It's 8:40 am and the Sheraton Hotel ballroom thunders with the sound of plastic explosives pounding against metal. No, this is not the Sheraton in Baghdad, it's the one in Arlington, Virginia. And it's not a real terrorist attack, it's a hypothetical one. The screen at the front of the room is playing an advertisement for "bomb resistant waste receptacles": This trash can is so strong, we're told, it can contain a C4 blast. And its manufacturer is convinced that given half a chance, these babies would sell like hotcakes in Baghdad--at bus stations, Army barracks and, yes, upscale hotels. Available in Hunter Green, Fortuneberry Purple and Windswept Copper.

This is ReBuilding Iraq 2, a gathering of 400 businesspeople itching to get a piece of the Iraqi reconstruction action. They are here to meet the people doling out the cash, in particular the $18.6 billion in contracts to be awarded in the next two months to companies from "coalition partner" countries. The people to meet are from the Coalition Provisional Authority (CPA), its new Program Management Office, the Army Corps of Engineers, the US Agency for International Development, Halliburton, Bechtel and members of Iraq's interim Governing Council. All these players are on the conference program, and delegates have been promised that they'll get a chance to corner them at regularly scheduled "networking breaks."

By now there have been dozens of similar trade shows on the business opportunities created by Iraq's decimation, held in hotel ballrooms from London to Amman. By all accounts, the early conferences throbbed with the sort of cash-drunk euphoria not seen since the heady days before the dot-coms crashed. But it soon becomes apparent that something is not right at ReBuilding Iraq 2. Sure, the organizers do the requisite gushing about how "nonmilitary rebuilding costs could near $500 billion" and that this is "the largest government reconstruction effort since Americans helped to rebuild Germany and Japan after the Second World War."

But for the undercaffeinated crowd staring uneasily at exploding garbage cans, the mood is less gold rush than grim determination. Giddy talk of "greenfield" market opportunities has been supplanted by sober discussion of sudden-death insurance; excitement about easy government money has given way to controversy about foreign firms being shut out of the bidding process; exuberance about CPA chief Paul Bremer's ultraliberal investment laws has been tempered by fears that those laws could be overturned by a directly elected Iraqi government.

At ReBuilding Iraq 2, held on December 3-4, it seems finally to have dawned on the investment community that Iraq is not only an "exciting emerging market"; it's also a country on the verge of civil war. As Iraqis protest layoffs at state agencies and make increasingly vocal demands for general elections, it's becoming clear that the White House's prewar conviction that Iraqis would welcome the transformation of their country into a free-market dream state may have been just as off-target as its prediction that US soldiers would be greeted with flowers and candy.

I mention to one delegate that fear seems to be dampening the capitalist spirit. "The best time to invest is when there is still blood on the ground," he assures me. "Will you be going to Iraq?" I ask. "Me? No, I couldn't do that to my family."

He was still shaken, it seemed, by the afternoon's performance by ex-CIAer John MacGaffin, who had harangued the crowd like a Hollywood drill sergeant. "Soft targets are us!" he bellowed. "We are right in the bull's-eye.... You must put security at the center of your operation!" Lucky for us, MacGaffin's own company, AKE Group, offers complete counterterrorism solutions, from body armor to emergency evacuations.

Youssef Sleiman, managing director of Iraq Initiatives for the Harris Corporation, has a similarly entrepreneurial angle on the violence. Yes, helicopters are falling, but "for every helicopter that falls there is going to be replenishment."

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