Two women giggle lightheartedly on the white sands, sitting in their knee-length pants with their bare legs and manicured toes touching the warm waters of the Persian Gulf. Down on the biking track, two men negotiate with a red-haired hooker in glossy makeup. A man whispers in the ears of passers-by, ''New beverages available,'' using a code for Russian vodka.

Kish, a tiny coral island 10 miles off the coast, is definitely not an ordinary spot in the Islamic Republic, where for the past two decades women have been forbidden to expose body parts, and prostitution and the use of alcohol are weighty sins.

Over the past decade, Kish has come to be known as an oasis of luxury and laxity. It became a free-trade zone in 1989, when the authorities tried to recapture at least a sliver of the billions of dollars that fled the nation after the 1979 revolution by gradually loosening social restrictions in the hope of luring Iranians who tended to vacation in Dubai.

Now, a million tourists travel to Kish each year, almost all Iranians, and the authorities say they spend more than $100 million.