(Agencies)
Updated: 2007-09-22 11:32

Iraq wants to tighten control over security contractors after a deadly shooting incident involving the US firm Blackwater, ending their long immunity from Iraqi prosecution, the Interior Ministry said on Friday.

Blackwater guards were back on the streets of Baghdad on Friday after the US embassy eased a three-day ban on road travel by US officials outside the capital's heavily fortified Green Zone.

Interior Ministry spokesman Major-General Abdul-Kareem Khalaf said the ministry had drafted legislation giving it wider powers over the contractors and calling for "severe punishment for those who fail to adhere to the ... guidelines".

Iraq has said it would review the status of all security firms after what it called a flagrant assault by Blackwater contractors in which 11 people were killed while the firm was escorting a US embassy convoy through Baghdad last Sunday.

Prime Minister Nuri al-Maliki suggested the US embassy should stop using Blackwater and said he would not allow Iraqis to be killed "in cold blood".

US embassy spokeswoman Mirembe Nantongo said the decision to allow "mission essential" trips, some guarded by Blackwater, was taken after consultation with Iraqi authorities.

"There isn't a lot of movement in general ... But it is likely Blackwater will support some of them," she said.

The shooting has incensed Iraqis who regard the tens of thousands of security contractors working in the country as private armies that act with impunity.

Khalaf said the new draft law, which he expected parliament to pass soon, gives the ministry powers to prosecute the companies and to refuse or revoke contracts.

Many security firms operating in Iraq have no valid license. A law issued by US administrators after the 2003 invasion which overthrew Saddam Hussein granted them immunity from prosecution and has not been formally revoked.

The New York Times reported on Friday that the interior ministry will also propose that foreign security companies be replaced by Iraqi firms.

"These American companies were established in a time when there was no authority or constitution," the newspaper quoted a ministry report as saying.

The head of an association of security firms in Iraq said replacing foreign companies with Iraqi security companies was not a new suggestion and was unlikely to happen overnight.

"One alternative would be partnerships with Iraqi companies, putting an Iraqi face on what we're doing," Lawrence Peter, director of the Private Security Company Association of Iraq, said.

Peter said around 30,000 people, half of them Iraqis, worked for security firms in Iraq.