"The respondents believe that their own firms will grow and succeed and that Iraq's economy and political system will continue to grow and develop," said the poll, which was released Wednesday.

Seventy-seven percent of business leaders polled said they expected the economy as a whole to grow at least somewhat, with more than half of those predicting the growth to be "substantial."

Increased sales were expected over the next six months by more than half of the firms (54 percent), compared with less than 8 percent who said they believed sales will fall. At least 45 percent said they believed they will see higher profits than the previous year.

Respondents were asked to compare the present situation to the Saddam Hussein era: 48 percent said basic services such as water and electricity worked better before the U.S. invasion in 2003. Separately, 26 percent said they thought the business climate was better under Saddam's rule while 49 percent said it had improved since his ouster.

The poll examined the attitudes of managers and owners of small, mid-sized and large firms within Iraq.

"Our goals were to bring forward the views of the private sector, and to increase communication between business and the government," said John Sullivan, executive director of CIPE. Sullivan cited insufficient dialogue between the two sectors as damaging to the advancement of business in the country.

David Mack, vice president of the Middle East Institute who has spent several years in Iraq, told United Press International he was not sure whether such optimism was warranted, but added more people in the country were undertaking small-scale investment ventures.

"(Iraqis) are investing lots, in everything from grocery stores to air conditioner suppliers, in order to meet pent-up demand," he said. "There's pessimism for the current population, but optimism for their children."

He also noted this investment was almost exclusively in the calmer sections of the country. Areas such as Baghdad and the Sunni triangle, where conflict is fierce, are not seeing the kind of business activity that promises economic growth.

Respondents expressed concern over security in the county where almost-daily attacks against U.S., and allied interest and Iraqis has claimed the lives of thousands. They also said they were worried by a lack of legal and regulatory enforcement, outdated capital equipment, lack of information about legal matters, high taxation and lack of international partners.

Respondents cited corruption as a problem in Iraqi business: 56 percent said corruption added 20 percent or more to the cost of doing business -- and it is believed most of this was caused by weak property rights and bribes extracted by civil servants.

CIPE recognized the obstacles that conflict and security problems posed to healthy business activity. When asked what was keeping foreign investment away, Sullivan answered, "It's all security."

The Iraqi government is aware of the need for that foreign investment.

The Iraq National Development Strategy, released in June by the newly elected government, lists foreign investment as an important objective, saying, "(Iraq's objective is) to remove all kinds of restrictions on foreign investors and to encourage the flow of foreign direct investment in a manner that ensures the flow of foreign capital, modern technology and management expertise."

In official talks on the private sector earlier this summer, former U.S. favorite Ahmed Chalabi, who is a deputy prime minister, stressed the importance of foreign investment to stimulate private sector growth.

Businesses share this sentiment, with 82 percent reporting they believe opening Iraq to international businesses will improve their prospects. Iraqis are particularly hopeful about extra-national business partnerships with neighboring Gulf states.

Another encouraging finding of the Zogby survey was the growing role women were playing in the Iraqi work force. Sixty-three percent of businesses now employ women, up by nearly 50 percent from last year.

The poll included face-to-face interviews with owners and managers from 641 firms, a list of which was provided by local chambers of commerce. Interviews were conducted in five cities -- Baghdad, Hilla, Arbil, Basra and Kirkuk. The poll had a margin of 4 percent.

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