CIA Shut Down in Iraq

Movements of key CIA station personnel in Baghdad-along with most State department diplomats and teams building police stations and schools-have been frozen for the second day in a row, according to a State department source who spoke on the condition of anonymity.

Essentially, the CIA, State department and government contractors are stuck inside the International Zone, also known as “the Green Zone,” in Central Baghdad. Even travel inside that walled enclave is somewhat restricted.

Pajamas Media is the first to report that the CIA station is all but motionless-as meetings with informants and Iraqi government officials have been hastily cancelled.

What caused the shut down? Following a firefight between Iraqi insurgents and a Blackwater USA protection detail on Sunday (12:08 PM Baghdad time), Iraqi officials suspended the operating license of the North Carolina-based government contractor. While the Iraqi government is yet to hold a formal hearing on the matter, Blackwater and all it protects remain frozen.

“By jamming up Blackwater, they shut down the movements of the embassy and the [CIA] station,” a State department source told Pajamas Media. He is not cleared to talk to the press.

Blackwater provides Personnel Security Details-or PSDs-for most CIA, State department, and U.S. Agency of International Development officers. In addition, Blackwater’s special-forces veterans guard many of the Provincial Reconstruction Teams-or PRTs-that build schools, clinics, police and fire stations and other structures that house essential Iraqi government services. Work on these vital “hearts and minds” projects has all but stopped across Iraq.

The State department has long insisted on using Blackwater and other private security firms so that its convoys and legations would not be controlled by the Defense department.

There are now more private contractors working in Iraq than U.S. soldiers serving there. Many are not U.S. citizens. Triple Canopy, another private firm, usually hires Peruvians to man the checkpoints inside the International Zone and Ugandans to guard distant airbases. The Peruvians, known as “incas” among Americans there, usually do not speak English or Arabic-a persistent source of complaint by Iraqi politicians who speak one or both languages.

At least eight Iraqis are reported dead after the Sunday shoot out and some press reports refer to the local casualties as “civilians.”

“Initial press accounts were inaccurate,” said Blackwater USA spokeswoman Anne Tyrell. “The ‘civilians’ reportedly fired upon by Blackwater professionals were in fact armed enemies and Blackwater personnel returned defensive fire. Blackwater regrets any loss of life but this convoy was violently attacked by armed insurgents, not civilians, and our people did their job to defend human life.”

“Blackwater professionals heroically defended American lives in a war zone on Sunday and Blackwater will cooperate with any inquiry into this matter.”

It’s well known in Iraq that dead insurgents become “civilians” as soon as their comrades carry away their AK-47s and spare magazines. Captured al Qaeda manuals detail how militants should use deaths as a propaganda tool.

TIME magazine received a partial copy of the official incident report.

According to the incident report, the skirmish occurred at 12:08 p.m. on Sunday when, “the motorcade was engaged with small arms fire from several locations” as it moved through a neighborhood of west Baghdad. “The team returned fire to several identified targets” before leaving the area. One vehicle engine was hit and disabled by bullets and had to be towed away. A separate convoy arriving to help was “blocked/surrounded by several Iraqi police and Iraqi national guard vehicles and armed personnel,” the report says. Then an American helicopter hovered over the traffic circle, as the U.S. convoy departed without casualties. Some reports have said the helicopter also opened fire on Iraqis, but a Blackwater official told TIME that no shots were fired from the air.

By apparently lifting Blackwater’s license, the democratically elected Iraq government may stall the forward progress created by the Gen. Petraeus’ surge and change in counterinsurgency tactics.

Indeed, some contend that the actions of Iraq’s Ministry of Interior, which supervises police and some intelligence functions, may be influenced by insurgents or even by Iran.

The staffing and internal rules of the Interior ministry were set up by Biyat Jabr, an affable and charming Shia Muslim who once worked for Saddam Hussein. (He was never a member of the Ba’ath party and thus survived de-Ba’athification with ease.)

Jabr is widely believed to be in the pay of Iranian intelligence services, although U.S. officials caution that there is no firm evidence of this charge. Jabr left the ministry in August 2006 and is now Finance Minister, but before he exited he salted the ranks with people loyal to Iran and hostile to the U.S. “Innocents dying [in the Sunday gun battle with Blackwater] is just a pretext,” the same State department source said.

Enemies of the U.S. inside the Interior ministry have been looking to shut down Blackwater for some time.

Prime Minister Nuri al-Maliki has adopted the same hard line against the American company. “This company should be punished. We are not going to allow it to kill Iraqis in cold blood. We have frozen all its activities and a joint panel has been formed to investigate the incident,” the prime minister told wire-service reporters.

“For their own interests, the Americans should hire a new company to protect their people so they can move freely.”

Both the State department and the Congress have signaled that investigations in to Blackwater will begin soon.

The State department hopes to shift blame onto Blackwater’s low-level “trigger pullers,” says the State department source, while Rep. Henry Waxman’s committee is expected to target senior executives at Blackwater and top Bush Administration officials. A perfect storm is set to roil Blackwater.

If Blackwater and other private contractors are shut out of Iraq, Democrats in Congress and Iranian intelligence operatives may have stumbled on a way to end the Iraq War-less than a week after Gen. Petraeus testified that the U.S. is turning the corner.