Joseph Contreras: Can He Fill Fidel's Boots?

Aug. 14, 2006 issue - Ordinary Cubans could only wonder whether Fidel Castro was alive or dead. They had no news photos of their 79-year-old leader convalescing from his reported surgery last Monday for gastrointestinal bleeding, no TV footage, no radio broadcasts of his voice—just one or two uncharacteristically terse statements issued in his name, calling his condition "stable," along with sporadic official assurances that El Jefe was recovering. Even the bleeding's cause was a state secret.

Late in the week, unconfirmable rumors said he was sitting up and eating. The loyal sibling who had been named as acting leader, 75-year-old Defense Minister Raúl Castro, remained conspicuously out of sight, as did just about every other senior member of the two brothers' circle. Some observers said the regime was trying to project a sense of normalcy. Still, people in Havana seemed no more uneasy than usual. After 47 years under Fidel's rule, Cubans have learned to wait. They spend life standing or sitting as patiently as possible while their officials insist that everything is OK.

Up north, the reaction was less restrained. Many of Miami's 650,000 Cuban-Americans danced on Fidel's grave, ignoring the fact that he wasn't in it yet. For the first time, the Cuban dictator had turned over power, even if it was to his brother. In Miami, that was cause for a nonstop street party. The exiles hate Raúl, too, but never mind. Rep. Mario Diaz-Balart, a leader in the exile community, recalls his father predicting long ago: "When Fidel Castro goes, this regime will disintegrate like a sugar cube dropped in a glass of water." Roger Noriega, former assistant secretary of State for Western Hemisphere affairs, thinks the younger Castro can't hold on more than a few months. "I don't see that Raúl has the legs to pull this off," he says. "I don't think he has the credibility or awe of the people." There are potential schisms in the military that could bring down the regime, Noriega believes, but real change can only come from the grass roots. "This is the time for a burst of pride in the Cuban people," he says. "They need to do it themselves."

Still, Washington is desperate to help. On Wednesday a bipartisan team of Cuban-American lawmakers met at the White House to swap ideas about fostering democracy on the island. "Everything was discussed," says Diaz-Balart, who was there. Another participant, Sen. Robert Menendez, says one topic was ways to gain more control over the granting of U.S. visas in Cuba. The State Department issues roughly 20,000 a year there, mainly by a lottery system, but the Castro regime decides who may leave the island. There was some discussion of giving visa priority to Cuban physicians living not only on the island but in many other countries, too. Doctors are among Cuba's proudest exports; if they start defecting, the regime is in big trouble.

Everyone has ideas. Sen. Mel Martinez, another participant at the Wednesday meeting, wrote to Donald Rumsfeld the same day asking the Defense secretary for communications aircraft to transmit American TV broadcasts into Cuba. Others want to send gear to the island's dissidents, particularly items such as computers, fax machines and satellite phones. Diaz-Balart likens it to what the Reagan administration did for the opposition in Poland while that country was still under communist rule. Far more controversial is a proposal to loosen restrictions on travel to the island, allowing Cuban-Americans to join their relatives there and perhaps spread democratic ideas. That would be a big departure from the administration's hard-line policy on keeping Cuba isolated—and Havana hardly seems likely to permit a flood of troublemakers.

Raúl's biography offers little encouragement to democrats. He's been living in the older Castro's larger-than-life shadow ever since the early 1950s, when they launched a revolt against the thoroughly corrupt dictatorship of Fulgencio Batista. The brothers were thrown in jail together, left Cuba together for a two-year exile in Mexico and finally in 1959 toppled the Batista regime together. The younger one earned the nickname "Raúl the Terrible" for his readiness to eliminate anyone Fidel suspected of treachery, and at the revolution's close he directed the summary execution of Batista troops by dozens and scores.

There is more hope that the younger brother may ease up economically, possibly in the way China's communist rulers did. Fidel's estranged daughter Alina Fernández, another member of the Miami community, has described her uncle as "the practical brother." When the island lost its financial lifeline with the 1991 collapse of the Soviet Union, Raúl argued forcefully for opening up the island to more foreign investment, and he has shown considerable interest in how China has done it. "Raúl is one of the foremost advocates of decentralizing the economy," says retired CIA analyst Brian Latell, author of the younger Castro's biography "After Fidel." Other veteran Cuba watchers aren't so sure. "Initially he will be as harsh or harsher than Fidel, and I don't see any opening of the economy for the first year or two," says Jaime Suchlicki, director of the University of Miami's Institute of Cuban and Cuban-American Studies. "Raúl is no Gorbachev, and I don't think he can afford to become a reformer."

