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The Assad regime hasn't stayed in power for nearly 40 years by playing nice. It has survived a tough neighborhood—bordered by Iraq, Israel, Jordan, Lebanon, and Turkey—by a combination of guile and cozying up to more powerful countries, first the Soviet Union and now Iran. In a state of war with Israel since 1948, Syria provides material support to the Islamist groups of Hezbollah and Hamas; it's also determined to reclaim the Golan Heights, a Syrian plateau captured by Israel in 1967. Relations with the United States, rarely good, turned particularly dire after the 2003 U.S. invasion of Iraq, when George W. Bush, citing Syria's opposition to the war and support for Iraqi insurgents, threatened regime change in Damascus and demonized Syria's young president as a Middle Eastern prince of darkness.

It's been nearly a decade since Bashar took office, and it's fair to ask what, if anything, has changed. It's also a good time to take stock, as Syria—responding to overtures from a new U.S. administration hungry for success in the Middle East—seems poised to resume a pivotal role in regional affairs. Henry Kissinger famously said you can't make war without Egypt or peace without Syria, and he's probably right. Like it or not, the road to Middle East peace runs right through Damascus. Yet even Bashar acknowledges that it will be hard for Syria to move forward without tending to its crippling internal disrepair.

Outside the ancient Hamadiya market in Damascus, a photograph of Hafez al Assad as tall as a three-story building once stood. Marked by a high forehead and poker player's eyes, the president's giant head peered out over his traffic-choked capital of four million people, as it did from billboards and posters all over Syria. Modeled on the totalitarian cults of the Soviet imperium, this Big Brother iconography always gave Syria the feel of being sealed in amber, trapped in an era when dictators were really dictators, the days of Stalin and Mao. This is the Syria that Hafez left behind.

In its place today, flanked by the city's Roman-era walls, is a large white billboard with a photograph of Syria's first postmodern president, waving. Bashar is shown with a buoyant grin on his catlike face, squinting over his whiskers into a bright sun. "I believe in Syria," the billboard says reassuringly. But it will take more than a smile and a slogan to reinvent his country, and he knows it. "What Syria needs now," Bashar told me, "is a change in the mentality."

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