Iraq's Economy Wakes Up

Investment and products from abroad begin flowing—along with oil

Boosting private investment won’t be easy. Officials were “raised in a statist environment”

Customers heading for a Baghdad branch of Dar Es Salaam Investment Bank know the drill. You walk through the entrance and heavily armed guards stop you. You get body-searched at least twice. And your phone is taken away before you reach a teller. Mobile phones, of course, can trigger bombs or send a signal to armed accomplices.

Yet Dar Es Salaam (known as DES) is thriving as Iraq begins to show signs of life. Profits have grown from about $600,000 in 2004 to more than $16 million. HSBC (HBC), the giant international bank that bought 70% of DES in 2005, feels so confident that it may put its own brand on the banks. “We think the timing is right,” says James Hogan, HSBC’s country manager. “Iraqis are starting to reconnect to the outside world.”