Long before that can happen, a lot of exiles hope he'll be gone. So far, U.S. authorities are reporting no unusual traffic across the Florida Straits, whether by Cubans fleeing their country or by anti-Castro activists heading in. "This is not a time for people to try to be getting in the water and going either way," said White House Press Secretary Tony Snow. A few forlorn banners hang from government buildings in Havana, bearing the slogan VIVA FIDEL! EIGHTY MORE YEARS. His 80th-birthday celebration, scheduled for Aug. 13, has been postponed to December. The question remains if he has even 80 more days.

With Carmen Gentile in Miami

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Dan Ephron: Nasrallah's Men Inside America

Aug. 14, 2006 issue - It began, as the Feds tell the tale, with a run-of-the-mill tax-fraud scheme. Imad Hammoud and his ring of Lebanese Americans from the Detroit area would buy boxes of cigarettes in North Carolina, where the state tax on smokes is among the lowest in the country, allegedly truck the goods back to Michigan and sell them at a profit of more than $10 a carton. Hammoud, an immigrant with ties to Hizbullah, according to an indictment filed with a U.S. district court in Michigan earlier this year, would then wire a portion of the earnings to a member of the group in Lebanon. By 2002, Hammoud and some of his colleagues were believed to be running $500,000 worth of cigarettes a week across state lines and expanding into stolen contraband and counterfeit goods, including Viagra tablets. During a three-month period that year, authorities allege, more than 90,000 Viagra knockoffs were purchased, with a plan to sell them as the real thing. "They're small, they're high in demand and they're easily transportable," says Bob Clifford, a senior FBI agent. "They're the perfect medium."

The Hammoud case is among a handful of money scams uncovered across the country in recent years bearing Hizbullah's fingerprints. Though the revenues are not huge, the cases together underscore a daunting reality: one of the most proficient terrorist groups in the world has at least a small web of operatives in America who, prosecutors believe, are loyal to Hassan Nasrallah. Hizbullah has not targeted Americans since the 1980s, when attacks on a Marine barracks in Lebanon and on the U.S. Embassy there killed more than 300 people. Sometime later, the group apparently made a strategic decision not to tweak the world's only superpower. Law enforcers say there's been no sign the fighting between Israel and Hizbullah, with all the Arab anger it stirs against America, will goad the group into action against the United States. Still, security officials worry that if Hizbullah does one day decide to strike, it can exploit an already-existing network in this country. "You often see in these groups that people who deal in finances also have military backgrounds," says Chris Hamilton, who was the FBI's unit chief for Palestinian investigations until last year. "The fact is, they have the ability [to attack] in the United States."

The FBI has made Hizbullah a central target of its counterterrorism efforts, setting up a unit dedicated to tracking the group and assigning agents to develop sources in Lebanese and other Middle Eastern communities across the country. Clifford, who once headed the unit on Hizbullah and Iran, made his biggest Hizbullah bust six years ago, cracking a North Carolina ring that forged credit cards and laundered money, using some of the profits to buy gear for Hizbullah. The ringleader, Mohammed Hammoud (no relation to Imad), was convicted of providing "material support" for terrorism and sentenced to 155 years in prison. Although he and his followers were not linked to actual terror attacks, the FBI found evidence they did engage in "tactical" arms training and would have been ready to strike if told to do so. "If they were given an order to conduct an operation in the United States, they would have found a way to do it," Clifford says.

What might prompt Hizbullah to issue such an order? American screw-tightening on Iran over its nuclear program, for one. Iran is Hizbullah's main political and financial backer. Some analysts believe the group's deadliest terrorist attacks, including bombings at Israel's Argentine Embassy in 1992 and at a Jewish community center in Buenos Aires in 1994, were ordered up by Iranian handlers. "It would be enough for the Iranian leadership to say the word for Hizbullah to launch an attack," says Congressman Ed Royce, a Republican from California who chairs the House subcommittee on international terrorism and nonproliferation.

But Hamilton, who is now a senior fellow at the Washington Institute for Near East Studies, says Hizbullah would be more likely to attack Americans abroad. "They would go for soft targets in places where they have lots of resources," such as South America or Turkey. Other experts believe Hizbullah would have too much to lose from an attack on American soil. "Their fund-raising activities have been very fruitful in the United States," says Dennis Lormel, who was the FBI's section chief for terrorist financing until 2003. "With Israel clamping down on their other sources of revenue, it wouldn't make sense for them to wreck their own ability to continue making money here."

