U.S. eyes cuts to Iraq embassy after troops exit

BAGHDAD (Reuters) - The U.S. government is looking to cut the size of its embassy in Iraq, by far its largest and most expensive mission, months after the last American troops withdrew, U.S. officials said Tuesday.

A State Department spokeswoman told reporters in Washington the objective was to reduce the cost of the overall mission, which includes roughly 2,000 diplomats as well as 14,000 contractors who do everything from provide security to run the kitchens.

The New York Times reported Tuesday that the U.S. government was preparing to slash its diplomatic presence, which includes consulate operations in Basra, Arbil and Kirkuk, by as much as one half.

State Department spokeswoman Victoria Nuland said there were no plans to slash the number of diplomats in half, although some reduction was possible, and that she could not predict what cuts there might be in the number of contractors.

"What we are doing ... is looking at how we can 'right-size' our embassy in Iraq and particularly how we can do more for that mission through the hiring of local employees rather than having to be as dependent as we have been in the past on very expensive contractors," Nuland told reporters in Washington.

"What ultimate numbers will result from this in reductions in contractors, we don't know yet. This process has just begun," she added. "But we are trying to ensure that it is rigorous and that it gets us to a much more normal embassy like some of our big embassies around the world."

Talks to reduce the size of the U.S. mission in Baghdad come after negotiations to keep around 3,000 American troops in Iraq as trainers fell apart over the sensitive issue of immunity from local prosecution for soldiers involved in crimes.

Since the U.S. troop withdrawal, foreign contractors in Iraq, particularly those involved in security, have complained about increasing difficulty in securing visas and permits to work in the country.

Many Iraqis have memories of abuses committed by U.S. troops and contractors after the March 2003 U.S.-led invasion such as the 2004 Abu Ghraib prison scandal and the 2007 incident in which 14 Iraqi civilians were killed by Blackwater private security contractors.

The U.S. embassy in Baghdad, which sits inside the heavily fortified Green Zone, houses diplomats and thousands of support staff and security contractors.

A handful of U.S. military personnel remain in the country, working with the embassy to help with arms sales and training for Iraqi forces. U.S. officials say there are about 16,000 people involved in the American diplomatic effort in Iraq.

(Reporting by Patrick Markey; Additional reporting by Arshad Mohammed in Washington; Editing by Andrew Heavens)