A smart terrorist understands that he is not engaged in conventional warfare. Instead he kills to call attention to his cause, to radicalize moderates, to disrupt the lives and livelihoods of those who would prefer not to be involved, to provoke his opponents into actions that drive more people into his camp.

In case you haven't noticed, the people running Al Qaeda are smart. Saturday's bombing in Bali, presumably carried out by a group connected to Al Qaeda, was monstrously evil. It was also, I'm sorry to say, very clever. And it reinforces the sinking feeling that our leaders, who seem determined to have themselves a conventional war, are playing right into the terrorists' hands.

Indonesia, the world's most populous Muslim country, has not been a major breeding ground for terrorists. It is, however, a nation with severe economic, social and political problems — the kind of problems that could radicalize the population and turn it into a terrorist asset. And Saturday's bombing was clearly an attempt to intensify those problems.

To understand why the attack was so clever, you need to appreciate Indonesia's fragility. Five years ago the country became the biggest victim of the Asian financial crisis. When inflows of foreign capital dried up, the economy's modern core imploded; big companies that had borrowed overseas found that their debts had ballooned to unpayable levels.

What saved Indonesia from complete economic collapse, and made a partial recovery possible, was the resilience of the country's economic and geographical periphery. The big companies on Java were devastated by the plunge in the rupiah, but smaller enterprises, especially on the other islands, saw the weak currency as an export opportunity. That included, in particular, the tourist industry of Bali, which has flourished in post-crisis Indonesia as an affordable destination for foreigners.

Now who will vacation on Bali? Indonesian officials are putting a brave face on it, assuring tourists that they are still safe, insisting that the economy can handle the blow. But it seems all too likely that the bombing has effectively destroyed one of the country's key industries. And given the already wobbly economy and the already weak authority of the government, a serious setback might set the stage for social and political turmoil — maybe with an ethnic and religious edge. For Indonesia is an overwhelmingly Muslim country in which a small ethnic Chinese minority, mainly Buddhist or Christian, dominates the economy.

In short, the people who set off that bomb knew what they were doing.

The bomb blast in Bali followed bad news from the world's second-most-populous Muslim country. Hard-line Islamic parties did unexpectedly well in Pakistan's election last week, and Pervez Musharraf's hold on power may be slipping. Do I need to point out that Pakistan is a lot bigger than Iraq, and already has nuclear weapons?

And that gets to my worries over the direction of U.S. policy. I don't think we could have done anything to prevent the blast in Bali — but the attack does suggest that our early military success in Afghanistan has done little to weaken terrorist capabilities. It's not clear whether the U.S. could have done anything to improve the situation in Pakistan, though it might have helped if we had done a better job in Afghanistan, both in pursuing our foes and in helping our friends; it might also have helped if the administration had made good on its promise to let Pakistan increase its textile exports to the U.S. .

What's clear is that the biggest terrorist threat we face is that one or more big Muslim countries will be radicalized. And yet that's a threat hawks advising the administration don't seem to take seriously. The administration adviser Richard Perle, quoted by Josh Marshall in The Washington Monthly, brushes off concerns that an invasion of Iraq might undermine the stability of Middle Eastern regimes: "Mubarak is no great shakes. Surely we can do better. . . ."

Meanwhile, plans to invade Iraq proceed. The administration has offered many different explanations, some of them mutually contradictory, for its determination to occupy Baghdad. I think it's like the man who looks for his keys on the sidewalk, even though he dropped them in a nearby alley, because he can see better under the streetlight. These guys want to fight a conventional war; since Al Qaeda won't oblige, they'll attack someone else who will. And watching from the alley, the terrorists are pleased.

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