Support for Nasrallah runs high in Lebanese communities across the country, and it spikes when Israel's war with Hizbullah or with Palestinians in the West Bank and Gaza heats up. When Los Angeles County sheriff's deputy Lt. John Stedman searched the home of a Lebanese immigrant in Los Angeles two years ago, he found Hizbullah flags decorating the walls, along with pictures of Nasrallah and audiotapes of his speeches. "We love him," Stedman quotes a resident of the home as saying, "because he protects us from the Jews." In a case against a Lebanese immigrant in Dearborn, Mich., who is suspected of tax fraud, prosecutors have showcased pictures of the suspect seated alongside Mohammed Hussein Fadlallah, Hizbullah's spiritual leader, at a 2002 fund-raiser in Lebanon.

But Arab-American leaders complain law enforcers are too quick to equate the pride some ex-patriates take in Hizbullah's stand against Israel—or even just the sympathy they feel for the Lebanese people—with support for terrorism. "Any time somebody sends money to somebody in Lebanon, they [prosecutors] say it's for Hizbullah," says Maurice Herskovic, who initially represented one of the defendants in the Detroit case. Last month two of the defendants reached a plea bargain with prosecutors, admitting to several fraud charges that carry a penalty of up to 30 months in prison, but they were not charged with terrorism. Hammoud was not among them. Though three of his brothers entered not-guilty pleas in the case, prosecutors say Hammoud slipped out of the United States and is probably back in Lebanon, where Hizbullah gunmen are waging bloody street battles with Israeli troops. "This is a new organization [compared with what it was years ago]," says Bob Baer, a retired CIA agent who spent years in the Middle East. "It's fighting a conventional war." Yet it also has the capacity to carry out devastating terrorist attacks. In Europe and South America, and possibly in the United States as well, that's a threat law enforcers must take seriously.

With Jamie Reno in San Diego, John Sparks in New York and Mark Hosenball in Paris

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Kevin Peraino: Eye For an Eye

Aug. 14, 2006 issue - Hizbullah's fighters were as elusive last week as they were deadly. Thousands of them were dug in around southern Lebanon, and yet encounters with the hundreds of journalists also in the area were rare, and furtive. Like Hussein, as he chose to call himself, who popped out of the rubble in the blasted town of Bint Jbeil, site of what Hizbullah is calling its Great Victory, to crow a little. He was in civvies, the only way the Hizbullah fighters appear in public, but the walkie-talkie under his loose shirt was a giveaway. The hillside nearby glittered with metal in the bright sun. Here and there lay shell casings, mortar tubes, mangled shrapnel from artillery and bombs. Thousands of cartridges, the gold ones from Israeli M-16s, the duller brown from Hizbullah's AK-47s, all mixed together. This was asymmetrical warfare with a fearful symmetry. Hussein picked up a handful of empty brass. "Very close-range fighting," he said, jingling them in his palm. "You can imagine what weapons we have and what weapons they have."

In an olive grove about five miles away, it wasn't necessary to imagine. Under camo netting, half-covered with the broad-leafed branches of a fig tree, was a GMC truck with a rocket-launching platform, probably for the 122mm Katyusha, fired wildly into Israel. It was untouched, unlike its twin a football field away, which lay mangled in an Israeli counterstrike. There was no sign of Hizbullah fighters, though, and locals spoke of seeing little kids running like mad from the rocket batteries after they fired. In Khiam, a teenager on a motor scooter rolled through town, apparently minding his own business—except that the ear bud of the walkie-talkie hidden under his shirt identified him as one of Hizbullah's many scouts. They were hard to find—until they wanted to be found.

Hizbullah is proving to be something altogether new, an Arab guerrilla army with sophisticated weaponry and remarkable discipline. Its soldiers have the jihadist rhetoric of fighting to the death, but wear body armor and use satcoms to coordinate their attacks. Their tactics may be from Che, but their arms are from Iran, and not just AK-47s and RPGs. They've reportedly destroyed three of Israel's advanced Merkava tanks with wire-guided missiles and powerful mines, crippled an Israeli warship with a surface-to-sea missile, sent up drones on reconnaissance missions, implanted listening devices along the border and set up their ambushes using night-vision goggles.

