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…

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.