Luxury Cars, Quiet Streets and Safety -- in Iraq?

We started our journey through Kurdistan high up in the mountains near the Turkish and Syrian borders. We met a shepherd, Ahmad Mohammed Ali, who has 80 sheep, almost as many children (it seemed) and a fairly peaceful lifestyle.

When we asked him about security, he said his only problem was with wolves, who had been attacking his sheep. He didn't know much about the fighting around Baghdad and wasn't that bothered about it either. As a Kurd -- an ethnic minority who are mostly Muslim but not Arabs and don't speak Arabic -- he is different.

All of Kurdistan, we discovered, is different. Although technically part of Iraq, it feels like a different country. The Kurds, who have lived semi-autonomously since 1991 after they rose up against Saddam in the wake of the first Gulf war, now jealously protect their differences.

They have an unofficial border around Kurdistan, checking any Arab Iraqis coming up from the south. There has been no major terrorist attack here for 18 months. During our entire trip in Kurdistan, we didn't hear a single gunshot.

According to the recent ABC News poll "Where Things Stand," 66 percent of the Kurds who dominate northern Iraq say their lives are going well, compared with 39 percent of all Iraqis. (Click here for the full survey)

This relative security proves increasingly attractive to other Iraqis. Many are moving up here to settle down and work, particularly those with high skills, like doctors and engineers. There is a new industry in Kurdistan of private medical clinics, staffed almost entirely by doctors from Baghdad.

Iraq's small Christian community -- about 2 percent of the population before the 2003 invasion, probably less now -- is increasingly moving north, too, escaping the violence in the big cities. There is an area right up close to Turkey that has traditionally been Christian -- for some 1,500 years it housed small villages with churches and monasteries. Now these villages are getting many more Christians moving in, where they feel safer.

Just on the border of Kurdistan is Kirkuk, a city that is half Kurdish -- and peaceful -- and half Arab, Turkomen and Assyrian, where there have been a lot of bombings.

But just 50 miles up the road is Erbil, the biggest city in Kurdistan, and here there is security and a huge boom in business as a result. We met one businessman who is investing $1 billion in an office and shopping complex to house 8,000 shops and 4,000 offices, which he says is the biggest in the Middle East. (Click here for more of Terry McCarthy's interview)

The more time we spent in Kurdistan, the more we realized what the rest of Iraq might begin to look like -- if they can find peace.