NEWSWEEK has learned from a source briefed in recent weeks by Israel's top leaders and military brass that Hizbullah even managed to eavesdrop successfully on Israel's military communications as its Lebanese incursion began. When Lt. Eli Kahn, commander of an elite Israeli parachutists outfit, turned a corner in the southern Lebanese village of Maroun al-Ras early in the month-old war, he came face to face with this new enemy. "He had sophisticated equipment like mine and looked more like a commando," he recalled. Lieutenant Kahn ducked back around the corner and reached for a grenade, but before he could pull the pin, the Hizbullah fighter had tossed one around the corner himself. The Israeli picked it up and threw it back, just in time. "They didn't retreat," says Danny Yatom, a former director of the Mossad. "They continued to fight until the death."

That combination of modern lethality and Old World fanaticism has taken a deadly toll. By the end of last week, 45 Israeli soldiers had died, and as many as 250 Hizbullah fighters had perished. Thirty-three Israeli civilians had been killed in the rocket barrages, while more than 480 Lebanese had died. But Hizbullah was boasting of its success. As Israel continued to push its ground offensive, progress was painfully slow, one small Lebanese village at a time.

Diplomacy was stalled, too, despite agreement on a U.N. ceasefire resolution expected to pass early this week. By Saturday the Israeli Defense Forces, with six brigades—close to 7,000 soldiers—could claim only to have subdued half a dozen villages, a long way from their goal of establishing a secure buffer zone, possibly as far north as the Litani River.

Israel's cabinet approved the ground campaign after its air war had failed to suppress Hizbullah's fire. On Wednesday the Israelis declared they'd destroyed two thirds of Hizbullah's missile arsenal, but on Thursday Hizbullah launched more than 200, with almost as many on Friday. Hizbullah leader Hassan Nasrallah vowed to strike Tel Aviv if Israel bombed Beirut again, and some thought he might be able to.

The whole calculus of this sort of warfare has changed, as even the Israelis gave grudging high marks to their opponents. The sort of weaponry Hizbullah is deploying is normally associated with a state, and states can be easily deterred by a superior military force like Israel's. They have cities to protect, vital infrastructure. Hizbullah depends to some extent on supplies coming from Iran via Damascus, and last week Israel bombed the last roads from Syria into its neighbor. But the organization is believed to have laid in supplies for at least another month, and when it suits, the Hizbullah fighters can disappear into the population. "We live on onions and tomatoes," said Hussein in Bint Jbeil, as he pulled one off a vine in an abandoned garden.

Last week, when Sheik Ahmed Murad, a Hizbullah spokesman, showed up at the Tyre Hospital to rant against the civilian casualties Israel had inflicted, he was in his Shiite cleric's turban and robes. After the press conference, Murad was escorted away by three bodyguards, then reappeared on the street in untucked shirt and slacks, apparently just another civilian. "Their strategy is a strategy of disappearance," says one Israeli military official, who spoke on condition of anonymity because he was talking about operations. "They are well prepared for this kind of invasion. [But] we are much stronger than them. We can bring a much greater force than they can deal with."

But the Hizbullah guerrillas are well aware of that, too, and they know how averse the Israeli military and public have always been to taking casualties. "The strategy is to make them lose as many [soldiers] as possible," said Hussein, on the cartridge-strewn hillside at Bint Jbeil. "Israel doesn't care about the [loss of a] tank. They care about the people."

As the prospect of a quick victory faded from Israeli view, Israel's military tried to regain the initiative, raiding a Hizbullah safe house in Tyre on Saturday, killing at least three militants in a ferocious shoot-out. Earlier in the week it took five Hizbullah prisoners in a raid on a hospital in Baalbek, in Hizbullah's Bekaa Valley heartland. "It was an attempt to re-create the days of Entebbe," said a senior Israeli security source who is not authorized to speak on the record.

How did Hizbullah morph from its terrorist roots 20 years ago to the formidably organized force of today? The short answer is: experience, leadership and Iran. The group was first pulled together in 1982 by members of Ayatollah Khomeini's Revolutionary Guards as a way to spread Tehran's influence while fighting against Israeli forces that had laid siege to Beirut. The following year the organization became infamous for the suicide bombing of the U.S. Marine Barracks in Beirut that cost 241 Americans their lives, and a simultaneous attack on French forces that killed 56. Soon, Hizbullah added airline hijackings and the taking of American and European hostages to its repertoire.

