BAGHDAD, Iraq -- Ahmad Mokhtar broke down in tears three times as he watched his office building, torched by looters, collapse in flames.

The technology maestro at the Ministry of Trade had spent 35 years designing databases, a craft he imparts to university students as passionately as a philosophy professor might discuss the secrets of time and existence. His files, books and computer programs were all destroyed.

"I lost my whole life's work," Mokhtar says. "I try to keep myself very busy. I try to forget."

Since the end of the war, Mokhtar and most of his 30,000 fellow officials at the ministry have gone back to work, using warehouses, silos and a floor of the U.S.-protected Ministry of Oil building as offices.

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Profiles: Iraqis face a daily toil just getting by He recently learned, to his great relief, that his biggest project -- a massive database containing the names, ages and addresses of every single Iraqi, which was developed to distribute food under the U.N. oil-for-food program -- had been backed up elsewhere.

It will prove most useful in helping Iraq's new Governing Council get off the ground and rebuild the country. And its discovery gives Mokhtar the sense that Iraq itself will rise from the rubble.

"It's all a matter of how you look at life," said the U.S.-educated engineer. "If you're an optimist you see the good things. If you're a pessimist, you only see the bad."

The continuing struggle in Iraq has emerged in part as a battle of perceptions -- both for Iraqis living in a new reality and for Americans trying to figure out whether their intervention has produced chaos or cause for hope.

Nowhere is this difference in perspective more evident than in the U.S. presidential election campaign. Democrats describe Iraq as a basket case; the Bush administration portrays the situation as troubled but steadily improving, not unlike conditions in Germany or Japan after World War II.

On the ground in Iraq, there is no consensus on which of these viewpoints is most accurate, and an optimist one day may be a pessimist the next. On the other hand, even the hopeful worry that chaos may be drawing near.

Fighting between U.S. soldiers and anti-American militants remains a part of daily life, and a series of deadly car bombings have confounded coalition forces and terrified Iraqis. The horrific explosions at the United Nations compound and at the Imam Ali mosque in Najaf, in particular, have darkened the experience of living, working or soldiering in Iraq.

Bloody days like Friday, when U.S. forces mistakenly killed eight Iraqi policemen and two U.S. soldiers died in a separate incident, contribute to the sense that the security situation and the relationship between Americans and Iraqis could spiral out of control.

At the same time, there is a continuing dribble of good news. Aided by a cadre of well-educated, highly skilled Iraqi technocrats, the American-led reconstruction of Iraq is plodding forward through the wreckage of war and the dust of neglect.

In their near-daily news briefings at the Baghdad Convention Center, coalition officials detail their successes and criticize the Baghdad news corps for focusing on the negative. "We're light years ahead of reconstruction compared to Kosovo," said Charles Heatly, the most visible spokesman for the Coalition Provisional Authority, the occupying power.

Iraqis themselves agree to some extent but have many complaints, particularly about the pace of reconstruction. "They're doing well, but they are terribly slow," said Mohsen Shanshal, an Iraqi businessman and former adviser to the Iraq Central Bank. "What could be done in one week is done in one month."

Coalition officials concede delays but point out that rebuilding institutions ravaged by time, political repression and war takes time. When U.S.-led forces barged into Iraq, for instance, there was not a single cop on the beat. Finding competent police is a painstaking process. "It's not just a matter of hiring them; it's a matter of training them, as well," said Heatly, a Briton who speaks Arabic fluently.

Iraq's rebuilding needs are vast. Its utilities, public safety, transportation, health care, education, military and energy sectors all need a thorough revamping.

But in the wake of the recent bombings, security is by far the biggest problem cited by Iraqis and the representatives of foreign governments, companies and aid agencies. Without improved security, they say, there may be no reconstruction.

Obsessed with security
"There will be no foreign investment here without security," said Professor Yahya al-Najar, an economist at the University of Baghdad. "The risks are too high for any company to come here."

Last week, a civilian employee was killed delivering mail for the U.S. Army as part of a contract with Kellogg Brown & Root, a Halliburton subsidiary. He was the second KBR employee killed in a month, underscoring the dangers for private firms.

Foreign investment in Iraq is still barely a trickle. Other than the mammoth and politically connected Halliburton and Bechtel Corp., only "brave and stupid" entrepreneurs have been willing to risk Iraq's political instability and violence, said Richard Galustian, a consultant for one of the 20 private Western security firms operating here.

Even getting into Baghdad is a challenge. Roads are filled with armed bandits. Coalition officials have balked at resuming commercial flights, partly out of fear that one of the many shoulder-fired missiles looted from Iraqi military barracks after the war could take down an airplane full of foreign investors. At least four such rockets have been fired at approaching aircraft, said Col. Guy Shields, a coalition spokesman.

Galustian said 8,000 of about 10,000 surface-to-air missiles remain unaccounted for. "I'd rather take my chances on the road," he said.

Coalition forces emphasize their attempts to quickly construct new Iraqi police and security organs to replace the ones washed away in the toppling of Saddam Hussein's Baathist government.

