EIRUT - In a desert full of despots, the lush green of Lebanon was always something of an oasis - an Arab nation with a vibrant civil society, free press, market economy, and the closest thing to a Western-style democracy in the region. Much of that was crushed during the country's vicious 16-year civil war, which ended in 1991 more out of exhaustion than resolution.

By now many of the bombed-out buildings in downtown Beirut have been rebuilt, the chain-smoking, super-thin models are back on display at the trendiest nightclubs, and the government has worked to recapture the feel that gave this Mediterranean city its prewar nickname of the ''Paris of the Middle East.'' As much as most Lebanese are disenchanted with how far they still are from their glory days, many find themselves looking on with a combination of bewilderment and anger with all the talk from Washington about promoting democracy and openness in the Middle East.

As President Bush has spoken confidently about building democracy in Iraq and about toe-dipping moves toward political reform in the monarchies of Morocco and Bahrain, many here have been struck by the silence about Lebanon. If Washington is serious about its democracy initiative, they argue, it should begin in Lebanon, both by helping to reverse the slide away from democracy and by using it as a case study to understand the forces - good and bad - that might emerge in a post-Saddam Hussein Iraq.

''For all its faults, Lebanon is the only country where you don't have to start from scratch,'' said Farid el Khazen, chairman of the political science department at the American University of Beirut. But if it is to be a model, the question becomes, which Lebanon? Both oasis and battlefield, the country is proof that myriad religious and ethnic sects can coexist in a prosperous, democratic society - and that it can all quickly disintegrate amid brutal fighting along sectarian lines.

Surely, there are useful lessons for Iraq, whose Sunni, Shia, and Christians, its Kurds, Turkomans, and Assyrians, have been held together for decades by the sheer repression of a ruthless dictator. Lebanon is also an example of how perceptions can be deceiving. Many argue that one of the root causes of its civil war was that the vibrancy and selective power-sharing of Beirut's go-go days masked the poverty and disenfranchisement suffered by some groups, particularly the Shia. And today many argue that beneath the meticulously restored sand-colored structures of the new downtown and the robust debate in Lebanon's Parliament and press, there is growing poverty, a crushing $30 billion national debt, and an authoritarian regime in neighboring Syria calling all the shots.

''What we have now is like a theater playing democracy,'' said Raymond Nader, a former member of the Christian militia who is now an executive with the Catholic television network Telelumiere. ''It's not real.'' Lebanon's current state is in some ways linked to the last US war with Iraq.

In the lead-up to the 1991 Gulf War, the last Bush administration was widely believed to have given then-Syrian leader Hafez Assad a freer hand to consolidate power in Lebanon in exchange for his crucial support for the coalition against Hussein. Assad had already become the most important outside figure in Lebanon by skillfully playing factions within factions off one another amid the fatigue of the civil war's final years.

Khazen, an outspoken critic of the Syrian role, says that even if the Bush administration has little interest in Lebanon itself, it would be foolish not to examine the Arab world's only real experience with democracy for insight into building a new one in Iraq. Although there are many differences between the two countries, Lebanon and Iraq were both quickly created by European powers after World War I, when disparate Ottoman jurisdictions were cobbled together. Both have diverse populations, with divisions not just between Sunni and Shia, or Muslim and Christian, but even between communities that consider themselves Arab and others that do not. Both have Shia as their biggest sect and the one that historically has been most shut out from power.

''The parallels between Iraq and Lebanon are actually quite impressive,'' said Augustus Richard Norton, a Boston University professor who has written extensively on Lebanon. If Iraq is to make the transition from ruthless dictatorship to robust democracy, Khazen says, given its numerous and long-repressed factions, how can it not begin with something like the Lebanese approach? Under the Lebanese ''confessional'' system, power is rigidly apportioned to its nearly 20 sects, or confessions, so that the president is a Maronite Christian, the prime minister a Sunni Muslim, and the speaker of Parliament a Shia Muslim. That approach, which extends to lower levels of the bureaucracy and most levels of life in general, has assured that no single group can become dominant enough to wipe out another. In fractious societies not under the thumb of a dictator, such assurances may be an essential starting point. ''The post-Saddam situation in Iraq should help people rediscover the merits of the confessional system in Lebanon,'' said Khazen, a Maronite.

''It has deficiencies, yes. But it's much better than any of the other authoritarian regimes.'' Yet others in Lebanon say that if, after war in Iraq, Lebanon is the best blueprint that the Americans and Iraqis can come up with, God help them both. ''I hope they don't try to replicate it in Iraq - it will be a chain around the neck of the body politic,'' said John Waterbury, president of the American University of Beirut.

''The Lebanese are not comfortable with it - they just can't figure out what to replace it with.'' In many ways Lebanon is a cautionary tale for Iraq. Members of the Bush administration have argued that a democratic Iraq would become a beacon of change for the region. But Lebanon stands as a reminder that a democracy surrounded by authoritarian regimes is going to be the most vulnerable to regional upheaval. ''You can't have an island of democracy in the Middle East and expect it to do well,'' said General Michel Aoun, the exiled former prime minister of Lebanon, in a phone interview from his home in France. ''The others will destroy it just like they did Lebanon.'' And if a power-sharing system makes sense for Iraq as a first step toward democracy, the Lebanon lesson is that it could turn out to be the final step. After all, when Lebanon's confessional system was introduced in 1943, it was supposed to be temporary. But when power is doled out to sects rather than individuals, the sects become the defining groupings in society and their leaders tend to fight any efforts that might dilute their power. This, after all, is a nation whose last official census was in 1932.

Under the agreement that ended the civil war, power in Lebanon was recalibrated - Muslims gained some, Christians lost some - but the sectarian divisions have only gotten stronger. ''When you know the government is the last place for you to go, you tend to crouch back to your sect,'' said Jamil Mroue, publisher of the English-language Lebanese newspaper The Daily Star.
''Why should I need to go to the leader of my Shia confession if I have a rent problem? This is crazy.''

After a decade of heavy Syrian influence over Lebanon, there is considerable worry across many sects that Lebanon's distinctive openness may never return. ''We are getting closer to a police state like Syria,'' said Nawaf Salam, a prominent Sunni attorney whose uncle was a long-serving prime minister of Lebanon. ''I wouldn't go so far as to say we are sinking into authoritarianism, but definitely I would say democracy is not doing well.''

Yet the fact that Syria's role can be discussed today in Lebanon is a big improvement over just a few years ago, when people were automatically jailed for such boldness, says Ghassan Moukheiber, a longtime democracy activist and newly elected member of Parliament. ''It's still sensitive but it's no longer taboo,'' he said. Last month Syria even withdrew an estimated 2,500 of its 20,000 troops in Lebanon. Moukheiber says it's important that the Lebanese, as dispirited as they may be over the state of their democracy, remember the advantages they have over the rest of the Arab world, and continue the struggle so they can be a model for places like Iraq. ''In the kingdom of the blind,'' he said, ''the one-eyed is always the king.''