In 1992, Israeli helicopters blew up the then leader of Hizbullah, Abbas al-Musawi, along with his wife and son. His successor was Hassan Nasrallah, who set a new course for the organization. Under Nasrallah, the militia grew quickly into the single most disciplined and powerful political force in the country. It built schools, hospitals, provided social services and got its members elected to Parliament. At the same time, its soldiers honed their skills at guerrilla warfare battling against Israeli troops still occupying southern Lebanon, studying their tactics, learning their weak points.

All this cost money, but there was plenty to be had. By Israeli estimates Iran has underwritten Hizbullah with $100 million a year. But Hizbullah also gets contributions and "tax" payments from wealthy Shiites in Lebanon and abroad, and revenues from both legal and illegal businesses worldwide. According to a recent study by terrorism expert Magnus Ranstorp at the Swedish National Defense College, its shopping list included night-vision goggles, Global Positioning Systems, advanced software for aircraft design, stun guns, nitrogen cutters, naval equipment, laser range finders and even ultrasonic dog repellers.

Over the years, Nasrallah has dressed like a cleric, but talked like a clear-eyed politician, reciting facts that suited him, cracking jokes and vowing to keep his promises. Cool and charismatic, he broadcast his message not only to all of Lebanon, but to much of the Arab and Muslim world over Hizbullah's Al-Manar satellite television station. The organization's purpose, Nasrallah said, was to fight Israeli occupation. When that ended with an Israeli pullout from South Lebanon in 2000, he argued that Hizbullah must keep its arms and build up its arsenal. The reason: "deterrence."

The effects of Hizbullah's buildup were a dismaying surprise to the Israelis from almost the first day of fighting, when Israel launched a massive retaliation for a Hizbullah raid across the border that had cost them eight soldiers killed and two captured. "The Iranians invested far more than people thought," said the source, who had been briefed by Israel's most senior leaders. "The command and control centers were state of the art. They built a whole network of underground tunnels that enabled them to trap Israeli soldiers ... They were eavesdropping on Israeli military communications with the equipment they received."

Hizbullah's high-tech communications heighten its classic advantage as a guerrilla force fighting on home turf. "The plan was to go deep, but we didn't finish it," said 19-year-old Nahum Fowler, a corporal in Israel's Nahal Brigade who fought in South Lebanon last week. "They know what they're doing. They know their villages really well." His unit never saw the enemy, he said. "We mostly heard them."

A diplomatic end to the fighting may be just as hard to find as Hizbullah's rocket launchers. By last weekend the French and Americans finally agreed on a draft U.N. Security Council resolution calling for "a full cessation of hostilities." But diplomats cautioned this is the beginning of a process, not the end of it. Hizbullah quickly said it would keep fighting as long as Israeli troops were left on Lebanese territory. And Israeli Ambassador to Washington Daniel Ayalon told NEWSWEEK on Saturday that Israel expects Hizbullah to do more now than just hold its fire. "What is important to us is not just that Hizbullah's operations end but also the arms shipments from Iran and Syria. And first they must release the two abducted soldiers." In that case, countries like France and Italy would be reluctant to honor pledges to send peacekeeping troops. "An international force arriving in Lebanon without the war having been stopped ... would be exposed to Iraq-style risks," said Italian Foreign Minister Massimo D'Alema. Worse, they would be up against Hizbullah.

With Richard Wolffe, Michael Hirsh, Dan Ephron and John Barry in Washington and Matthew Kalman in Jerusalem

EDITOR'S NOTE: The death toll rose still further as this week began, with the deadliest Hizbullah attacks yet killing 15 people—nine of them reported to be Israeli military reservists—in northern Israel on Sunday. Israeli strikes killed at least 17 in southern Lebanon on the same day.

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Fareed Zakaria: The Real Story Of Pricey Oil

In March 2005, when a young Goldman Sachs analyst, Arjun Murti, predicted a doubling in oil prices to $100 a barrel, some compared the projection with the exaggerated forecasts of the technology era. But with oil at $70 a barrel, Murti's idea doesn't look bubbly anymore. Now we're experiencing a different conventional wisdom, one that says high oil prices reflect simple economics and there's not much anyone can do about it. Demand is rising, supply can't keep up, so prices rise. But behind the economics lie two powerful political realities that are worth exploring--and that suggest that market fatalism is the wrong response to this looming crisis.

