ISLAM RISING : Foreign Policy : West Debates Muslim Surge : The faith’s expanded reach intensifies the search for a modus vivendi after years of strain.

It’s discussed heatedly at French dinner parties. German intellectuals have dissected its future direction. British foundations have conducted discussions on its meaning. Japanese businesses have consulted outside experts to explain it. Even the Vatican has reflected on its growing impact.

As political Islam sweeps into new territory from North Africa to Central Asia, governments globally are debating how to deal with one of the most energetic political phenomena of the 20th Century. And no place is that debate more controversial than in the West.

Indeed, not since deliberation on the West’s relationship with communism after World War II has so much attention been focused at so many levels on a single foreign policy enigma.

The need for a modus vivendi--after a policy vacuum during 14 years of strained, often tumultuous relations--has intensified in part because of Islam’s expanding reach. Activism is no longer limited largely to Iran, Lebanon and a Mideast extremist fringe. The issues are also no longer just national security.

In disparate ways and different degrees, political Islam has now penetrated about 75 nations with significant Muslim populations (out the 190 total nations in the world). And many of those Muslim communities are, or will be, of increasing economic, strategic and social importance.

Asia’s fastest-growing stock market last year, for example, was in predominantly Muslim Malaysia. The new dividing line between Europe and Asia now runs through Russia and newly independent Central Asian states like Kazakhstan and Uzbekistan--also Muslim. And Muslim Nigeria is expected to be the world’s third most populous country by 2025.

The scrutiny is also due to recognition that relations between the West and Islam have reached a defining moment.

“It’s a defining moment because Islamic groups are now significant players in mainstream society,” said John L. Esposito, author of “The Islamic Threat: Myth or Reality?”

“Politically, they’re the leading opposition groups in Jordan, Egypt and Tunisia. They almost came to power in Algeria, and they’re the power behind Sudan’s government. Socially, they’re running clinics, schools, legal aid and social welfare agencies.

“For years, the West had to come to grips mainly with extremists who wanted to seize power. Now we have to deal with populist movements that have the potential to lead countries,” Esposito said.

Whether appropriately or ironically, the only state to have a longstanding policy on political Islam is the Vatican.

In 1963, the Second Vatican Council declared: “As some disputes and animosity have erupted between Christians and Muslims over the centuries, the Holy Synod reminds all not to dwell on the past, to make truthful efforts for mutual understanding and to support unanimously the protection and improvement of social justice, moral values and not least peace and freedom for all mankind.”

Over the intervening 30 years, most Western states have done or said little more--except in reaction to violence.

In the United States, President Jimmy Carter tried to establish a framework after Iran’s revolution and the U.S. Embassy seizure in Tehran in 1979. In crisis sessions, he repeatedly told advisers: “Our problem is not with Islam. Our problem is only with Iran.”

But 13 years and two presidencies passed before that approach was publicly enunciated as policy. In a speech last year, Assistant Secretary of State Edward P. Djerejian said, “The U.S. government does not view Islam as the next ‘ism’ confronting the West or threatening world peace.” And even that much had to be cleared personally by then-Secretary of State James A. Baker III.

But that still leaves the bigger question unanswered: How does the West deal with political Islam and its many manifestations?

Developing effective policy may be more difficult than dealing with communism, according to European and American scholars.

First, centuries of historic baggage, from the Crusades to colonialism, mean neither side starts afresh.

Second, the West’s commitment to Israel’s survival adds inherent tension as long as the Arab-Israeli conflict is not settled.

Third, the West had intellectual access to 19th-Century works like “Das Kapital” and the “Communist Manifesto.” Policy-makers shared the same modern and Western traditions as Marx, Engels and Lenin--two Germans and a Russian. While they may not have liked socialism, at least they understood it.

In contrast, the 7th-Century Koran, which records God’s word to a former nomadic merchant in the Arabian desert, is a less accessible guide for secular Western nations. Since Islam took root in an Eastern culture, even the faith’s context is more difficult to comprehend. And neither is widely taught in Western schools.

But the West can’t deal with Islam until it is understood, according to Helmut Schmidt, a former German chancellor and one of Europe’s great intellectuals.

“In Western democracies there is hardly any understanding of Islam and its historical development,” even by former colonial rulers of Muslim societies, Schmidt said at his symposium on Islam and the West last fall.

Schmidt learned about Islam on a Nile River ride with then-Egyptian President Anwar Sadat. Said Schmidt: “I heard things I’d never heard before. Sadat wanted to make people aware of the commonality of the three Abrahamic religions--Christianity, Judaism and Islam--as a means of living in peace.

“He made me study the subject. Late in my life, I learned the immense scientific and cultural achievements of Islam. For the Western world,” Schmidt advised, “it’s important to learn to understand Islam, to learn to discuss with Muslims more than oil.”

Since Schmidt offered that advice, the new Clinton Administration has taken symbolic steps.

On Inauguration Day, President Clinton attended Washington’s historic African Methodist Episcopal Church, once used by runaway slaves on the underground railway to freedom. Imam W. Deen Mohammed, a prominent black Muslim cleric from Chicago, was among the leaders of many faiths who offered prayer.

“Believers, Jews . . . or Christians--whoever believes in God and the Last Day and does what is right--shall have nothing to fear or to regret,” he read from the Koran’s fifth chapter.

