BAGHDAD — The American security firm once known as Blackwater ended its operations in the diplomatic hub of Baghdad on Thursday, bringing to a close a bitter chapter in U.S.-Iraqi relations that began with a deadly shooting by its contractors.
Iraqis welcomed the departure from the capital of the company, which has protected American diplomats in Iraq since the start of the war in 2003. The company, which has changed its name to Xe, will continue to have guards in some southern areas and to run its aviation service and through September.
The end of the firm's Baghdad operations comes nearly two years after the Iraqi government first demanded it leave after the September 2007 shooting on a busy square in central Baghdad that left as many as 17 Iraqi civilians dead.
It was small consolation for Iraqis.
"As far as I'm concerned this decision should have been taken years ago. Any security firm in Iraq should have used Iraqi personnel so that they could help them know Iraqi culture," Baghdad resident Jabar Farhan said.
U.S. Embassy spokeswoman Susan Ziadeh said Xe's contract for Baghdad ended Thursday and a new security provider, Herndon, Virginia-based Triple Canopy, was taking over.
Blackwater guards will remain protecting American diplomats in the predominantly Shiite cities of Hillah, Najaf and Karbala, all south of Baghdad, until Aug. 4, according to the State Department.
And Presidential Airways _ which operates some two dozen helicopters _ will continue to fly until Sept. 3, it said.
Ziadeh would not comment on the company's other task orders, saying only that they "will come to an end once they expire, which will be soon."
Moyock, North Carolina-based Xe had continued operations in Iraq despite a decision by the Iraqi government to deny it a license in January, raising questions over the strength of Iraq's sovereignty as it remains heavily dependent on the U.S. for security.
Iraq's Interior Minister Jawad al-Bolani said the government recognized that the U.S. administration needed some transition time in shutting down the company's operations.
"There were certain outstanding technical issues involving the use of Iraqi airspace that required a limited extension," he said.
The Iraqi government also has said it had no objections to the possibility of former Blackwater guards who were not involved in the shootings remaining in Iraq as employees of other companies. "We're dealing with companies, not individuals," al-Bolani said.
Iraqis have long complained about the heavy-handed behavior of security contractors for Blackwater and other companies. That anger peaked after the 2007 shootings in Nisoor Square.
Five Blackwater guards have pleaded not guilty to manslaughter and weapons charges in the shooting, which prosecutors say was an unprovoked attack on civilians. A sixth Blackwater guard struck a deal with prosecutors and pleaded guilty to killing one Iraqi and wounding another.
The shooting strained relations between Baghdad and Washington and became an issue in negotiations over a U.S.-Iraqi security pact that took effect on Jan. 1 as the Iraqis demanded the lifting of the blanket immunity that contractors had.
But the American Embassy, which is located in Baghdad's heavily fortified Green Zone, and U.S. government employees elsewhere in Iraq have relied heavily on Blackwater for protection in extremely dangerous conditions, with threats ranging from suicide attackers to kidnappings.
Triple Canopy is one of three private companies, along with Xe and Virginia-based Dyncorp, that have handled security for U.S. diplomats in Iraq. But Xe is the largest, having won more than $1 billion in government contracts since the March 2003 start of the Iraq war.
Blackwater first got attention in 2004 when a mob of insurgents ambushed a company security detail in the city of Fallujah, killing four guards and burning their bodies, stringing some of their remains from a bridge.
Xe spokeswoman Anne Tyrrell defended the company's performance in Iraq.
"We are honored to have provided this service for five years and are proud of our success. No one under our protection has been killed or even seriously injured," she said.
After the Nisoor Square deaths, Iraqi officials ruled that Blackwater would be barred from operating in the country. Despite the ban, the State Department renewed Blackwater's contract seven months later, in April 2008.
After Iraqi authorities denied the company an operating license in January, the Obama administration said it would not renew the company's existing task orders.
However, the State Department signed a $22.2 million deal in February to keep the company working in Iraq through most of the summer.
Associated Press Writers Mike Baker in Raleigh, North Carolina, and Qassim Abdul-Zahra in Baghdad contributed to this report.