On Wednesday the Coalition Provisional Authority will shut down and Iraq will be governed by Iraqis.

This is welcome. Opinion surveys show 80 percent of Iraqis approve of the new interim government.

And despite the desperate acts of those closest to Saddam's regime--car bombings, kidnappings, assassinations and sabotage--things have improved.

Schools and hospitals are up and running, children are being immunised against disease and 150 newspapers have sprung up under press freedom abolished by Saddam.

The new interim government will operate under a transitional law more liberal than any in the Arab world, allowing freedom of speech, association and worship.

Its task is to prepare the country for elections early next year. For the remnant of Saddam's reign of terror and Islamic fanatics from Iran, Syria, Saudi Arabia, Yemen and elsewhere, the dream of democracy is a nightmare.

They know they cannot win at the ballot box. A legitimate Iraqi government will round them up or force them to flee.

Abu-Mus'ab Al-Zarqawi--the terrorist responsible for recent kidnappings and beheadings in Iraq--has admitted that the establishment of democracy would be a catastrophic defeat for the cause of Islamic extremism. He and his allies will stop at nothing to destroy Iraqi hopes for a decent, democratic future.

And dictatorships around Iraq know democratic success could bring demands for reform at home.

Nowhere is the prospect of a decent Iraq more menacing than next door in oil rich Saudi Arabia. For years Saudis funded extremists preaching exclusion and intolerance. Now they are under attack from the monster they fed.

Iraq has a bright future. Saudi Arabia may not.

Richard Perle is a resident fellow at AEI.