But Blackwater founder Erik Prince told The Associated Press that while losing the State Department contract would hurt the company, the move would cause more harm to the diplomats it has protected since soon after the U.S.-led invasion that toppled Saddam Hussein.
"Our abrupt departure would far more hurt the reconstruction team and the diplomats trying to rebuild the country than it would hurt us as a business," Prince said Thursday in an exclusive interview with the AP.
Iraqi officials said the lingering outrage over a September 2007 shooting in Baghdad's Nisoor Square that left 17 Iraqi civilians dead led to its decision.
The shooting strained relations between Washington and Baghdad and fueled the anti-American insurgency in Iraq, where many Iraqis saw the bloodshed as a demonstration of American brutality and arrogance. Five former Blackwater guards have pleaded not guilty to federal charges in the United States that include 14 counts of manslaughter and 20 counts of attempted manslaughter.
Blackwater maintains the guards opened fire after coming under attack, an argument supported by transcripts of Blackwater radio logs obtained by the AP. They describe a hectic eight minutes in which the guards repeatedly reported incoming gunfire from insurgents and Iraqi police.
The Iraqi decision to deny Blackwater an operating license was made public Thursday. A U.S.-Iraqi security agreement, which took effect Jan. 1, gives the Iraqis the authority to determine which Western contractors operate in their country.
"We sent our decision to the U.S. Embassy last Friday," Iraqi Interior Ministry spokesman Maj. Gen. Abdul-Karim Khalaf told the AP. "They have to find a new security company."
State Department spokesman Robert A. Wood said the department has yet to determine its next step.
"We have to study and see what we're going to do next," said Wood. "We haven't made a decision on how we're going to move forward yet."
Prince said his company had yet to receive orders from the State Department to evacuate.
Neither Khalaf nor a U.S. Embassy official speaking on condition of anonymity gave a date for Blackwater personnel to leave Iraq, and neither said whether they would be allowed to continue guarding U.S. diplomats in the meantime.
Blackwater president Gary Jackson told the AP the company has plans to remove its nearly two dozen aircraft and 1,000 security contractors from Iraq within 72 hours of receiving such an order. "If they tell us to leave, we'll pack it up and go," Jackson said.
Two other U.S.-based security contractors working for the State Department — DynCorp and Triple Canopy — have licenses to operate in Iraq. But Prince played down the possibility that Blackwater contractors would simply move to another employer.
"It is a big assumption for someone to say, 'Fire Blackwater (and) all those guys will migrate over to one of the other competitors.'" Prince said. "It's not that easy."
Blackwater has been operating in Iraq without a formal license since it arrived in the country. The State Department extended Blackwater's contract for a year last spring, despite widespread calls for it to be expelled because of the shootings.
Blackwater's work in Iraq, which includes a reputation for aggressive operations and excessive force it disputes as unfair and inaccurate, turned the company into a catchall brand name for private security contractors. Executives said last year that the unwanted attention had them shifting their focus away from private security.
If banned from protecting diplomats in Iraq, Blackwater executives said Thursday the company remains on track to reach a goal of $1 billion in annual revenues in the next year or two. The State Department contract comprises about one-third of the company's overall revenues, though the work of providing actual boots-on-ground security is only part of the deal.
The private security firm, which trained some 25,000 civilians, law enforcement and military personnel last year, continues to expand even as its future in Iraq becomes less promising. Blackwater has a fleet of 76 aircraft, and almost all of them are deployed in hot spots in places like Afghanistan and West Africa.
On Thursday, three international teams were at the company's compound in North Carolina going through classes: Authorities from Yemen flipped through four-inch binders as they learned how to identify the components of an explosive by looking at X-rays. A group from the country of Georgia was practicing SWAT techniques in a makeshift building, taking instructions through a translator from a Blackwater official.
A Canadian team was also on site, along with a number of other law enforcement, Coast Guard and civilians who kicked up burning rubber on a driving track and rattled off rounds on shooting ranges. Members of the Army and Navy were practicing their driving skills in Blackwater's mine-resistant, ambush-protected vehicles.
"When you first hear Blackwater, you automatically, instantly think about the overseas stuff," said Jim Sierawski, Blackwater's vice president for training. "That overshadows the training center. Here, we've been on a steady incline every year."
FOR MORE INFORMATION ON THE HISTORY OF BLACKWATER IN IRAQ GO HERE:
-Thanks to Brian Casler - Rochester IVAW