The Iraqi Interior Ministry says it revoked the license of an American security firm, Blackwater USA, to operate in Iraq after a deadly gunfight in Baghdad.
Nine Iraqi civilians were killed, and 15 were wounded when members of the firm allegedly opened fire on a busy street in western Baghdad Sunday.
Eyewitnesses told ABC News that foreign security guards — "some with red hair and some with fair hair" — opened fire randomly at cars in a traffic jam as they tried to extract a U.S. embassy convoy from the area.
"They shot randomly," said one man who was wounded, "shooting at cars with women and children inside."
The Iraqi government reacted angrily to the shooting, and several Iraqi politicians have said they want to see the company expelled from the country.
Iraqi Prime Minister Nouri al-Maliki called the shootings "a crime."
Blackwater, based in Moyock, N.C., has 987 employees in Iraq — most of them Americans — and is the principal provider of security for U.S. Embassy officials in Baghdad.
The company issued a statement today, saying it "regrets any loss of life, but this convoy was violently attacked by armed insurgents, not civilians, and our people did their job to defend human life.
"Blackwater's independent contractors acted lawfully and appropriately in response to a hostile attack in Baghdad Sunday."
With U.S. forces overstretched in Iraq, private security contractors have been increasingly brought in to protect American personnel, to supply convoys and sensitive installations, and reconstruction projects. There are an estimated 20,000 to 30,000 private security contractors in Iraq.
Iraqis have frequently complained that some foreign security contractors are overly trigger-happy, after a number of incidents in which civilians have been killed in questionable circumstances.
But unlike U.S. military personnel who are subject to stringent rules of engagement, a clear chain of command and severe penalties for unlawful use of force, civilian security contractors operate with very little oversight.
They are not subject to prosecution in Iraqi courts and appear not to be subject to prosecution back in the United States, either.
Carter Andress, who runs his own security company in Iraq, American-Iraqi Solutions Group, said, "We are an anomaly, no question. I mean, this is a significant gray area, and from my reading of the law, there is no criminal consequence here."
It is a dangerous job — over 1,000 private security contractors have been killed in Iraq since the war began. But some Iraqis say they are too quick to shoot first.
As an indication of how serious the Blackwater affair has become, U.S. Secretary of State Condoleezza Rice made a rare phone call tonight to Maliki, to apologize.
But the damage may already have been done.