TERROR'S NEXT STOP

The last two weeks of mass killings--of celebrant Shiites in Iraq and Pakistan on the holy day of Ashura, followed a week later by the attacks on commuters in Madrid--may some day be viewed as the opening shots fired by this spectral second generation of terrorists. In both cases authorities remain fairly clueless as to which groups were involved and to whom they are linked, whether they take orders from Al Qaeda or merely coexist with it, and whether non-Islamist groups like the Basque ETA have grown new synapses connecting them with otherwise disparate movements. All that is known is that such groups seem to be fueled by ever more virulent anti-American sentiment, and that since the war in Iraq this has often manifested itself through attacks on U.S. allies such as Spain, and agencies like the Red Cross or United Nations that work with Washington. In a videotape last fall, bin Laden specifically named Spain as a potential target. Intelligence officials also tell NEWSWEEK that Zarqawi is viewed as a suspect in three major attacks in Iraq last year: on the U.N. headquarters in Baghdad, on a leading Shiite mosque in Najaf (in which a pro-U.S. ayatollah was killed) and on an Italian paramilitary post.

For Americans, the reality of this new shadow war hasn't hit home yet--even though the millions who ride commuter trains are queasily aware of how easily a Madrid could happen here. Since 9/11, the clenched fist of American power has struck two mighty blows--one in ousting the Taliban in Afghanistan, the other in taking out Saddam. In doing so, President George W. Bush has reasserted American power in a region where U.S. officials believe that an image of weakness invites attack.

The question now, though, is whether that giant American fist has effectively smashed down on a blob of mercury, sending it in myriad directions and making it all but untraceable. NEWSWEEK has learned that the last Orange terror alert in December--triggered by hijacking threats to foreign airliners heading to America--was based on what appears to be bad information. No arrests or detentions have been made, and no leads remain open. U.S. officials say that, even in the wake of Madrid, the level of intelligence "chatter" about an attack on the continental United States remains low; but if it was "high" in December, does today's lack of intel mean anything? A former senior counterterrorism official in the Bush administration points out that "there have been more major terror attacks in the 30 months since 9/11 than in the 30 months before. I think we may have cut off Al Qaeda's head, but the rest of the body is working fine and has spawned 10 more smaller heads."

Administration officials argue that the smaller, depleted groups out there today probably couldn't produce an attack as sophisticated as September 11's. And they point out that there has been no major attempt to attack the U.S. homeland since then. But Madrid was devastating, occurring just across the Atlantic, especially considering that a major goal of Al Qaeda and other groups has been to weaken and disrupt Western economies. "For most major cities, transit systems are very critical to the functioning of the local and regional economy," says Stephen Flynn, a former Coast Guard commander and author of the forthcoming book "America the Vulnerable: How the U.S. Has Failed to Secure the Homeland." Flynn plays down the fact that the homeland's been terror-free. "We thought after 9/11 it was a two-year project. We know now 9/11 was closer to five years in the making."

At the White House, Bush's counterterror chief, Frances Townsend, chairs a daily 9 a.m. videoconference of senior staffers at the CIA, the FBI and the new Terrorist Threat Integration Center, known as TTIC. Officials speak of multiple "threat strands" and "the retail structure" of very loosely affiliated groups. In his recent testimony, Tenet talked of "a global movement infected by Al Qaeda's radical agenda" and said "the steady growth of bin Laden's anti-American sentiment and the broad dissemination of Al Qaeda's destructive expertise ensure that a serious threat will remain for the foreseeable future, with or without Al Qaeda in the picture." A senior U.S. intelligence official adds: "Everyone is looking for neat explanations, but unfortunately the terror-threat assessment is much messier. Al Qaeda is on the run, but it is not vanquished. The problem is, we simply don't know what it is capable of pulling off."

What is known is that terror cells of various kinds riddle the Middle East, Europe, Africa and parts of Southeast Asia. Some are still comfortably situated in friendly nations. The former leader of an alleged Qaeda affiliate in Iraq called Ansar al-Islam, a fiery jihadist preacher known as Mullah Krekar, still lives openly in Norway. Under U.S. pressure--including a visit last year to Oslo by Attorney General John Ashcroft--Norwegian authorities have repeatedly tried to lock him up, only to see the courts release him for insufficient evidence. Switzerland, too, is only just discovering its role as a terror way station. Swiss investigators initially played down reports that 9/11 hijacker Muhammad Atta once transited Zurich in connection with a visit to Spain, and that suspected "dirty bomber" Jose Padilla visited Zurich twice between fleeing Afghanistan and traveling to America (where he was arrested). But a few weeks ago, the Swiss picked up eight Muslim men on suspicion they were involved in helping Al Qaeda stage the attacks last May against residential compounds in Riyadh. The Muslim regions of Africa are also increasingly regarded as rich recruiting grounds. In several places--Sudan, across the Sahara's ancient caravan routes to Nigeria and Mauritania, even in South Africa--elements of Muslim communities are becoming radicalized. And a bit of bribe money can take a fugitive from one end of the continent to the other.