WASHINGTON - Last fall, Blackwater Worldwide was in deep peril.
Guards for the security company were involved in a shooting in September that left at least 17 Iraqis dead at a Baghdad intersection. Outrage over the killings prompted the Iraqi government to demand Blackwater's ouster from the country, a criminal investigation by the FBI, a series of internal investigations by the State Department and the Pentagon, and high-profile congressional hearings.
But after an intense public and private lobbying campaign, Blackwater appears to be back to business as usual.
The State Department has renewed its contract to provide security for American diplomats in Iraq for at least another year. Threats by the Iraqi government to strip western contractors of their immunity from Iraqi law have gone nowhere.
No charges have been brought in the United States against any Blackwater guards in the September shooting, either, and the FBI agents in Baghdad charged with investigating whether Blackwater guards committed any crimes under United States law are sometimes protected as they travel through Baghdad by Blackwater guards.
State Department officials said yesterday they did not believe they had any alternative to Blackwater, which supplies about 800 guards to the department to guard diplomats in Baghdad.
Officials say only three companies in the world currently meet their requirements for protective services in Iraq, and the other two do not have the capability to take on Blackwater's role in Baghdad.
The State Department did not even open talks with the other two firms, DynCorp International and Triple Canopy, to see if they could take over from the North Carolina-based contractor after the shooting in September.
"We cannot operate without private security firms in Iraq," said Patrick F. Kennedy, the undersecretary of state for management. "If the contractors were removed, we would have to leave Iraq."
Still, serious risks remain for Blackwater and at least some of its current and former personnel. A federal grand jury continues to consider evidence in the Baghdad shooting. Although the company is not likely to face any criminal charges, people involved in the case say that some Blackwater guards involved in the shooting are cooperating with the FBI as it pursues evidence against other guards.
Separately, a former Blackwater guard is under criminal investigation for the December 2006 shooting death of an Iraqi guard for the vice president of Iraq, and may soon face federal charges. In a third case, two former Blackwater personnel have pleaded guilty to weapons-related charges, but earlier this year both received sentences that included no jail time in return for their cooperation in a broader investigation.
A House committee has also asked the Internal Revenue Service to launch an inquiry into whether Blackwater has designated its guards as independent contractors instead of employees to avoid paying federal taxes.
The State Department renewed the security contract for one year - just long enough to take the company into the start of the next administration. And Blackwater's political connections to the Bush administration may not serve it well if the Democrats take the White House in November.
Given the furor that surrounded Blackwater after September, critics say the decision to renew the company's contract in Iraq is a sign of the Bush administration's inability to curb its reliance on outside contractors in the war.