Participants in an Iraq reconstruction conference differed, however, on whether a new law that opens up the country to foreign investors was the right answer to decades of a state-controlled economy which left the private sector "completely disenfranchised," as one banker put it.

Calling for the repeal of CPA law 39 enacted by the now defunct US-led Coalition Provisional Authority, London-based Iraqi banker Basil al-Rahim said the law states that Iraq "should be opened immediately to foreign investment," except for property and oil and other natural resources.

"The problem is that you're approaching an economy that has been state-managed for 35 years (under the Baath regime of ousted president Saddam Hussein) ... and if you open the floodgates to foreign investors, you'll never give the private sector a chance to get on its feet and compete, and you will not allow domestic wealth creation," he said.

Rahim, whose argument was contested by other panelists, made a powerful case for the "empowerment of the private sector" in Iraq, calling for the creation of a "private sector commission" to oversee its revival and for drastically reducing the state's role in economic activities.

The government's role should become that of "regulator, enabler and facilitator," he said.

Rahim, managing director of MerchantBridge investment bank, said Iraq had six resources which "never converged in one country."

Apart from "potential oil reserves estimated at 300 billion barrels," far exceeding the 113 billion barrels of proven reserves, he said Iraq had water from two major rivers, considerable arable land, an educated and professional population and archeological and religious sites that give it a high tourism potential. In addition, Iraq is a focus of "international interest," he said.

Christopher Exline, president of Home Essentials, an American furniture rental company which has been operating in Iraq for a year, said the "barbarism and insanity" practiced against both Iraqis and foreigners over the past weeks should not blur the broader picture.

"There is a phenomenal opportunity for those who look beyond the headlines," he said.

But the chairman of the Iraqi Business Council in the United Arab Emirates capital of Abu Dhabi warned that mounting abductions of foreigners, many of whom have been killed by militant groups, were triggering an "exodus of business" from Iraq.

Even employees of Egyptian telecom giant Orascom were now leaving following the abduction this week of eight staffers, including six Egyptians, Talib Khan told AFP on the sidelines of the conference.

He said "50 percent" of hostage-takers were "gangs" looking for ransoms rather than ideologically motivated groups.

"These riffraff should be contained by employment ... Even if Arabs and foreigners leave, we have to proceed with reconstruction," Khan said.

Iraqi legal expert Adil Sinjakli said "insecurity and lack of elected government" was one of the main obstacles to investment, along with a foreign debt estimated at between 110 and 120 billion dollars.

Paige Craig, executive vice president of Iraqex, a US firm involved in a range of activities from manufacturing construction materials to "providing logistics" for US forces, disagreed with the general view that the security situation was deteriorating.

"People think it's getting worse because they only pay attention to foreigners (who are being taken hostage and often executed). But it's definitely more secure now than it was" a year ago, he told AFP.