(FORTUNE Magazine) – Fawaz Ismail heard the whooping sound of a police siren as he cruised his topaz Mercedes out of the parking lot of his favorite Afghan restaurant on a mid-September afternoon. It was just a routine stop, the officer told him. He needed to see some I.D. What the policeman didn't explain--but what Ismail fully understood--was that being an Arab American in suburban Virginia, just a stone's throw from the Pentagon and a few miles from Washington, D.C., was about to get complicated.

Ismail obliged, handing over his driver's license along with two American-flag lapel pins, the same ones his company supplies to the White House, among other customers. "When you see President Bush on TV, these are the exact pins he's wearing," Ismail told the cop. "But I can't take these," the officer parried. "Then give them to your friends," said Ismail before he smiled and drove off.

To some people Fawaz Hassan "Tony" Ismail looks Greek. To others he could pass for Italian or Latino. But to a jittery cop in the aftermath of Sept. 11, the 40-year-old Palestinian-American CEO of Alamo Flags, the country's largest retail-flag enterprise, fits the racial profile of a potential terrorist.

It's an experience shared by lots of Arabs and Muslims these days. In the weeks that followed the September attacks, the nation's three million Arab-American citizens have endured a barrage of bigotry, anger, and suspicion. Passengers have refused to board planes with Arab travelers--or anyone who remotely resembles one. Formerly cordial neighbors have vandalized Arab homes. Patriotic zealots have attacked Arab men, women, and children in the streets. All told, the American-Arab Anti-Discrimination Committee logged more than 440 hate crimes and cases of discrimination and harassment against Arabs and Muslims between Sept. 11 and mid-November. That's almost double the number of complaints it received during all of 2000.

After 16 years in business, Ismail still makes sales calls and installs flagpoles himself. The work keeps him alert and clear-headed, he says. Today he's behind the wheel of his candy-apple-red van on the way to Arlington, Va. After getting lost in a few nondescript cul-de-sacs, he arrives at the customer's home. He greets the woman, asks a few questions about the type of flag and pole she wants, and then paces off some measures in the front yard. "Right here," he says.

"Is this too far from the house?" the woman asks.

"No, no. You don't want it too close. People can see it better out here," says Ismail. "This is perfect. I'll be back tomorrow to dig the hole."

On the way back to the office, he gets a call on his cell phone from an irate man who says he's been waiting all day for someone to install his flagpole. Ismail explains that his staff is stretched thin. "I'll see if I can come out there tomorrow morning," he says. He hangs up the phone and chuckles. "Some disaster happens and all of a sudden people are patriotic."

That's putting it mildly. For as bad as things have been for Arab Americans, the post-Sept. 11 world has been great for flag sales. People are flocking to Ismail's 42 retail stores across the country. Positioned in tourist areas of cities like Atlanta, Boston, and New York, the shops sell not only flags from every nation but also hats, bumper stickers, T-shirts, and even bikinis with flag motifs. In recent weeks clients from the White House and Interpol to McDonald's and the U.S. Postal Service have ordered more U.S. flags than Ismail can stock. The surge in demand helped boost sales more than 200% at his $18-million-a-year company during September and October.

But when it comes to his personal politics, Ismail has had to walk a fine line since Sept. 11. Born to Palestinian refugees in Aman, Jordan, Ismail moved with his family to Mesquite, Texas, at the age of 9. In school he excelled at soccer and football, and later took up weightlifting and boxing. (It was his boxing coach who persuaded him to use the name "Tony" in the ring. "It sounded tougher than Fawaz," Ismail says.) As the oldest of seven children, he worked weekends and summers at his father's grocery store in south Dallas. Over the years Ismail acquired a slight twang, became a huge Dallas Cowboys fan, learned to make perfect barbecued ribs, and earned an international-marketing degree from the University of Texas at Dallas.

Ismail funded part of his education by selling Turkish tapestries--and later flags--from the back of his Volkswagen bus. In 1986 an executive from Coca-Cola approached him on a Dallas street corner and asked whether he could supply the soft-drink maker with flags for all the countries where Coke is sold. The banners would be displayed at Coca-Cola's centennial celebration in Atlanta. It was Ismail's first big order--$12,000. The money was enough to parlay into his first store, which opened in Dallas a year later.

