speed, the stakes for finding al-Zawahiri and bin Laden have never been higher, especially now that terrorist forces seem to have developed a keen eye for political calendars. The Islamists charged with slaughtering more than 200 Madrid commuters struck on March 11. Three days later Spanish voters tossed out the ruling party allied with the U.S. in the war in Iraq. Incoming Socialist Party Prime Minister Jose Luis Rodriguez Zapatero, who called the Iraq occupation a “fiasco,” reiterated a campaign promise to pull Spain’s 1,300 peacekeepers out of Iraq by June unless the U.N. takes over operations there. In Iraq insurgents attacked several hotels on the eve of the war’s first anniversary, just when the U.S. hoped to talk up Iraq’s successes. The bombings were believed to be the work of Islamic extremists eager to plunge the country into chaos before the June 30 deadline for handing authority back to Iraqis.

The sweep of death and destruction gave fresh evidence of how the Islamist terrorist threat has managed to survive the global war waged against it. New networks of jihadists emerge faster than the U.S. and its allies can arrest or kill them. Counterterrorism experts believe that the old al-Qaeda organization commanded by bin Laden may be expiring and that a new, more elusive generation of extremists apparently inspired by al-Qaeda’s ruthless vision–men like Jamal Zougam, 30, a cell-phone salesman arrested for the Madrid bombings, and Abu Mousab al-Zarqawi, 37, the Jordanian suspected of orchestrating violence in Iraq–has taken up the banner. Barely recognizable even to officials who make a living tracking terrorists, the new jihadists proved in Madrid that they can evade detection while they hatch their plots. And no one knows where they will strike next.

THE SPANISH CONNECTION

Nobody thought Islamic terrorism would happen in Spain. Much of Europe is known to be a logistical base for the militants but rarely a theater of operations. “We knew there were Islamist networks in Spain, even knew who most of the people involved were,” says a French counterterrorism investigator. “But we had no idea these networks and cells were operational in planning and staging attacks.”

That may account for the lackadaisical response Spanish security services gave to warnings from France and Morocco to keep an eye on Zougam. Last Friday a Spanish judge charged Zougam and two fellow Moroccans with carrying out the train bombings. All three proclaimed their innocence. But Zougam had been under watch by European counterterrorism officials since at least August 2001, after French officials found a number of their suspects crossing paths with him. They asked Spanish law enforcement to search Zougam’s Madrid apartment, where he lived with his mother, who had taken him from Tangiers when he was 10, and two sisters. Inside police found videotapes on bin Laden and jihad and the telephone numbers of three members of the Soldiers of Allah cell run by Syrian-born Imad Eddin Barakat Yarkas, known as Abu Dahdah. In November 2001 Spanish authorities jailed Yarkas, believed to be the leader of al-Qaeda’s cells in Spain, for allegedly helping in the preparation and implementation of the 9/11 attacks.

A tall man with stylishly unkempt hair and no beard who wore Western clothes, Zougam hardly looked like an Islamic fundamentalist. He did not appear religious. In Lavapies, a Madrid melting pot of North African, Chinese and Indian immigrants, Zougam ran a locutorio, one of the popular shops where you can make cheap phone calls abroad. The owner of another locutorio says Zougam was an expert in “liberating” phones–altering handsets sold cheaply by service providers to take prepaid SIM, or internal identity, cards. Among Zougam’s customers was Yarkas. According to the November 2001 indictment against Yarkas, police tapping his cell phone heard him tell other contacts that he was in “Jamal’s telephone shop.” In September 2001 Zougam called Yarkas to say he had just returned to Madrid from Morocco and brought greetings from Abu Dahdah’s brother.

The connections were too vague for Spanish investigators to arrest Zougam, who was not suspected of criminal activity. But law-enforcement authorities in Morocco began tracking him on his frequent visits to his old neighborhood in Tangiers. There he may have heard the preachings of Sheik Mohammed Fizazi, the spiritual leader of Salafia Jihadia, a group of Moroccan radicals said by some investigators to have ties to al-Qaeda. In August 2003 Fizazi was sentenced to 30 years in jail for inspiring the terrorists who bombed five sites in Casablanca, including a Spanish club, in May 2003. Zougam’s name surfaced during the investigation of those attacks: at one point, he shared an apartment in Madrid with Abdelaziz Benyaich, one of those arrested for his alleged connection with the bombings. Morocco last week was again looking for links between Zougam and the Casablanca attacks. He had been in Morocco in advance of the strike and returned to Spain just three weeks before it occurred. But so far, says an official, “the only connection involves background and ideology.”

To investigators, Zougam appeared to be a low-level operative who moved easily in Islamist circles, not a terrorist kingpin. Moroccan officials told TIME they considered him an intermediary between various cells in that country. “His name came up very often,” said a Moroccan official. “But we had no evidence he had done anything, so we could not arrest him.”

In the end, Spanish police reconnected with him through dumb luck. A bomb that didn’t explode on March 11 was connected to a cell phone whose SIM card was tracked back to Zougam’s shop. Spanish press reports say he purchased a whole box of them recently, along with 14 cell phones. In a thorough search of his shop, police reportedly found a piece of plastic broken from the casing of the cell phone found with the unexploded bomb.

