US extends 'Blackwater' contract - 02 Sept 09

Private contractors have proven to be highly controversial in Iraq where the security firm formerly known as Blackwater has been banned.

But the US state department has extended a contract with the firm, now known as Xe, indefinitely, just as its contract was due to expire this month.

Iraqis had long complained about incidents involving Blackwater's ground operations, particularly when a shooting by Blackwater guards in Baghdad, the Iraqi capital, in September 2007, left 17 civilians dead.

The deaths further strained relations between Baghdad and Washington and led US prosecutors to bring charges against Blackwater and its founder, Erik Prince.

But sources say the department has agreed to temporarily continue using a subsidiary known as Presidential Airways to provide helicopter transport for embassy employees around Iraq.

Al Jazeera's Tom Ackerman reports.

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