Erbil, the capital of the Kurdish Autonomous Region of northern Iraq, is less than an hour’s flight from Baghdad but almost a world away. While the insurgent-plagued airport road in Baghdad is known as the “Highway of Death,” the road from the newly opened Erbil International Airport, plagued by nothing more dangerous than cyclists in spandex, wends through construction for a real estate development called “Dream City,” a planned community of several hundred California-style detached single-family homes, a supermarket and an American school. Fueled by oil wealth from rich fields in the region, Kurdistan has all the appearance of a budding market economy, with many of the appurtenances of Western capitalism.

But the safety and progress in northern Iraq has come at a cost — and the Kurdish government may be paying for it now. While the Kurdistan Regional Government has a parliament and a president, the administration of Kurdistan is carved up between two rival political parties the Kurdish Democratic Party (KDP) in Erbil and the adjoining Dohuk governorates, and the Patriotic Union of Kurdistan (PUK) in Suleymania Governorate. The two parties monopolize power in their respective territories and their despotic tendencies threaten civil liberties and the fledgling democratic process, creating an environment that is rife with corruption and repression. Frustration at this dual monopoly appear to have been behind a violent outburst yesterday at Halabja, the town on which Saddam Hussein inflicted a barbaric chemical attack in 1988, killing 5,000. It was the anniversary of the atrocity, and the mob destroyed the government-sanctioned shrine to the victims of the attack.

While the KIU played a role in inflaming political debate ahead of the election by accusing their rivals of being American and Israeli stooges, the incident reflected the fact that the KDP and PUK rule Kurdistan in part by force and fear.

Police State

Kurdistan is a veritable police state, where the Asayeesh — the military security — has a house in each neighborhood of the major cities, and where the Parastin “secret police” monitors phone conversations and keeps tabs on who attends Friday prayers. While these security measures are an important part of why Kurdistan has largely kept jihadi and resistance cells from forming within its borders, security measures are often used by the ruling parties as an excuse to crack down on opponents and independent civil organizations, according to these groups. “Our members are regularly thrown in jail for seven or eight months at a time without cause,” said Hadi Ali, the Minister of Justice, the token KIU minister in the KDP-dominated Erbil administration. “When they get out I tell them that they are lucky to be alive and to keep quiet.”

The KDP and PUK each have their own militias, which are essentially the armies of the local governments. According to the Minister of Justice, the courts in the region are almost completely politicized, with judges often rubber-stamping party decisions. The secret police even have their own judges, he said. During each of Iraq’s three elections in the past year, police officers openly campaigned for the ruling parties. Schools, hospitals and other government building carry portraits of the respective party leaders, and access to education, jobs and career advancement is often determined by party affiliation. Demonstrations are banned unless they are party-sponsored. “Kurdistan isn’t a civil society, it’s a partisan society,” says Rebwar Ali, head of the Kurdistan Student’s Development Organization. “The presidents of the universities, the university council, the deans and the heads of the departments should all be members of one of the main parties, KDP or PUK. Admissions aren’t based on merit, they are based of membership in one of the two parties. Scholarships are only for party members.” Big business contracts depend on connections and political affiliations as well, leading to a pandemic of corruption, according to Kurdish businessmen and anti-corruption groups.

The KDP and PUK do include some smaller parties in their governing coalitions and on their electoral lists, especially those composed of ethnic and religious minorities, such as Assyrians Christians and Turkomen. But established opposition parties say that these small parties have either been bought off or wholly invented by the ruling parties, in order to give the appearance of diversity and broad support. “It’s the old Middle Eastern mentality — that it’s not enough just to win an election, they want to win by 99%,” says Salim Kako, an official with the Assyrian Democratic Party. “Everyone has to agree. You are not allowed to have your own opinion.”

A Hundred Small Saddams

Sunni-dominated Kurdistan is a tolerant refuge for religious minorities, who are free to worship as they please, these groups say. But the ruling parties keep tight rein over the Muslim religious establishment through the Ministry of Awqaf, an institution that was created by Iraq’s British overlords in the 1920s to control mosques, mullahs and what gets said in Friday sermons. The Baathists maintained the Awqaf as a useful tool of coercion, but it was disbanded by the American-appointed Governing Council in 2003 and forbidden by Iraq’s new constitution. Yet Ministries of Awqaf still exist in Kurdistan, and are still used to enforce political orthodoxy. “Instead of one big Saddam, we have a hundred small Saddams in Kurdistan,” says mullah Ahmed Wahab, a member of the Iraqi parliament for the KIU and the head cleric of mosque in Erbil until he was fired by the Erbil Awqaf on the pretext that he held two jobs.

The media in Kurdistan is extremely partisan and prone to propaganda. There are no independent television stations in the region, and the future is grim for independent radio news, according to Kurda Jamal, head of US-funded Radio Nawa. “Kurdistan isn’t suitable ground for a free media,” he said. “If America wasn’t here and if America wasn’t funding us, the parties would move to shut us down.”

The lack of protection for free speech and the politicization of the security services and judiciary in Kurdistan were made apparent by the case of Dr. Kamal Said Qadir, a jailed law professor and journalist. Dr. Kamal, who is also an Austrian citizen, criticized Masoud Barzani, who is both the President of Iraqi Kurdistan and the head of the KDP, and other members of the Barzani family, calling them “traitors to the Kurdish issue” in articles published on an opposition website run by Kurdish expatriates. When Dr. Kamal returned to Erbil last October, he was arrested and tried in secret. He was sentenced to 30 years in prison for threatening the security of Kurdistan.

Dr. Kamal’s sentence is likely to be drastically reduced after appeal. In an interview, Barzani to TIME that the laws under which he was charged need to be changed. Says Barzani: “Although he has been very aggressive and libelous against me personally I have forgiven him personally for what he has written about me and ask other people whom he has been writing against to forgive him as well.” Still, the treatment given to Dr. Kamal sent a clear signal to journalists and government critics. “There are red lines that you cannot cross,” said Saman Fawzi Omer, a professor of law at Sulymania University. “You cannot criticize the leading members of the PUK and KDP or this is what happens to you.”

Security and Self Rule

For all their abuses, the Kurdish ruling parties still have a great deal of legitimacy among the Kurdish people. That's in part because they deliver what Kurds haven't had for almost as long as anyone can remember: security and self-rule. "There is still more to be done in Kurdistan," said Jamal Salih, 49, a shopkeeper from Halabja, who survived the Iraqi military's gas attack that killed 22 members of his family and about 5,000 other residents of Halabjja in 1988. Though he lives without a pension despite his years as a PUK peshmerga commando, and though he rebuilt his home and his shop without help from the government, he isn't bitter. "The important thing is that we are Kurds being governed by Kurds," he said.

And there are signs of a movement from within the parties to reign in the excesses created by the two-party dominance. In January, the Kurdish parliament announced plans to merge the two administrations. Barzani told TIME that one of the driving forces in merging the administrations was to prevent abuses created by individuals within each party. "The aim was to have some constitutional institutions in the country so that the PUK and the KDP and together with the other parties could become civil society parties, so that law will be the ruler in this country, so that there will be transparency in the region."