In March 2003, following the US invasion, it seemed as if everyone was trying to do business in Iraq. After decades of sanctions, war and corruption, the country was primed for a massive, US-backed investment programme to rebuild the country.

Five years on, however, it is hard to find anybody willing to work in the country. Years of violent insurgency have meant that Washington and Baghdad have spent only a fraction of what they promised, and incompetence and corruption have resulted in millions of dollars being wasted.

But while most overseas businesses may have written off Iraq, it is time to think again. Because of the surge in US troops in 2007, there is good reason to believe Washington is at last getting on top of the insurgency. And while plenty of political obstacles remain, Prime Minister Nouri al-Maliki is making progress on pulling together the country’s political, religious and tribal factions.

One of the keys to progress will be Baghdad’s ability to find and produce oil. It is the lifeblood of the Iraqi economy, generating income and attracting investment. This is where there is most reason for optimism.

The launch of a licensing round and bilateral talks with oil majors is clear evidence that the focus of the government has shifted from fighting insurgents to pumping oil. It is the first step on a long road to recovery.

Index of all stories

• The growing power of Baghdad

• Regional powerhouse wakes up

• Akashat: Promoting industry

• Time to change Iraq’s spending priorities - includes extended Major Iraqi projects spreadsheet

• Iraq’s substantial infrastructure spending needs

• Taking politics out of oil

• Comment: Oil revenues must be spent wisely