I don't know if the world is running out of oil, a subject of heated debate. Even oil experts really are just guessing. But what's clear is that supply is low because few producers are spending big chunks of money to find and develop new oilfields. Without massive long-term investments, supply cannot keep up with demand. Another Goldman analyst, Jeffrey Currie, estimates that it would take $3.5 trillion dollars (yes, trillion) in the next decade to keep up with rising demand. Actual investments are going to be a fraction of this number.

Why? Partly because oil companies are fighting the last war. Spooked by the 1980s, when oversupply caused prices to collapse, they have been underinvesting for a decade. But private oil companies--the so-called majors--have reversed course. The problem is that the majors are actually the minors now. Exxon, Chevron and BP are small in comparison with the real giants, the national companies of the major oil-producing countries. They--Saudi Aramco, Petrleos de Venezuela S.A. --control more than 70 percent of oil production. And mostly they are not investing for the long term. Why? It's politics, stupid.

There are really only five countries that matter in the world of oil: Saudi Arabia, Iran, Iraq, Russia and Venezuela. And in every one of these countries, the government has questionable legitimacy or competence. Thus political leaders use their oil money to buy political support. They provide vast handouts to their people--gas is 40 cents a gallon in Iran!--in hope of keeping them quiet.

Consider the lineup. Saudi Arabia is actually the best of the bunch. While it lavishes its population with benefits, it has also begun spending to build up its supplies. The others are much worse. Russian production was growing 5 to 10 percent a year in the 1990s but is now increasing at merely 2 to 3 percent. Iran is flat, Iraq is down and Venezuelan production has dropped by half since 2003. In order to build up real capacity, these governments would need to take their oil revenues and reinvest them in projects that would take five to 10 years to spout oil. Which of these countries has that level of stability, confidence or competence?

The second political reality is in the United States. For all the talk about China and India, America remains the gorilla of global gas. India consumes 2.5 million barrels of oil a day. America burns 10 times that amount. The single biggest shift in global demand over the past decade has not been the rise of China but the rise of SUVs. Since the mid-1970s the demand for petroleum in Western Europe and Japan has been flat. In the United States it has doubled.

This ever-rising economic demand in America is fueled by politics. Without a loophole in the law, SUVs would be banned. Without artificially low gas prices, Americans would not guzzle as much gas. The American government subsidizes gas in many different ways, big and small. As consumers, we do not pay for the enormous expense involved in policing the Middle East, an expense we would almost certainly not incur if its chief export was carrots. We do not pay for the environmental fallout from burning gasoline. We get free roads and a free ride. And it might get freer. American politicians are jumping all over themselves to provide tax relief because a gallon of gas might hit $4--while prices in Japan and Europe are close to $7. I understand why the Saudi regime keeps gas cheap to bribe its citizens. But must America do the same?

President Bush has set up an absurd investigation into price fixing and gouging, which at best will be an exercise in futility. But imagine if he set up a national commission on energy that explained to Americans why prices were high. If the president and Congress were to propose a powerful package of measures--higher gas taxes, fuel-efficiency standards starting at 30 and rising to 40 miles per gallon, tax credits for new technologies--it would begin to wean the United States off its addiction to oil. And, it would signal to the market that demand for oil in the United States was likely to slow and stabilize. The fear, uncertainty and speculation that is built into the price of oil right now would ease. I can see the headline now: government acts boldly; oil prices drop. That's not just good economics, it's good politics.

New York: May 22, 2006.Vol.147, Iss. 22; pg. 41

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Lorraine Ali: Red Hot & Blue

July 31, 2006 issue - Christina Aguilera shows up for dinner at an L.A. restaurant looking like Jean Harlow. Her platinum-blond hair is curled just so, her lipstick a perfect shade of retro red; her eyelashes are so long they cast shadows on the wall. The 5-foot-2 bombshell turns heads among the clientele: some recognize her, some just assume that anyone who looks like this must be famous. Aguilera, 25, seems cool and composed. Then she orders a banana split for dinner. "Wanna share?" she asks. When it arrives, it's so big she finds it "a turnoff"; she talks about "pushing artistic boundaries" and "thinking outside the box" while stirring the melting ice cream. At one point, she pulls one of her own shimmering hairs out of the dish. "Ew." She scrunches her face. "I mean, like, ew! Now it's even more gross."

