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Until the old man is out of the way, everyone else who hungers for power in Iraqi Kurdistan is on hold. It could be a long wait. Despite his chronic bad knee and a Mayo Clinic heart operation last August, 75-year-old Jalal Talabani, Iraq's president, is a survivor. At present, he and his longtime rival, Massoud Barzani (together with their families and their respective political machines), still control the largest part of what's worth controlling in the three northern Iraqi provinces that make up the autonomous region. Government ranks are filled with their relatives. Barzani himself is president of the Kurdistan Regional Government, while his nephew Nechirvan is its prime minister and his son Masrour is in charge of intelligence. Talabani's son Qubad is the Kurds' man in Washington, while a nephew heads counterintelligence. Backers once touted Kurdistan as the model for a democratic Iraq—perhaps even for a total makeover of the Middle East. But if anything, the place seems more and more like a stagnant, feudal principality.

Kurdistan used to be the Americans' favorite part of Iraq. Temperate and stable, pro-Western, mostly secular and gleefully capitalist, it was a haven from the chaos and bloodshed that engulfed the rest of the country. It was never perfect—then as now, corruption was endemic, human rights were patchy and civic life was dominated by the same two parties: Barzani's Kurdistan Democratic Party (KDP) and Talabani's Patriotic Union of Kurdistan (PUK). Still, most Kurds could live with the flaws as long as the regional government defended their hard-won autonomy and kept away the suicide bombers.

But as the rest of Iraq keeps growing more open and democratic, the enclave remains stuck in its old ways—and ordinary Kurds are noticing. Businessmen grumble at having to form partnerships with government cronies; voters are demanding more choice. One recent survey in the region found that 83 percent of respondents say the place needs to change. "We're fed up with a government that forgets about people," says Mousa Rasoul, 39, owner of a small business in the town of Sangasar. Those complaints are not to be ignored, a senior Kurdish official agrees. "If we don't respond, others will come and take over this place," he tells NEWSWEEK, asking not to be named on such a risky topic. "Whether it is the Islamists or someone else. We cannot count anymore on revolutionary rhetoric to justify our rule."

Such warnings may be wasted on Kurdistan's two great clans. Talabani created the PUK in 1975 as a leftist challenger to the "feudalist, tribalist, bourgeois, rightist and capitulationist" KDP of the Barzani family. Thousands on both sides are said to have died before the two parties signed a formal ceasefire in 1998 and carved up the region. They gave up their ideological differences long ago, and neither hides its desire for a piece of any action in sight—starting with the region's share of the national budget, which totaled about $6 billion last year. Kurdish officials say each of the two parties takes as much as $35 million per month off the top, although party leaders deny any knowledge of such sums.

Even the Kurdish budget is undisclosed. "We need a transparent [regional] budget," complains the senior Kurdish official. The vast majority of Kurds agree. In a February poll by the Erbil-based Kurdistan Institute for Political Issues, 94 percent of respondents said the regional government ought to make its budget public and specify where and how the money is spent.

Much has been made of Kurdistan's booming economy, but the region is littered with unfinished construction projects. Most foreign investors, daunted by red tape and confusion, are skittish. A former member of the PUK politburo says no oil company operates in Kurdistan without paying commissions to party or regional-government officials. NEWSWEEK was at a recent meeting where one local entrepreneur complained to top Kurdish officials that businessmen have to pay millions to party bureaucrats to win contracts. The officials commiserated.