%mlink(STRY:; PHOTO:NY182-071402; AUDIO:%)

DAMASCUS, Syria (AP) _ When Mouayad Takidin decided to open a franchise of a Canadian coffee shop chain in Damascus, he could not begin to imagine the frustrations ahead.

Like finding someone who could print the logo on the cups. Or produce the right size of straws. Or make plastic boxes for the tuna and cheese sandwiches.

In the end, he had it all done in neighboring Lebanon. But it left the 27-year-old Syrian-American wondering when Syria would make the leap into modernity promised by its president.

``I want the government to improve the country,'' Takidin said. ``I feel the president wants to do a lot of things for Syria, but when? Things are moving slowly. Why?''

Those are questions many Syrians are asking as President Bashar Assad's second anniversary in power approaches. He promised sweeping reforms in his inaugural speech July 17, 2000, but few of them have come about.

On the surface, Syria today appears younger, livelier and more efficient than it was a few years ago under Assad's father, the late Hafez Assad. There are cell phones, satellite television, trendy restaurants and Internet cafes with operators who know how to find detours to Web sites blocked by the government. The country's first mall opened last year.

However, below the surface, the system remains corrupt and decrepit, unable to make the changes that could propel Syria and its 17 million people into the 21st century.

Diplomats say the 36-year-old president is eager to turn this former Soviet client state into a dynamic power, but is slowed by an old guard that fears change. The education system churns out far more bureaucrats than entrepreneurs.

On Syria's foreign affairs front, the Sept. 11 attacks in the United States have brought more pressure from Washington to cut ties with the extremist Palestinian groups it harbors and the militant Lebanese Hezbollah group it supports.

On the issue of Mideast peace, Assad has not deviated from his father's refusal to negotiate until Israel agrees to return the Golan Heights seized in the 1967 Mideast war.

Relations with Israel have not improved. Last year, Israeli warplanes blasted a Syrian radar station in Lebanon, where Syria is the main power broker, killing three Syrian soldiers. The strike, the first in five years against the Syrian military, retaliated for an attack by Syrian-backed guerrillas that killed an Israeli soldier.

A month later, Assad shocked the West when, in a speech welcoming Pope John Paul II, he used unmistakably anti-Semitic language to attack ``those who ... betrayed Jesus Christ and ... tried to betray and kill the Prophet Muhammad.''

Syria can point to one diplomatic triumph. In January, it joined the 15-nation U.N. Security Council for two years _ no small feat considering it is on Washington's list of terrorist sponsors and some claims of responsibility for Palestinian suicide bombings in Israel are made from Damascus.

The younger Assad, a London-trained ophthalmologist, assumed power without a team that shares his vision. He has appointed only one close associate to a high post _ Tourism Minister Saadallah Agha al-Qalaa _ and his signals have been mixed on civil liberties.

In his inaugural speech, Assad said the country desperately needed constructive criticism, which intellectuals interpreted as a green light to speak out.

But last summer, 10 of them were jailed on charges ranging from attempting to change the constitution to inciting sectarian conflicts.

``We apparently misread the reality on the ground,'' said Hasan Abdul-Azim, one of the defendants' lawyers. ``We had thought the speech was a positive and important step that opened the door wide for change and reform.''

The judiciary remains corrupt and bureaucracy remains entrenched. New laws in banking, commerce and tax are talked about, but only some have been implemented.

``There are a lot of vested interests which are hindering reform and putting up obstacles,'' said Nabil Sukkar, a former World Bank economist who runs a private investment and development firm in Damascus.

Unemployment is estimated at 20 percent while economic growth is estimated at 2.5 percent. Meanwhile, the population grows at 2.7 percent a year and two-thirds of Syrians are under 25.

Still, Assad himself has the advantage of youth: He can outlast the old guard. And many Syrians believe he has at least put the country on the right track, with changes that once would have been unthinkable.

State-run television for the first time is airing live reporting and showing programs that touch on corruption, economic problems and current affairs. One such program is broadcast weekly from Washington.

A Ministry of State for Expatriate Affairs has been established to lure back overseas Syrian capital, estimated at $30 billion-$80 billion.

A drive to increase tourism revenue from 7 percent of the gross domestic product to 20 percent has resulted in more smiles and quicker formalities at airports for the mostly Arab tourists visiting Syria. One of the capital's landmarks, Hamidiyyeh Souq, has been cleaned up.

Moreover, after so many years under the remote, austere Hafez Assad, Syrians delight in telling stories about encountering his son at stores, the theater or restaurants.

Majed al-Baladi recalls a recent April night when he was about to close his grocery. A couple pulled up in a black Audi, walked in and asked for spices, chips, juice and cans of sardine, tuna and tomato paste.

``They were just like other couples who come here to shop,'' said al-Baladi, 35. The couple just happened to be President Assad and his wife, Asma.