Aguilera has been a Mouseketeer in starlet's clothing, a bubblegum pop star in S&M gear ... and so on. She's changed her look as often as other girls change handbags, and with each new image comes a new sound. This Harlow glam fits her new double CD, "Back to Basics," a set of new songs that pay tribute to vintage blues and jazz. It's a risky move for a pop star, but Aguilera's taken chances before. If any of her peers had tried to pull off the deliberately ugly makeover on the cover of her last record, "Stripped" (ratted black hair, dirty fingernails), they'd now be doing infomercials. But unlike Britney Spears or Jessica Simpson, Aguilera can really sing. "She has one of the best voices out there," says Linda Perry (who's worked with Pink, Gwen Stefani), who wrote the songs with Aguilera and produced disc two. "Her competition is no longer Britney. She's on another level, one where she can compete with those great old voices from the past."

On "Back to Basics" Aguilera takes her cues from Billie Holiday, Ella Fitzgerald and Etta James, who's now a friend of hers. Her take on the blues is not as sacrilegious as you'd think. The first disc, produced by DJ Premier (D'Angelo, Mos Def), mixes hip-hop beats and vintage samples while the second uses all live instruments; together they add up to a unique take on swing and speak-easy blues. Aguilera's vocal range is still awe-inspiring, but there's more to her performance than acrobatics. You can feel these songs. When Aguilera's sexy, she's supersexy; when she's down, she's all the way down, and when she's rowdy, she blows the roof off the joint.

"At a really early age I connected with old soul and blues," Aguilera says. "My grandma used to take me to little record stores around Pittsburgh and buy me old records. I was 6, and I'd sing the songs at block parties. My grandma would get a kick out of hearing me do material that was far beyond my years. I was known around the neighborhood as the little girl with the big voice, and I always liked that contrast." But Aguilera had deeper reasons for gravitating toward the blues: a truly painful childhood. "There's a lot of pain and angst in those songs," she explains. "They spoke to my life before I moved in with my grandma—my father, all the abuse I endured." On one track, "Oh Mother," Aguilera sings about that period directly. "On that song, I thank my mom for leaving him, for getting us out of that situation because it was life-threatening." Aguilera, who got married last November, still avoids contact with her father. "He tries to send letters every once in a while, but I have amazing people around me now and I'm happy, so I don't really long for that relationship. I just don't see the need."

At 12, Aguilera managed to put on a happy face—and plastic ears—when she became a Mouseketeer and shared the stage with Spears, Justin Timberlake and JC Chasez. Her media training from that period seems to have stuck with her: when she's at a loss for words during interviews, she'll fall back on such phrases as "staying true to your heart" and "believing in yourself." Aguilera still has contact with her old Disney clan. "Justin's always been a friend," she says. "I know if I ever needed to call him for anything, I could. Britney and I, we've sent each other wedding gifts." So she and Spears didn't hate each other? Aguilera rolls her eyes. "We were like best friends, but the media saw a navel and blond hair and had to create some drama."

The media's never quite gotten Aguilera. Her self-titled solo debut, in 1999, was dismissed as bubblegum—it sold more than 8 million copies—and Aguilera, then 18, wasn't feeling the music either. "Trust me, I thought that record was fluffy too," she says now. "It was made for that pop time when there was no real substance behind the music." Her first taste of critical respect came with her powerhouse remake of Patti LaBelle's 1976 classic "Lady Marmalade" on the 2001 "Moulin Rouge" soundtrack. But that was soon upstaged by the controversy surrounding Aguilera's sophomore record, "Stripped" (2002), a down and dirty reaction to what Aguilera perceived as her unshakable clean-teen image. She posed topless on the album cover and her "Dirrty" video looked like a black-market adult film. Dressed in leather chaps, red undies and a bikini top, she writhed around in a skeezy boxing ring surrounded by signs that read, in Thai, YOUNG UNDERAGE GIRLS. "Skank" was one of the milder epithets aimed at her. Aguilera admits the image initially detracted from the music, but she has no regrets. "I was proud of myself for having the balls to do it. And you know what I love about that record? Everybody had an opinion. If you liked it, you wanted to root for me—'Look, she's empowered.' If not, well, you'd stick all those labels on me."

Call Aguilera what you want, but there's no denying she's a great talent. And the newfound sophistication of "Back to Basics" should turn some scoffers into believers. "The sexuality coming forward on this record is more softened," she says. "It's more pinup, tongue-in-cheek. It's playful. People take sex far too seriously." If people haven't taken Aguilera seriously enough up till now, you just watch. And listen.

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