Turkey is at a crossroads: Its economy is booming, and the Turkish economic miracle is the direct result of the current government’s willingness to foster domestic entrepreneurship and do whatever is necessary to integrate the country into the twenty-first century’s global economy.

In addition, it is once again becoming one of the dominant powers in the Middle East as a result of its growing hard and soft power. Turkey’s hard power is a legacy of Turkey’s role as the Cold War anchor of NATO’s southern flank reinforced by its economic growth.

Turkey’s soft power, at least in the Middle East, is a function of the fact that it seems to be demonstrating that Islam and modernity—specifically, democracy and participation in the globalized economy—are in many ways compatible. If the Turks manage to pull this off, they will be poised to lead the Islamic world into the twenty-first century. But like any radical experiment, it is not clear that this one will succeed. Herein lies the peril and promise of contemporary Turkey for the United States.

Turkey has an Islamically-oriented government under Prime Minister RecepTayyip Erdoğan’s Justice and Development Party (AKP). The AKP’s 2003 victory (and unprecedented reelection in 2007) was the result of both the corruption and intellectual exhaustion of Turkey’s hitherto dominant political party, Mustafa Kemal Atatürk’s center-left Republican People’s Party (CHP) and the fact that the majority of Turkey’s voters have rejected the militant secularism that has characterized the Turkish Republic since 1923.

The peril is clear: The continuing growth of politicized Islam in Turkey, which, by the way, pre-dated the coming to power of the AKP, is polarizing Turkish society. Walking down the streets of Istanbul, Turkey’s largest city, you see the full range of Turkey’s political spectrum in the very different costumes and grooming of people on the street, with the devout women wearing head scarves and long dresses and coats, and the men sporting the telltale “Islamic” mustache (look at a picture of Erdoğan for an example) while the secularists dress as though they were living in Berlin or Paris, with blonde haired “white Turks” looking as though they came from even farther north in Europe.

The head scarf is the focal point of conflict in contemporary Turkey (reminiscent of Atatürk’s outlawing of the fez in 1925), with secularists designating it as the central front in the secular/Islamic culture war that rends Turkish society today. Some academic colleagues, part of Turkey’s secular elite, explained to me that as part of their responsibilities they were charged with “counseling” Islamic college students against wearing the head scarf, a principle they supported but a task they nonetheless regarded as embarrassing.

Since I was lecturing at a Turkish university, my “sample” of Turkish opinion was highly skewed toward secularists. That group, which makes up a significant fraction of the intellectual and political elite in Turkey, is deeply wary of the growing influence of Islam in Turkish politics. Former–Foreign Minister Emre Gonensay warned me that the Obama administration’s embrace of the Erdoğan regime, the culmination, in his view, of an American plot to convert Turkey into an Islamic Trojan horse, would backfire.

Overtly, secularists like Gonensay worry that Turkey will become like Iran. But I thought that I detected a more subtle fear: That the rise of the AKP demonstrates that the choice facing Turks is no longer between modernity and democracy and economic growth, on the one hand, and Islam and backwardness, on the other. In other words, developments in contemporary Turkey constitute a refutation of the core premise of the Atatürk Revolution that successful modernization could only come with secularization.

The international complications resulting from a more Islamically inclined Turkey are also becoming apparent. The AKP project of reconciling Islam and modernity is probably not helping Turkey’s admittedly slim chances of joining the European Union, given Europe’s militant secularism and growing Islamophobia.

Turkey’s diplomatic efforts to reach out to other regional powers, especially Iran and Syria, are also not playing well in the United States, where I think we mistake current–Foreign Minister Ahmet Davutoğlu’s “zero problems” diplomacy of engagement with those countries as appeasement , rather than as part of Turkey’s effort to lead the region through a combination of hard and soft power.