For including an Islamic cleric, the interfaith “Celebration of Unity” was a presidential first.

Three weeks later, on Feb. 13, Clinton’s new foreign-policy team--Secretary of State Warren Christopher, U.N. Ambassador Madeleine Albright, National Security Council staffer Martin Indyk and many others--met in the State Department’s formal seventh-floor quarters for a weekend seminar on political Islam.

Almost a generation after the first encounter between the United States and political Islam, ranking U.S. officials discussed such basic issues as whether Islam and democracy are compatible and Islamic groups’ attitudes on the West. “There were a lot of questions,” said one participant. “It was very useful.”

In crafting policies, the United States and its Western allies are unlikely to ever speak with a single voice, any more than the myriad Muslim groups or governments will ever take a united stand on their relations with the West. Interests and anxieties vary.

Because of proximity, colonial history and domestic politics, Southern Europe is more affected by--and fearful of--political Islam. Since Algerian Islamists’ near-victory last year, for example, France fears that Islamic rule in a former colony 400 miles away will unleash mass migration by Algeria’s Westernized elite.

Like many other countries, France already has a large Muslim emigre community and labor force. Immigration has become a volatile issue, triggering unrest and the rise of a xenophobic right wing.

Russia has similar fears about its southern flank. Since the 1991 demise of the Soviet Union, which had the world’s fifth-largest Muslim population, Russia has dealt with six newly empowered states, 60 million strong. As Uzbeks, Tajiks and others explore anew their Muslim heritage, Russian fears of Islam have soared.

Economic realities shape different approaches. Because of its total dependence on foreign oil, Japan has comparatively close ties with Islamic regimes ostracized by its allies. Japanese diplomats, business people and journalists have long had a major presence in Tehran, while Iranian President Hashemi Rafsanjani’s first and only visit to a major industrial democracy was to Japan.

The differences, however, go to the core of the debate over the West’s options, the range of which are represented by two starkly different alternatives, according to Gilles Kepel, an expert on Islam at the Institute of Politics in Paris.

In keeping with the global push for democratization, the first option is to encourage Islamic movements to use the ballot rather than the bullet and then be prepared to accept any regime that wins a democratic vote--as long as it sustains democracy.

“This option says: Let people be ruled as they wish, and if they want Sharia (Islamic law), let them have Sharia and Islamist rulers,” Kepel said. “There is nothing the West should do to avoid it.

“It also says: The interests of business will be better protected by Sharia regimes than by regimes pretending to rule by Western political systems, but which use repression to block Islam and cause a response that gets tourists and businessmen killed day after day.”

In large part because many of the regimes most challenged by Islamic opposition are Western allies or control resources vital to Western interests, Western governments have been unwilling to adopt this approach--despite increasing warnings from Western specialists.

“The appeal of political Islam is not temporary,” explained Laura Guazzone of Rome’s Institute of International Affairs.

The second option is to use financial, political and, if needed, military resources to prevent Islam’s rise or to contain its growth, even if that means tolerating repressive regimes or tactics.

“This option says: If Islamists take over, they will have a tremendous and negative impact on the world order. They will proselytize and be aggressive like Iran was after 1979. They must be stopped,” Kepel said.

Several states where Islam is the most active are already asking for such help. Egyptian President Hosni Mubarak last month appealed for a “global alliance” against political and extremist Islam. Even Libya’s Moammar Kadafi called for Western aid to fight the “Islamic cancer.”

France, particularly, is responding. In January, then-Foreign Minister Roland Dumas became the first Western official to visit Algiers since a military-led coup last year aborted a democratic election that Islamists were sweeping.

France has given financial aid to Algeria, the second most populous Arab state, to help the regime survive an increasingly bloody underground war that followed erasure of the election.

But this option also has high costs. Already under a state of emergency, Algeria last December launched a new offensive against Muslim extremists that included dissolving charitable and cultural groups, labor movements, companies and local and regional authorities controlled by the broader Islamic movement.

Amnesty International charged last month that in Egypt, security forces had been given an “official license to kill with impunity” in the country’s crackdown on Muslim extremists.

Human rights in Egypt--which has more than half the world’s Arabs and is the closest U.S. Arab ally--have also deteriorated seriously. Rights violations include mass arbitrary arrests, torture, long-term detention and unfair political trials before military courts resulting in death sentences, Amnesty International reported.

So far, Washington has attempted a difficult balancing act somewhere between the two different options.

While the Clinton Administration has created new positions at the State and Defense departments on democratization worldwide, it appears willing to work gradually with existing regimes rather than risk the danger of their ouster through more rapid change.

In nations with strong Islamist movements, “U.S. policy encourages a two-track approach: first, movement toward democratic reforms, broadened political participation, political dialogue with representative groups, and second, economic reforms and privatization,” Djerejian said.

The best means of preventing confrontation is to deal with the “social and economic injustices” that spur frustration and opposition--and lead large numbers to turn to Islam--he said.

But Djerejian conceded: “In many cases we can only help on the margins. The role of outside powers is to help societies help themselves.” There’s also the risk that events on the ground could overtake efforts at peace and social and institutional reforms.

“It’s a race against time,” he added.

But so far, none of the Western strategies appear to be having much of an impact in easing tensions between the West and Islam or defusing the growing turmoil in Muslim states.