When the United States invaded Iraq, it did so thinking that it could turn the country into an economic dynamo fueled on oil reserves that are among the largest in the world. “Iraq is open for business,” L. Paul Bremer, the top U.S. administrator in Iraq at the time, said in 2003.

But the fighting never really stopped, and the U.S. vision was never really realized. Now, with American troops gone, the question is: What can Iraq build on its own? So far — with the nation’s leaders locked in a political crisis and insurgents launching spectacular attacks — the signs are not good.

A view of these obstacles, playing out on a smaller scale, can be found behind 10-foot blast walls on the floor of the city’s tiny stock exchange. Investor Saad Jaleel began the year hopeful, buying $1,600 worth of shares in the Iraqi Middle East Investment Bank. But by the third day of trading, watching the market creep down, he stopped.

“People are just waiting and worried, because of the political and security situation,” said Jaleel, 52, a former stationery store owner.

The stock exchange, with only 45 actively traded companies, is hampered by Iraq’s dysfunctional business climate, which, analysts say, lacks adequate laws to govern investments, taxation and property issues. Three massive generators are parked outside the building, keeping the lights running. Just showing up is an act of courage.

Two blocks away are the charred remains and rubble from a Dec. 22 car bombing, which occurred outside a government anti-corruption agency and killed more than a dozen people.

But Jaleel remains bullish about his country and said he will get back to trading this week. “Within three years,” he said, “we will have total change.”

Tough business climate

Iraq sits on an estimated 143 billion barrels of proven oil reserves, according to the World Bank, which recently projected that growing oil exports will boost the country’s gross domestic product by 12 percent this year, among the fastest rates in the world.

But part of that growth reflects dramatic business activity in the country’s semiautonomous Kurdish region. And, more broadly, the challenge for Iraq is that the oil revenue passes through the government, which traditionally hasn’t spent the money well or done enough to diversify the economy, according to U.S. and Iraqi officials.

Iraq ranks 159 out of 227 countries in per-capita income, according to U.S. government statistics. The World Bank ranks Iraq 164 out of 183 countries in terms of ease of doing business, down five spots from the year before. Corruption rankings, according to Transparency International, are worse.

But rather than try to improve the country’s standing, political leaders in recent weeks have spent their time fighting one another, trading accusations of terrorism and incompetence, moving to consolidate power and boycotting the parliament. The political drama has made it more difficult to do business, with government bureaucrats unsure not only how to process work but also who runs their agencies.

“In Iraq at the moment, you’ve got no idea what is going on,” said a businessman who spoke on the condition of anonymity to be candid.

Small merchants say shoppers aren’t spending as much amid uncertainty about what the future holds.

“When the crisis took place and the blasts took place, the people became conservative,” Emad al-Khafaji, a tailor in Baghdad’s Karrada neighborhood, said recently while taking a break from hemming a garment.

Around the corner, other merchants have noticed business slowing since the political crisis and waves of bombs erupted after U.S. troops left Dec. 18. Haider al-Kwaz, 24, works in a family-run shop that sells men’s clothes. He said business has been down 50 percent in the past three weeks. “The owners are sitting in front of their stores like they are sitting in front of their houses,” Kwaz said.

‘A lot of uncertainty’

Violence took a sharply sectarian turn Thursday, when a suicide bomber killed 48 Shiite pilgrims walking to the holy city of Karbala and explosions killed 24 people in Shiite neighborhoods in Baghdad. If such attacks continue, the slowdown the merchants are feeling “could become worse in a hurry,” said Anthony H. Cordesman, an analyst at the Center for Strategic and International Studies and author of a recent paper titled “The Broader Crisis in Iraq.”

Hussain al-Shahristani, the country’s deputy prime minister for energy affairs, said the government is committed to diversifying its oil wealth into new areas of the economy — and doing so through real democracy.

“People in this part of the world have been told that they have to choose between freedom or prosperity,” Shahristani said. “In Iraq, we are determined to prove them wrong.”

He said that power plants are under construction and that more oil will be exported through a tanker terminal set to open this year. As for political disputes and bombings, he said they have had little effect on foreign oil companies.

“If they have complaints, it’s not about the political debate or the bombings in Baghdad or elsewhere, it’s about some bureaucracy at seaports, at custom clearances, visa applications and so on,” Shahristani said. “We have come a long way, but still the companies expect speedier procedures, and I do fully agree with them.”

British insurance executive Jonathan Biles founded Iraq Gate Insurance Brokers in Baghdad in 2009, with policies that cover construction liability, kidnapping and ransom, among other areas. He takes the long view of economic development in Iraq.

“If you had a one-year plan, you would never come,” he said. “If you had a three-year plan, you would be constantly weeping. If you have a five-year plan, you may just be thinking things were going OK. But with a 20-year plan, it has to work.”

Still, as foreign companies weigh investing here, Biles said he worries that they will look at recent events and go elsewhere: “Money looks at the whole world, and money doesn’t like uncertainty. And, right now, you’ve got of lot of uncertainty in Iraq. Will this uncertainty hamper investment in the new Iraq? I suspect it will.”

Trading amid bad news

At Rabee Securities, located two blocks from the Iraq Stock Exchange, the blast last month blew out windows and caved in parts of the ceiling.

One of Rabee’s traders, Tamara Hussain, lost her sister in the explosion. She worked as a lawyer for the government’s anti-corruption agency.

But Hussain was back at work in the new year. “I can’t stay at home and see my mother crying all the time,” she said from her desk at Rabee’s repaired offices. “I try not to think about the bomb.”

Down the hall, a half-dozen investors requested trades from Rabee brokers, who made the transactions over laptop computers. Electrical engineer Saeed Dharhi, 58, wants to buy bank shares. But as the market slipped this year, he has not purchased any stocks. “Bad news in politics and explosions,” he said.