The US State Department may phase out or limit the use of private security guards in Iraq. That could mean canceling Blackwater USA's contract or letting it lapse and awarding it to another company within months in line with an Iraqi government demand.
Such steps would be difficult given US 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 US embassy convoy in Baghdad were accused of killing 17 Iraqi civilians.
The shooting has enraged the Iraqi government, which is demanding millions of dollars in compensation for the victims and removal of Blackwater in six months. It also has put a focus on the nebulous rules governing private guards and added to the Bush administration's problems in managing the war in Iraq.
It also 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 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, that the State Department uses in Iraq.
Whether it is feasible to eliminate or drastically curtail the use of private foreign contractors to protect US diplomats in Iraq. 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 US laws, as well as US government regulations for vendors.
They noted that Rice is eager for changes and already has 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.
The officials said it was highly unlikely that Kennedy's team would recommend eliminating all private contractors because it would have a profound impact on how US 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.
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