Much attention has been paid to the role of private security corporations in both the invasion and occupation of Iraq. In particular, the activities and legal ambiguity surrounding organizations such as Blackwater (now Xe Services), Aegis Defense and DynCorp have come under scrutiny for their extensive roles in both security and reconstruction efforts in Iraq. However, the external private sector has a broader presence in post-2003 Iraq, particularly in terms of the reconstruction of the energy sector, telecommunications, banking and infrastructure. This paper is an examination of the role of the external private sector in Iraq in developing a sustainable program of post-conflict reconstruction and good governance. It argues that whilst the external private sector has an important role to play, particularly in assisting in the re-establishment of a viable financial sector and development in industries such as telecommunications and infrastructure (particularly transport), the case of Iraq highlights other trends. In particular, the efforts at disestablishing any form of governmental regulation over the external investment in the immediate post-invasion period has left successive Iraqi governments, whose rule is fragile at best, without effective means of control over this activity. Drawing on World Bank modelling, this paper will highlight how the removal of regulatory mechanisms for external private investment in Iraq leaves the Iraqi government not only vulnerable to predatory practices, but also in danger of being unable to absorb future investment and reconstruction programs. As such, the sustainability of the medium to long-term future of reconstruction in Iraq is tenuous.