WASHINGTON — The State Department may phase out or limit the use of private security guards in Iraq, which could mean canceling Blackwater USA's contract or awarding it to another company in line with an Iraqi government demand, The Associated Press has learned.
Such steps would be difficult given U.S. reliance on Blackwater and other contractors, but they are among options being studied during a comprehensive review of security in Iraq, two senior officials said.
The review was ordered after a Sept. 16 incident in which Blackwater guards protecting a U.S. Embassy convoy in Baghdad are accused of killing 17 Iraqi civilians.
The shooting has enraged the Iraqi government, which is demanding millions in compensation for the victims and removal of Blackwater in six months. It also has focused attention on the nebulous rules governing private guards and added to the Bush administration's problems in managing the war in Iraq.
And it prompted Secretary of State Condoleezza Rice to order the top-to-bottom review from a commission headed by Patrick Kennedy, one of the State Department's most experienced management officials.
Kennedy has been told to concentrate on several key issues, according to the officials, who spoke on condition of anonymity because the review is still under way. Among them:
_Changes to the rules of engagement under which State Department security contractors operate, particularly for approaching suspicious vehicles, which is at the crux of the Sept. 16 incident. Blackwater insists its guards were fired upon, although Iraqi witnesses and the Iraqi government maintain the guards opened fire with no provocation when a vehicle got too close.
_Whether Blackwater's secretive corporate culture, reputed to have encouraged a "cowboy-like mentality," has led to its employees being more likely to violate or stretch the existing rules than those of the two other private security firms, Dyncorp and Triple Canopy, the State Department uses in Iraq.
_Whether it's feasible to eliminate or drastically curtail the use of private foreign contractors to protect U.S. diplomats in Iraq. And, if so, how to replace them.
The officials cautioned that no decisions have been made on what the review panel will recommend. They also said that each recommendation involves complex variables that could depend on interpretations of Iraqi and U.S. laws, as well as U.S. government regulations for vendors.
But they said Rice is eager for changes and has already accepted and implemented initial steps Kennedy urged in a preliminary report last week. They included improving government oversight of Blackwater by having federal agents accompany convoys and installing video cameras in their vehicles.
Officials in the tight-knit world of security operatives in Baghdad said Blackwater was preparing a reorganization and possible downsizing. The officials spoke on condition of anonymity because of the issue's sensitivity. The company, based in Moyock, N.C., does not speak publicly about its operations or plans. Calls and e-mail messages left with Blackwater on Wednesday were not returned.
A top aide to Prime Minister Nouri al-Maliki told the AP that Washington was considering the findings of the Iraqi government's report into the incident and calls for reform.
"But so far there has been no concrete answer from the U.S. Embassy showing it was definitely going to drop Blackwater," the aide said.
The aide said the al-Maliki government told the U.S. Embassy, "We will draft and pass laws that would lift the immunity on these security companies to stop their reckless behavior."
Kennedy has been in Iraq for nearly two weeks with one of three outside experts Rice named to the commission, Eric Boswell, a former diplomat and intelligence official. The other two, retired Army Gen. George Joulwan and former Ambassador Stapleton Roy, were being briefed on the mission at the State Department on Wednesday before heading to Baghdad.
"They are going to take the time that they need with the understanding that the secretary wants to make sure that this is done with some dispatch," State Department spokesman Sean McCormack said.
The officials said Kennedy's team was not expected to recommend eliminating all private contractors because it would have a profound impact on how U.S. diplomats work in Iraq. The State Department's own Bureau of Diplomatic Security lacks both the manpower and equipment, notably helicopters, to do the job, they said.
The State Department has operated its own "air wing" with U.S. helicopters and planes for counternarcotics work in Latin America but has had to rely on contract pilots from Dyncorp to fly them.
Blackwater is now the biggest of the three firms working for the department in Iraq with about 1,000 employees and handles protection in and around Baghdad, the most dangerous areas of the country. It has been paid as much as $1 billion for its work in Iraq.
Dyncorp and Triple Canopy, which work in the north and south, are far smaller and face resource constraints.
Under the terms of the department's Worldwide Personal Protective Security contract, which covers privately contracted guards for diplomats in Iraq, Blackwater, Dyncorp and Triple Canopy are the only three companies eligible to bid on specific task orders there.
If Blackwater goes, the slack would almost certainly have to be picked up by one or more other companies, which may require certifying other firms to bid, including non-U.S. ones, the officials said.
Of interest to the department is the possibility of forming Iraqi companies with Iraqi employees to protect U.S. diplomats as local guards do for embassy staff in other countries, they said. That would bring the guards fully under the jurisdiction of Iraqi law but is not a short-term option given inadequate training facilities.
The Pentagon has been reluctant to provide security for diplomats but another alternative might be joint State-Defense department patrols. Yet another would be hiring Blackwater and other private guards as temporary U.S. government employees, the officials said.
Associated Press writers Steven R. Hurst and Qassim Abdul-Zahra in Baghdad contributed to this report.