Though he's arguably more Texan than President Bush, Ismail defines himself first as a Palestinian and a Muslim. He prays the required five times each day. (He says when he's busy with work, he often makes up the lost prayer time at night.) With the help of his close-knit family, he's retained his Arab identity--including the anger that many Palestinians share toward Israel. "Palestinians are generous and peaceful, but we are not happy people," he says. While Ismail was growing up, his father regaled him with stories of life in Palestine before Jews settled the area. "The Israeli Knesset sits on land taken from my family," says Ismail, who refuses to refer to Israel by name. "It's Palestine. It's all Palestine."

Like the vast majority of Arab Americans, Ismail condemns the World Trade Center attacks. (According to a recent poll, 65% of Arab Americans say they are embarrassed that the attacks were committed by people from Arab countries.) But at the same time he is sympathetic to Palestinian suicide bombers in Israel. "Those are kids with nothing to live for. I actually say a prayer for them," he says. "Osama bin Laden is worth millions, and he chooses to live in a cave. Why? Because he believes there's a lot of injustice in the world. And he's right. I don't support Osama bin Laden, but I do support the PLO and any group that's trying to free Palestine," he says. He also takes the U.S. to task for not pressing Israel to concede more land and power to the Palestinians.

Controversial views, to be sure. But Ismail never lets his political convictions get in the way of his business. He supplies most government agencies and all but a few foreign embassies in Washington. In 1997, Alamo Flag even designed a special 50th-anniversary flag for the CIA. "We went over there for the ceremony, and they checked me out better than the doctor did for my colon test," he laughs. In his stores the Israeli flags, pins, and patches are displayed just as prominently as Palestinian merchandise. He sells the African-American red, black, and green flag as well as the Confederate Stars and Bars. Last year he fired an employee after she was quoted in the Atlanta Journal-Constitution equating the Confederate banner with the Nazi swastika. "The Confederate flag is the top-selling flag in this country after the American flag," he told her. "This is business, and we don't give our opinions." In fact, a few years ago Ismail even installed a flagpole at the Israeli embassy. "Do you know how hard that was?" he asks.

Ismail has finished his rounds for the day and wants to get in a big meal. Tomorrow is the first day of Ramadan, the month during which, Muslims believe, Allah revealed the Koran to the prophet Mohammed. It's a time to reflect and offer thanks, a sort of 30-day Thanksgiving for Muslims. Instead of gorging themselves, though, Muslims show their gratitude by refraining from food and drink during daylight hours. Devout Muslims are also expected to keep their minds free of impure and malevolent thoughts, which is hard to do when you have impatient customers calling your cell phone. Over dinner at the Peking Gourmet Inn, Fawaz and his CFO, Aladdin Cherkaoui, a Moroccan immigrant and fellow Muslim, debate the proper way to respond to racist customers in the store. A few days ago, Cherkaoui says, "this guy bought a couple of flags. When he saw me behind the register, he asked if the proceeds were going to Osama bin Laden."

"And what did you say to him?" asks Ismail.

"I didn't say anything. Why bother? I'm a turn-the-other-cheek type person," Cherkaoui says with a shrug.

"Not me." Ismail says, shaking his head. "I would sink right down to that idiot's level and explain that Afghanistan and the place where I'm from are, like, thousands of miles apart."

As the waiter places thin slices of Peking duck on their plates, Cherkaoui and Ismail grouse about the situation at Alamo's New York store. Because of Manhattan's tourism shortfall, sales have dropped sharply at Alamo's South Street Seaport location, just a half-mile from ground zero. Not only that, Cherkaoui tells his boss, but the store's manager, Mohammed Mohsen, a Jordanian, was recently the victim of a racist attack. Mohsen had overdosed on his depression medication and been rushed to the Lutheran Medical Center in Brooklyn. In the waiting room, he says, security guards began to taunt him. When the jeers gave way to a shouting match, Mohsen says the guards handcuffed him, took him to a back room, beat him, and stole $450 plus his green card from his wallet. Then they told him, "You're not a human. You're an animal. We're going to ship you back where you came from and put you in a cave where you belong." (The hospital denies anything "untoward" happened.) It's the first Ismail has heard of the incident, and he seems shaken. "This is crazy," he says.

Ismail finds solace for all this in prayer. After picking up a few supplies for a flagpole installation the next day, he heads toward a mosque in Falls Church, Va. The imam leads a prayer and delivers a sermon in Arabic, and then repeats them in English. He tells the men that fasting will absolve their sins and "recharge" them. "You should abstain from lies and untruths--as well as reading or listening to such things," he says. At the end of the lecture he issues a reminder: "When you come to prayer, try to give the true image of our religion. Their eyes are watching us." For Ismail and other Arab Americans, that's a colossal understatement.

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