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Turkey is misunderstood by most people in Europe and the U.S. - not the least because Turks themselves comfortably call their country European, Eurasian, Balkan, Mediterranean and Near Eastern, and this very modern, actively commercial, long-time NATO member is also a leading voice in the Organization of the Islamic Conference. Its population is only 10 percent smaller than Germany's; it ranks 15th in national wealth among the G-20; its citizens are more than 95 percent Muslim. After shrinking by nearly 5 percent in 2009, the Turkish economy will grow by nearly 7 percent in 2010 - one of the fastest rates of recovery from the worldwide recession.

Nearly two millennia at the crossroads of empires, religions, trade routes and regional conflicts, modern Turkey is once more at the crossroads. This was symbolized at the Oct. 29 Turkish Republic Day celebrations where the Turkish president and his head-scarf-wearing wife hosted one reception, and military leaders, "guardians of the secular state," hosted another.

How did this all come about?

Following the Ottoman Empire's defeat in World War I, Turkey was molded into a secularized republic by its charismatic military leader and first president, Kemal Ataturk. By the time of his death in 1938, Turkey had been radically transformed. The most obvious changes involved European dress, a Romanized alphabet, strict separation of religion from state affairs and a special "guardian" role reserved to the military; a role which has periodically rationalized intervening in political affairs when it thinks secularization at risk. The new Turkish nation-state displaced the multicultural and multilingual empire of the Ottomans.

Turkey managed to remain neutral during World War II, joining the Allied war effort only in February 1945, but was pressured by Soviet territorial claims to choose sides as the lines of the Cold War were being drawn in the mid- and late-1940s. Throughout the Cold War Turkey's orientation was clear: It was Western, and a vital link in the chain of alliances designed to contain the Soviet Union and its satellites.

After joining NATO in 1952, it hosted major American bases in eastern Anatolia and guarded the gates - the Bosporus and Dardanelles - that could have, in wartime, denied the Soviet Black Sea fleet access to the Mediterranean. It was also a member of the Baghdad Pact which linked it to Iraq, Iran and Pakistan to bar potential Soviet access to Middle East oil.

In the late 1980s, however, the demise of Soviet communism triggered significant realignments. Post-Soviet Russia under Boris Yeltsin turned inward and a major concern for Turkey's strategic planners dissipated. With the Soviet threat gone, Turkey needed a new strategic doctrine that recognized a new geopolitical reality.

Sukru Elektag, an experienced diplomat and long-time Turkish ambassador in Washington, argued that Turkey faced potential threats stemming from a variety of unfriendly neighbors and had to be prepared to fight simultaneous wars with Syria and Greece as well as neutralize the internal threat posed by the separatist Kurdish movement (the PKK). Logically, this new strategy called for continuing the traditional partnership with Washington - but also for adding a new strategic partner in Tel Aviv.

By the late 1990s, Turkey saw possibilities for a new role, and, building on its long-time membership in the Council of Europe, the OECD, and the OSCE, made membership in the European Union a major priority. That called for detente with Greece in the Aegean, a more flexible policy regarding Cyprus and a gradual improvement of relations with Syria. After the 2002 elections and the coming to power of Recep Tayyip Erdogan and his Justice and Development party (AKP), Turkey abandoned the confrontational aspects of Elektag's strategic doctrines and began to define a different role.

Highly skeptical of U.S. intervention in Iraq in 2003, eager to put some distance between Israel and itself and confident of solid economic performance that matched those of China, India and Brazil, the Erdogan government, following its decisive reelection in 2007, was ready to redefine Turkey's place in the world.

Erdogan's foreign minister, Ahmet Davutoglu, emphasizes a broad strategic perspective and calls for "zero problems" with all of Turkey's neighbors. EU membership is still a priority, but enlargement fatigue and Franco-German opposition are dimming hopes. Turkey and Brazil have proposed an alternative method of dealing with Iran's putative nuclear plans and have not supported recently expanded UN sanctions. Turkish-Israeli relations deteriorated following the latest Israeli invasion of Gaza and Erdogan's vocal criticism of Israeli settlement policies in the occupied Palestinian territories of the West Bank.

Erdogan and Davutoglu are clearly trying to position Turkey as a go-between that can help broker peaceful resolution of Middle East issues, which, in fact, supports Western as well as regional interests in stabilizing precarious situations that have festered for decades.

As the Erdogan government prepares for national elections and the possibility of a new constitution, senior members of the armed forces are awaiting trial for secretly conspiring to destabilize the country's democracy. The symbolism of separate Republic Day celebrations - all because military officers dedicated to Attaturk's secular principles did not wish to shake hands with president Gul's wife, who was wearing the highly controversial head scarf - is not lost on the Turkish public, and should not be lost on outside observers, either.