US to tighten rules for Iraq contractors

(Releads with State, Pentagon agreement)

By Andrew Gray and Randall Mikkelsen

WASHINGTON, Oct 30 (Reuters) - The Pentagon and U.S. State Department have agreed to tighten rules governing private security contractors in Iraq, giving a greater oversight role to the U.S. military, officials said on Tuesday.

The proposed changes emerged from a review triggered by a shooting incident in Baghdad last month in which security guards from U.S. security firm Blackwater, working for the State Department, are accused of having killed 17 Iraqis.

Efforts to prosecute guards involved in the incident could be complicated by a grant of limited immunity offered by State Department investigators, U.S. officials also said on Tuesday.

Secretary of State Condoleezza Rice and Defense Secretary Robert Gates met on Tuesday to discuss a working group's recommendations to give the U.S. military "considerably more involvement in contractor operations," the Pentagon said.

"All this stuff needs to be tightened up," Pentagon press secretary Geoff Morrell told a news briefing.

However, the agreement appeared to fall short of a deal putting contractors under the command of the military, as Pentagon officials had suggested.

State Department spokesman Sean McCormack said from a practical standpoint, it was decided not to put contractors under military command.

"Once they did an analysis of it, they decided this was not something they wanted to take on," said McCormack.

Gates and U.S. commanders have expressed concern that contractors' actions could undermine the U.S. mission in Iraq.

"If we can agree on a common set of standards, common rules for the use of force and can agree that there will be coordinated movements of contractors ... that may suffice," Morrell said.

Iraq says there are more than 180 mainly U.S. and European security firms in the country, with estimates of the number of individual security contractors between 25,000 and 48,000.

SAME MISSION

Analysts have said the mission of security guards, who may be more inclined to threaten or use force to protect their clients, can conflict with the broader U.S. military mission of winning over the Iraqi population to defeat insurgents.

"We want everybody operating for the sake of the same mission," Morrell said. "Invariably, State Department contractors are going to have to assume greater risk."

Morrell said the working group would take its plans to Baghdad next month for approval by military commanders and Gates hoped to have the new arrangements finalized by the Thanksgiving holiday on Nov. 22.

Separately, U.S. government officials confirmed media reports that State Department investigators gave limited immunity to Blackwater guards involved in the Sept. 16 shooting, preventing their statements being used against them.

But officials said the guards could still be subject to prosecution using other evidence gathered in the investigation, which is now being led by the FBI.

"Any suggestion that the Blackwater employees in question have been given immunity from federal criminal prosecution is inaccurate," Justice Department spokesman Dean Boyd said.

Blackwater says its guards acted lawfully after being shot at, but the Iraqi government says the guards "deliberately killed" the 17 people.

The killing of the Iraqis created tensions between the Iraqi government and Washington, and the Iraqi government took its own steps on Tuesday to tighten controls on contractors.

It approved a draft law that would scrap a decree issued by the U.S.-led Coalition Provisional Authority in 2004, before it handed over control to Iraqis, which granted foreign contractors immunity from prosecution in Iraq.

Lawmakers in Washington are also discussing the issue of whether and how contractors could be pursued by U.S. courts. (Additional reporting by Arshad Mohammed and Sue Pleming)