by Khalid Al-Ansary

BAGHDAD - Iraqis expressed anger on Saturday at news the United States had renewed the contract of Blackwater, a private security firm blamed for killing up to 17 people in a shooting incident last year.

"Renewing this contract means we will see this sort of thing again in the streets," Abbas Hasoun, a grocer, said. "I wish we could turn the page on this, but keeping this company here means bloodshed will continue."

A traffic policeman who said he was questioned in Turkey by the FBI about the shooting was patrolling on Saturday the same busy traffic circle where the incident took place.

"I went to Turkey and testified about what I saw, but all my efforts were in vain when I heard the news," said the policeman who asked that his name not be published for security reasons.

The FBI is investigating whether Blackwater employees broke the law during the shooting last September when Blackwater staff, apparently believing they were under attack, fired into cars in heavy traffic, killing civilians.

In spite of the criminal probe, the State Department announced on Friday the firm's contract to protect U.S. personnel in Baghdad would be renewed.

The State Department says Blackwater's tactics have been changed to prevent further incidents like last year's shooting.

Iraqi government spokesman Ali al-Dabbagh said the government believed its requests for tighter controls over Blackwater's activities had been met.

"The demands of the Iraqi government have been taken into consideration and Blackwater will follow the Iraqi government's laws. We were never against Blackwater's work in Iraq, but the company has committed a mistake," he said. Ordinary Iraqis were less tolerant.

"These companies should be removed from the country. They don't deserve to stay here a moment. They committed massacres and killed innocent people," said Naseer Kahdim, a soldier checking cars a few hundred metres from the site of the shooting.

The government's political opponents accused it of failing to enact measures that would control foreign security firms.

"So far we haven't passed laws governing the work of foreign companies. The government should have shown its influence and authority by taking the initiative," said Saleem al-Jubouri, spokesman for the mainly Sunni Arab Accordance Front bloc.

"But the Americans want to show that Iraq is under their control. It's a violation of the Iraqi judicial system."

(Additional reporting by Wisam Mohammed; Editing by Robert Woodward)
© 2008 Reuters