Still, Zougam’s possible role in the Madrid plot is unclear, and experts are still divided over who might have ordered it. Although the key arrests in the railway bombings were Muslims, there is no iron-clad evidence–though there is plenty of speculation–that they worked for al-Qaeda or any other group. Analysts say the timing of the attacks may signal a dangerous turn: a new generation of terrorists, impressed by their seeming ability to sway an election, could plan to calibrate future attacks to achieve political objectives.

IRAQ’S NEW INSURGENTS

The mighty car bomb last week that lit the sky orange as flames shot from the wreckage of the five-story Mount Lebanon Hotel in downtown Baghdad was the latest evidence of the changing nature of terrorism there too. Though the bombing killed only seven, not 27 as originally reported, its impact was outsized, underscoring the trend toward striking ever softer targets. That included last week’s murders of four U.S. missionaries and two European engineers working to rebuild Iraq.

It all seemed intended to stamp a negative image on the course of the occupation one year after it began and step up a calculated campaign to disrupt the transfer of sovereignty to Iraqis on June 30. U.S. officials expect attacks to increase as the date nears. “All of a sudden, it put a countdown clock on this country,” says General Mark Kimmitt, the military’s chief spokesman in Iraq. Kimmitt and other U.S. officials in Iraq increasingly believe Islamic radicals have taken charge of orchestrating the violence as Saddam Hussein loyalists fade from the scene. Their intent is to push the country into anarchy, where extremism can flourish.

It seems to be working. Brigadier General Mark Hertling, assistant commander of the 1st Armored Division patrolling Baghdad, told TIME that compared with capturing Saddam, unraveling the network of terrorist organizations in Iraq is a much rougher struggle. Unlike Saddam’s loyalists, the jihadists operate in cells that are not based in specific neighborhoods or tribes. They avoid fighting the U.S. directly, instead using terrorism to sow fear and undermine security among Iraqi civilians.

The U.S. believes the new extremists are not the made men of al-Qaeda, but men with a similar militant mind-set. A few come from abroad, but others seem to be indigenous. “We are not seeing a major flow of foreign fighters coming across the border,” says Kimmitt. He thinks there are a “couple of hundred” extremists doing the dirty work, including a few al-Qaeda elements, remnants of Ansar al-Islam that were dispersed from their headquarters in the Kurdish north during the war, Sunni extremists who share bin Laden’s radical brand of Islam and a trickle of individual volunteer jihadis.

The man most often cited by occupation authorities as the ringleader is al-Zarqawi. They frequently tie the Jordanian militant to al-Qaeda and Ansar al-Islam. But now al-Zarqawi seems to be running his own network in Iraq. He allegedly set out, in a long letter U.S. officials attributed to him in January, his plan for inciting civil war through attacks on Iraqis. He was quickly blamed last week for the hotel bombing, which mimicked al-Qaeda’s style. “I think he might be one of the leaders giving instructions,” says Hertling. Catching al-Zarqawi is a “daily mission,” says Kimmitt, but he adds that it probably wouldn’t stop the extremists. He has seen signs that the old regime’s loyalists are joining forces with Islamists who have the money and leaders to take on the U.S. In exchange, militants who belonged to the ousted Baath ruling party can provide safe houses, weaponry and trigger pullers. “They’ve got to grab on to something,” says Kimmitt, and if the trend continues, it may mean the “couple of hundred” fighters would be bolstered by many, many more.

JIHAD INC.

More than two years, two wars and billions of dollars in intelligence expenditures have made the U.S. more effective than ever at hunting and pre-empting terrorists. Much of the old al-Qaeda leadership has been destroyed, along with many of its trained field operatives. Though bin Laden and al-Zawahiri remain at large, U.S. officials believe they have been “off net” for some time, relying on laborious courier traffic to communicate with their subordinates. That means logistical planning for attacks has been done independently of them.

Yet intelligence officials acknowledge that the U.S.’s success in dismantling bin Laden’s organization has not lessened the threat of Islamic terrorism. Al-Qaeda has spawned a movement greater than itself. “Al-Qaeda has infected others with its ideology,” CIA director George Tenet said recently. “Other extremist groups within the movement it influenced have become the next wave of the terrorist threat.” That only makes them harder to find and stop. Even in hindsight, there was no electronic chatter, no rumor, nothing from interrogations hinting at an attack before the train bombers struck in Madrid. The amorphous nature of the plotters’ network enabled it to operate under the noses of intelligence and police forces.

That’s why, in the darkened warrens of the U.S.’s counterterrorism agencies, the pace is unrelenting, as analysts try to disrupt the terrorists before they can strike here. Those officials are intensely worried that Islamists, emboldened by the Spanish vote, are focusing on how to target the U.S. in the run-up to Election Day to blow up public confidence in the Bush Administration. Officials warn that this summer’s Democratic and Republican conventions in Boston and New York City present exactly the kinds of targets al-Qaeda teaches its operatives to choose: the crush of VIPs, chaos, noise and long hours will be a security nightmare. And, as a senior U.S. official points out with a shudder, both conventions will be held above train stations.

–Reported by Timothy J. Burger and Elaine Shannon/Washington, Bruce Crumley/Paris, Stephan Faris and Vivienne Walt/Baghdad, James Graff and Samuel Loewenberg/Madrid, Syed Talat Hussain/Islamabad, Scott MacLeod/Rabat and Tim McGirk/Wana