An internal State Department report says Blackwater Worldwide may lose its license to work in Iraq and recommends that the agency prepare other ways to protect its diplomats there.
The 42-page report by the State Department's inspector general says the department faces "numerous challenges" in dealing with the security situation in Iraq, including the prospect that Blackwater might be barred from the country. The department would then have to turn to other security arrangements to replace Moyock, N.C.-based Blackwater, officials said.
"The department faces the real possibility that one of its primary Worldwide Personal Protective Services contractors in Iraq -- Blackwater -- will not receive a license to continue operating in Iraq," the recently completed report says.
The report is labeled "sensitive but unclassified." The Associated Press obtained a copy.
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Five Blackwater guards have been indicted on manslaughter and other charges stemming from a September 2007 incident in Baghdad's Nisoor Square in which 17 Iraqis were killed. The company itself was not charged.
The State Department had no immediate comment on the report. Deputy spokesman Robert Wood said officials were looking at "whether the continued use of Blackwater in Iraq is consistent with the U.S. government's goals and objectives."
It is not clear how the department would replace Blackwater. It relies heavily on private contractors to protect its diplomats in Iraq, as its own security service does not have the manpower or equipment to do so. The report suggests one way to fill the void would be for the department's Diplomatic Security Service to bolster its presence in Iraq.
A decision on how U.S. diplomats in Iraq are to be protected will be left to the Obama administration, which will be in place when Blackwater's contract comes up for renewal in the spring.
Sen. John Kerry, the incoming chairman of the Senate Foreign Relations Committee, is a critic of Blackwater and the use of private security companies in general. "The era of Blackwater must finally end," said Kerry, D-Mass.
"It will benefit the incoming administration to have reassurance from the State Department that Blackwater's contract should be seriously questioned, but it's disheartening that it took 15 months from a tragedy in Baghdad for the Bush administration to reach an overdue conclusion," Kerry said.
But terminating the company's Iraq contract will be difficult for Obama's Secretary of State-designate Hillary Rodham Clinton because no other private security contractor has its range of resources, particularly its fleet of helicopters and planes.
Blackwater spokeswoman Anne Tyrrell declined to comment, saying the company has not yet seen the report. The company has said in the past that it plans to largely get out of security contracting to concentrate on training and other projects.