Iraq's Interior Ministry has revoked the license of Blackwater USA, an American security firm whose contractors are blamed for a Sunday gunbattle in Baghdad that left eight civilians dead. The U.S. State Department said it plans to investigate what it calls a "terrible incident."
In addition to the fatalities, 14 people were wounded, most of them civilians, an Iraqi official said.
U.S. Secretary of State Condoleezza Rice has expressed regret for the weekend killings, Prime Minister Nuri al-Maliki's office said late Monday.
Sunday's firefight took place near Nusoor Square, an area that straddles the predominantly Sunni Arab neighborhoods of Mansour and Yarmouk.
The ministry said the incident began around midday, when a convoy of sport utility vehicles came under fire from unidentified gunmen in the square. The men in the SUVs, described by witnesses as Westerners, returned fire, the ministry said.
One witness told The Associated Press that he heard an explosion before the gunfire began.
"We saw a convoy of SUVs passing in the street nearby," Hussein Abdul-Abbas, owner of a mobile phone store in the area, told the AP. "One minute later, we heard the sound of a bomb explosion followed by gunfire that lasted for 20 minutes between gunmen and the convoy people who were foreigners and dressed in civilian clothes. Everybody in the street started to flee immediately."
A team from another security company passed through the area a few minutes afterward.
"Our people saw a couple of cars destroyed," Carter Andress, CEO of American-Iraqi Solutions Groups, told CNN on Monday. "Dead bodies, wounded people being evacuated. The U.S. military had moved in and secured the area. It was not a good scene."
An Interior Ministry spokesman, Brig. Gen. Abdul Kareem Khalaf, said, "We have revoked Blackwater's license to operate in Iraq. As of now they are not allowed to operate anywhere in the Republic of Iraq. The investigation is ongoing, and all those responsible for Sunday's killing will be referred to Iraqi justice."
Rice called al-Maliki to offer "her personal and the U.S. administration's regrets" for the shootings. They agreed to conduct "a fair and transparent investigation into this incident" and punish those responsible, the prime minister's office said.
The Diplomatic Security Service has launched an official investigation, a review that will be supported by the Multi-National Forces-Iraq, State Department spokesman Sean McCormack said.
"The secretary wants to make sure we do everything we possibly can to avoid innocent loss of life," he said.
McCormack said that while the United States tries to avoid innocent casualties, "we are fighting people who don't play by any rules" and have no problem killing innocent civilians.
There has been no official notice from the Iraqi government on revoking Blackwater's license, McCormack said, so he couldn't confirm it and declined to speculate on how it would affect protection of U.S. personnel.
A spokesman for the U.S. Embassy in Baghdad confirmed a State Department convoy was in the area.
"We are taking it very seriously. We are cooperating with the Iraqi government on several different levels and will continue this cooperation with Iraqi officials," the embassy official said.
Blackwater, founded in 1997 and based in Moyock, North Carolina, is one of many security firms contracted by the U.S. government during the Iraq war. An estimated 25,000 employees of private security firms are working in Iraq, guarding diplomats, reconstruction workers and government officials. As many as 200 are believed to have been killed on the job, according to U.S. congressional reports.
Some Blackwater personnel died in a grisly attack in Iraq more than three years ago that sparked shock and outrage in the United States.
Four Americans working as private security personnel for Blackwater, all of whom were military veterans, were ambushed, killed and mutilated in March 2004 in Falluja, west of Baghdad.
People close to the company estimate it has lost about 30 employees during the war.
Iraqi authorities have issued previous complaints about shootings by private military contractors, the Congressional Research Service reported in July.
"Most recently, a news article discussing an incident in which a Blackwater guard shot dead an Iraqi driver in May 2007 quoted an Iraqi official's statement that the Iraqi Interior Ministry had received four previous complaints of shootings involving Blackwater employees," the congressional service report said.
The Congressional Research Service report cited other concerns, such as "the apparent lack of a practical means to hold contractors accountable under U.S. law for abuses and other transgressions and the possibility that they could be prosecuted by foreign courts."
The reported added, "Iraqi courts do not have jurisdiction to prosecute contractors without the permission of the relevant member country of the Multi-National Forces in Iraq."
Contractors fall under Justice Department and FBI jurisdiction for alleged crimes, said a Pentagon official, who confirmed the accuracy of the congressional report.