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Blackwater may lose Iraq license

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WASHINGTON (AP) — The State Department faces serious challenges protecting U.S. diplomats in Iraq and may no longer be able to rely on Blackwater Worldwide to do the job, according to an internal report.

A report from the department's inspector general says the agency must deal with the prospect that Blackwater — its main private security contractor in Iraq — could lose its license to work in Iraq. Officials say that means preparing alternative arrangements.

"The department faces the real possibility that one of its primary worldwide personal protective services contractors in Iraq — Blackwater (Worldwide) — will not receive a license to continue operating in Iraq," the recently completely report says.

A copy of the 42-page report, labeled "sensitive but unclassified," was obtained by The Associated Press on Wednesday.