However, the most dramatic diplomatic shift has come in Turkey’s relations with Israel, in which incidents both trivial (as when Israel’s deputy foreign minister sought to humiliate Turkey’s ambassador by seating him in a low chair during a diplomatic démarche) and deadly (the nine deaths when the Israel Defense Forces seized the Turkish ship Mari Marmara on its way to run the Gaza blockade) have shaken the two countries’ previously cordial diplomatic relations and threaten their deep strategic cooperation. It was perhaps inevitable that as Turkey aspires to become a leading voice in the Islamic world, its relations with the Jewish state would cool, primarily over the issue of the unresolved Israel-Palestine conflict.

There is no doubt that the Turkey of today is not what it was even a few years ago, and this has caused domestic tensions and international complications. But we should not let these real costs obscure the potential benefits of the changes in Turkey for the region and ultimately the United States.

The AKP’s rise reflects in part the bankruptcy of the other political alternatives, including Kemalism itself. Nor does it appear to be necessarily incompatible with Turkey’s continued democratization. Indeed, one could argue that the Erdoğan government has deepened the process of democratization through much-needed judicial and constitutional reforms. The AKP has also taken much bolder steps toward resolving the Kurdish conflict than any previous government by making small but symbolic concessions to that restive minority group whose struggle for autonomy has cost nearly forty thousand lives over the past twenty-five years.

And instead of regarding Turkey’s overtures to Iran and Syria as indicative of its desire to join the “Axis of Evil,” we in the United States would do better to see it as part of an effort to neutralize Iranian influence in the region by presenting an alternative model to that of the Islamic Republic, one based on Islamic values but also committed to the principles of the modern world like democracy and free trade.

In the United States, it is inevitable that Turkey’s image will be shaped in important ways by its relationship with Israel, the other major U.S. ally in the region. Once the darling of the pro-Israel lobby in Washington, which ran interference for it on sensitive issues like the Armenian genocide, Turkey is now being vilified by supporters of the Jewish state, largely because the shift in its regional diplomacy has led it to take a more assertively pro-Palestinian stance than it did in the past.

It would be a mistake, however, for us to judge Turkey by American standards of unquestioning support for the Jewish state, no matter what it does. First of all, it is that position, rather than evenhandedness, that is out of step with public opinion in Turkey and in the region (not to mention the rest of the world). It is also not clear that one-sided support of Israel by the United States has done much to advance the peace process, which is ultimately in the interest of Turkey, the rest of the region, the United States and Israel itself.

Indeed, if one believes as the Obama administration does, that the resolution of the Israel-Palestine conflict is one of the most important steps for advancing American national interests in the region, Turkey’s more assertive stance on behalf of Palestinian self-determination probably does more to advance the two-state solution than does our own country’s default strategy of serving, in longtime U.S. government official Aaron David Miller’s apt phrase, as “Israel’s lawyer.”

It would be naive, of course, to deny that this new reality will not complicate things for Turkey both at home and abroad. But it would be a greater mistake for us to focus only on these complications and ignore America’s stake in the success of the Turkish experiment.

But the promise is real: If Turkey succeeds in combining Islam with political and economic modernity, and then helps the rest of the Islamic world achieve that synthesis, it could have the sort of regionally transformative effects that the Bush administration and its neoconservative allies’ sought, but failed, to bring about through their misguided war in Iraq. As President Obama put it last year, “given Turkey's history as a secular democratic state that respects the rule of law, but is also a majority Muslim nation, it plays a critical role I think in helping to shape mutual understanding and stability and peace not only in its neighborhood but around the world.”

The reality of modern Turkey is therefore as complex as the street tableaux I saw recently in Istanbul. It is both headscarves and miniskirts; it is simultaneously reaching out to Iran and Syria and moving closer to the European Union; and it is integrating into the modern global economy while at the same time reclaiming its Islamic heritage. A democratic, globalized and moderately Islamic Turkey contributes more to advancing U.S. interests in the Middle East than almost anything we could do directly. That’s our stake in Turkey’s experiment.