The coalition has put 37,000 new police and 11,000 security guards on the streets and in front of buildings throughout Iraq. It has placed 13,000 Iraqi border guards, customs officials and immigration officers at the nation's frontiers. It has recruited more than 1,000 soldiers for Iraq's new army. It is in the process of setting up an eight-battalion civil defense force that will help maintain order in the restless, ethnically and religiously divided country.

Still, even U.S. Army Lt. Gen. Ricardo Sanchez, overall commander of military forces in Iraq, says he doesn't have enough troops to protect against potential outbreaks of violence. The challenges include securing Iraq's borders, fending off terrorist groups or armed militias, and stifling factional conflicts.

"I have sufficient forces to accomplish the missions that are currently assigned," he told reporters earlier this month. "But there are some security challenges that are looming in the future that would require additional forces." The United States is currently negotiating a new role for the United Nations in Iraq in hopes of getting more countries to contribute troops.

Security has become an obsession for all Iraqis and foreigners.

"During Saddam it was better because I could work 24 hours a day," said Dhia Farid, a CD vendor in a fancy Baghdad neighborhood. "But now I have to close at 10 p.m. because of the curfew and the crime. I'm losing business."

Splintered bits of progress

Security problems have a ripple effect throughout the economy.

In Washington's vision for rebuilding post-war Iraq, oil revenues from Iraq's vast reserves were supposed to fuel Iraq's growth. But sabotage and looting have degraded Iraq's already fragile oil infrastructure.

Not only have alleged Saddam loyalists damaged pipelines, causing massive oil fires, but some Iraqis -- organized into criminal gangs -- have tapped into pipelines and refineries to steal fuel, which they smuggle abroad to other Persian Gulf countries. As a result, drivers in the country with the second largest oil reserves in the world must fume in long lines for petrol due to chronic shortages.

The lack of oil revenue also threatens to cripple reconstruction, even if Congress provides the additional short-term funding President George W. Bush has requested.

"If we export oil and buy good equipment we can rebuild our economy very quickly," al-Najar said. "Without oil we cannot survive because we don't have flourishing agriculture or industry."

Coalition officials say they're close to restoring electricity supplies to pre-war levels. But blackouts remain a persistent problem throughout Iraq. Power is available off and on for only 12 hours a day in Baghdad.

The energy problems feed off of each other: the electricity shortage contributes to the fuel shortage as more people buy petrol to power huge noisy electric generators.

Coalition officials blame Saddam for failing to invest in Iraq's infrastructure during the decades of his rule. Indeed, during the Iran-Iraq war of the 1980s, Saddam spent 100 percent of the nation's revenues on the military, plummeting the once-rich country into debt. "We inherited an appalling legacy under the previous government of massive under-investment," Heatly said.

Nevertheless, Iraqis are fed up. Riots erupted in Basra this summer as heat-addled residents demanded more electricity. The coalition responded by bringing in fuel to run generators and establishing an oversight committee to improve the situation.

Coalition officials often boast that Basra gets higher quality water than it did under Saddam. But that's assuming it gets to homes and businesses. Pumps and water treatment facilities don't work when the electricity goes out.

The coalition is trying to get the private sector going on all levels. It has helped revamp a 1,300-stall marketplace in Baghdad, a project expected to employ 800 laborers. "You can see the amount of economic activity, the consumer activity just walking along the streets," said Heatly.

But efforts are splintered and messy. The coalition recently organized a conference at the Baghdad Convention Center to connect Iraqi businesspeople with foreign investors. Tight security prevented many from entering. Those who managed to get through the complex series of checkpoints found only other Iraqi businessmen.

Then there's the telephone system. U.S. forces bombed the telephone infrastructure during the war, and much of the country no longer has service. Both the coalition and Iraq's fledgling government have promised to get the phones up and running as soon as possible. U.S. officials each week trumpet the number of lines restored.

But Iraqi and American officials consistently pass the buck on who will ultimately fix the phones and make sure contracts are awarded fairly. Meanwhile, businessmen stew.

Zeyed Hassan Saleh al-Ithawi, a brash young real estate broker, spends his days running through the streets relaying messages. Instead of hobnobbing on the phone with clients or schmoozing homeowners, he's more likely than not locking up his shop to tend to menial errands.

"This is no way to do business," he said. "I have to close up completely and get into a cab just to go contact clients, ask about prices or just to say something to somebody."

Aside from the mammoth infrastructure projects, U.S. military commanders also have been steadily pumping money into local communities, spending $69 million so far. In Najaf, for instance, the Marines have launched 1,400 projects totaling $5 million to do such things as rebuild a cement factory, rehabilitate an amusement park, refurbish schools and repave roads. The reconstruction of Iraq's irrigation canals is employing nearly 100,000 people.

All such projects, say coalition officials, however small or unnoticed, put cash in the hands of poor Iraqis and help local contractors build fledgling businesses.

Throughout Iraq, thousands of small improvements do seem to be eking the country forward everyday. Whether they will go far enough or come fast enough to stabilize the situation, or whether Iraq will unravel in violence, remains to be seen.