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CAIRO'S Mustafa Mahmoud mosque would go unnoticed by most passers-by if it weren't for the crowds waiting outside, not just on the Muslim day of worship. Yet the austere three-story stone complex symbolizes the ``quiet Islamic revolution,'' as it is referred to here, that is sweeping through Egypt and other Middle Eastern nations. The complex, which includes a clinic, an elementary school, a small library, and a rooftop observatory, is among the most impressive of a growing number of Islamic facilities now creating a virtual parallel state within Egypt.

An estimated 3,000 such clinics and 6,000 schools - from nurseries and large tutorial programs to colleges - reflect how deeply fundamentalist Islam has penetrated Egyptian society, according to Egyptian sociologist Saad Eddin Ibrahim.

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Established by a vast array of groups and devout individuals, the quality of the services provided is often better than state or private facilities, because staffs are motivated by a higher calling, not profit. More than 250,000 people are treated at the Mustafa Mahmoud clinic each year; the charge is less than 50 cents a visit.

Government banks are also struggling to compete with thriving new Islamic financial institutions by starting their own ``Islamic transactions departments.'' Travel agencies now advertise ``Islamic holidays'' to holy shrines or with Islamic groups. Food stores cater to fundamentalists by keeping alcohol out of pastries and off the shelves. Islam is literally now an alternative way of life in Egypt.

``Everyone is trying to out-Islamicize each other,'' a leading Cairo commentator said. ``It tells you a lot about what's `in' in Egypt today.''

Of all the politicized religious movements over the past decade, Islam is the most vivid and widespread example. It also holds the most potential for long-term impact.

``Over the next 40 years, populist Islam is going to be the most important ideological force in the world,'' predicted James Bill, a political scientist at the College of William and Mary.

Events in Egypt, whose 50 million people account for one-third of the Arab world and which has long been a political trend-setter, may mark a new phase in the Islamic resurgence. Three characteristics are emerging in this phase:

First, the fundamentalist passions synonymous with Iran and Lebanon and most publicized among the Shia, Islam's so-called second sect, have become major political factors within the mainstream Sunni sect - and not just in Egypt.

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Despite repeated government sweeps for suspected members, Tunisia's outlawed Islamic Tendency Movement now has the support of up to 25 percent of the population, according to Western diplomats. Predominantly Sunni Muslim Algeria has ordered Friday prayer leaders to register with police after a spate of sermons suggesting that the socialist, one-party government be replaced with Islamic rule.

University campuses in Jordan, Kuwait, and Morocco are now astir with fundamentalist politicking. Mosques in virtually every Middle East state, as well as outside the region, are increasingly forums for political debate. Even Israel is witnessing a Sunni Islamic movement among Arabs living both in Israel proper and in the occupied territories.

Second, fundamentalists are no longer limited to the radical fringe. Earlier manifestations of Sunni fanaticism, most notably during the 1979 takeover of Saudi Arabia's Grand Mosque and the 1981 assassination of Egyptian President Anwar Sadat, were tied to comparatively tiny cells of extremists. Indeed, the Egyptian movement is now led by middle-class professionals, including engineers, lawyers, and doctors.

Mustafa Mahmoud, who built the complex named after him from personal funds and contributions, is symptomatic of the trend. A former physician-turned-writer-and-philosopher, Dr. Mahmoud abandoned his earlier flirtation with Marxism when he rediscovered Islam. He now hosts a weekly prime-time television program on Islam and modern science which is broadcast throughout the Arab world.

Third, fundamentalist campaigns are no longer gaining public attention only because of aggressive or violent acts, but also for now providing constructive al-ternatives.

``The majority of Egyptian fundamentalists are trying to reform the whole system along Islamic lines through legitimate channels,'' explained former Egyptian diplomat Tahsin Bashir.

EGYPT'S Muslim Brotherhood, or Ikhwan, was outlawed in 1954 after being linked with an assassination attempt on former President Gamal Abdel Nasser. More than three decades later, the group (some of whose views are discussed in the accompanying interview) is still banned. Yet in last April's parliamentary elections, the Brotherhood officially became this North African state's largest legal opposition.

As with its counterparts in other third-world regions, religious opposition in Egypt did not emerge from a vacuum. It coincides with a host of problems, including:

Political alienation resulting from dependence on foreign powers. ``Many fundamentalists, not only in Egypt, feel their nations are becoming second-rate replicas of Western models, so they are searching for alternatives,'' explained Dr. Muhammad Shalaan, a psychiatry professor at Cairo's Al Azhar University.

A crumbling economy burdened by a $44 billion foreign debt and by a million new mouths to feed every nine months. Food subsidies total $6 billion. Inflation is 30 percent. There is a five-year waiting list for government jobs, which all college graduates are guaranteed.

Iran's 1979 revolution had little to do with the Egyptian movement specifically, political observers said. It clearly set a precedent for the entire Muslim world and offered early inspiration. But, as in other Middle East states, the roots of Islam's current politicization are indigenous. Indeed, they predate Iran's upheaval.

The humiliating losses of the 1967 Arab-Israeli war, including parts of Egypt, Syria, and Jordan, plus sacred Jerusalem, was the turning point.

MANY Arabs blamed their defeat on the fact that the Israelis had been more faithful to their religion than the Arabs had been to Islam. ``The '67 defeat was a defeat directed by God because we had abandoned Islam,'' is how Mr. Bashir explained this view. Political gains in the 1973 war against Israel, which was fought in the name of Islam rather than pan-Arabism, deepened religious feelings.

Meanwhile, Egypt's many problems were not being solved - either by President Nasser's socialism and alliance with the Soviet Union in the 1960s or President Anwar Sadat's capitalist experiment and opening to the West in the 1970s - analysts here say. New groups, particularly of alienated youths, began forming around various religious sheikhs, who preached that Islam offered the only viable alternative.

That theme was reflected in April's election. The Muslim Brotherhood's succinct slogan, still visible on billboards, fences, and shop walls throughout Cairo, was ``Islam is the solution.''

The sense of malaise and indecisiveness surrounding President Hosni Mubarak's government has recently strengthened feelings, even among nonfundamentalists, that the nation is in the midst of a transition.

``Six years after he came to power, Mubarak is still viewed as an interregnum,'' remarked commentator Muhammad Sid Ahmed.

This sequence underscores how politicized religion often emerges as a reaction to the perceived failure of other systems.

``All religious groups here are gaining as quickly as the government is losing - because the government is losing,'' said Egyptian sociologist Mona Makram Obeid.

Indeed, Mr. Mubarak is widely believed to have reluctantly allowed the Ikhwan to run - under cover of an alliance with two secular parties - to force it to share the burden of solving Egypt's problems - and also to stem the Islamic tide with a dose of reality. ``He had no other option,'' a Cairo analyst said.

ISLAM is unique among the world's major monotheistic faiths in that it is not just a religion but a religious polity complete with rules of law, the Sharia. In the 7th century, Muhammad was the first prophet to systematically merge political and religious authority. In the third world's search for an authentic system, Muslims have the most obvious and most legitimate model.

But, as throughout the Middle East, Egypt's Islamic political movement is not politically united. Indeed, its various factions are increasingly divided.

The Ikhwan, founded in 1928 by schoolteacher Hassan al-Banna and now estimated to have at least 500,000 supporters, has opted to try to reform the system along Islamic lines through legal channels. The group's major demand is that Sharia be applied as the law of the land.

The Jihad extremists, who began splintering from the Ikhwan in the 1970s and who are now the most active fanatics, feel the Ikhwan is guilty of compromising a Muslim's obligations. Jihad backers seek to replace the system and the nation's leadership. They have most recently been linked to the May and August shootings of two former interior ministers and a leading columnist, all of whom advocated a crackdown on religious militants.

They justify their means, like their ends, on religious grounds. Islam does not condone violence, but it puts no limits on actions perceived as taken in defense of the faith. Since officials and other political forces are seen as guilty of apostasy, the view is that ``corrective'' action is justified.

Fragmentation and a new militancy are evident elsewhere.

Tunisia witnessed the first religion-related violence during this summer's bombings of four tourist hotels, claimed by its own underground Jihad group. The largest trial in Algeria's post-independent history sentenced more than 200 Muslim fundamentalists in July for plotting against the state.

Yet Sunnis are less prone to the martyrdom of Iranian troops or Lebanese bombers, because of their different political legacies. They are also less susceptible to radical sheikhs' calls to mobilize, for Sunni clerics are less powerful than their Shiite counterparts.

And analysts generally discount suggestions that another Iranian-style theocracy could be created in the foreseeable future in any Sunni-dominated nation.

But moderate or militant Muslims do not need to take over to have an impact that will alter the system. The religionization of politics has already redefined the national debate on Egypt's priorities and future.

Robin Wright is a senior associate at the Carnegie Endowment for International Peace.

Egyptian fundamentalist sees a turning `back to God' the world over

In 1972, Issam al-Irian was among the first fundamentalists elected to Cairo University's student leadership. His later essay on Islam's view of history is still widely quoted. In 1981, during President Sadat's final security crackdown, he was detained.

Released in 1982, Dr. Irian went on to convert Egypt's Physicians' Union, a former leftist stronghold with a membership of 80,000, into a bastion of fundamentalism. To enter the union's headquarters, women must now wear the hejab (head scarf).

Last April, Irian won an even more important election. Today he is the youngest member of Egypt's parliament. Indeed, the five youngest parliamentarians are all Muslim Brotherhood members. Following are excerpts from an interview with Irian:

On Egypt's 10 percent Christian Coptic population: ``We should love each other, Copts and Muslims. Islam is not against other religions.''

On relations with Israel: ``You need to ask Israel if it wants a real peace. Sadat and [President] Mubarak gave Israel many chances for peace. The result until now is that millions of Palestinians still live in camps. We can't break off relations now. But the situation can't continue indefinitely like this.''

On Islamic extremists: ``I don't agree with violence, and I don't agree with all their actions. I think by discussion we can correct many of their thoughts. But the government doesn't give us the chance. It prefers to arrest them. Thousands are in jail.''

On the Islamic code of justice: With disbelief that its legitimacy could be doubted, he says, ``It's the law of Allah.''

On the future: ``In 20 or 30 years all peoples of the world will turn back to God. This is not related only to Egypt. The systems which govern the world today are going to be discredited. People must find another system. Religion is the alternative.''

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