(Recasts with Gates' comments)

By Sue Pleming and Andrew Gray

WASHINGTON, Oct 18 (Reuters) - U.S. Defense Secretary Robert Gates on Thursday criticized security contractors in Iraq as Baghdad piled more pressure on the State Department to pull the Blackwater firm out of Iraq after deadly shootings last month.

Gates said the work of security contractors was sometimes at odds with the overall U.S. mission in Iraq and their activities must be better coordinated with U.S.-led forces.

"There have been instances where, to put it mildly, the Iraqis have been offended and not treated properly," Gates told reporters at the Pentagon. "Those kinds of activities work at cross purposes to our larger mission in Iraq."

Iraqi government spokesman Ali al-Dabbagh said Blackwater should be pulled out of Iraq and held accountable for its conduct in a Sept. 16 shooting incident that killed 17 people and has enraged Iraqis.

"We would like .... Blackwater to leave Iraq, this is at the end their position, this is the State Department position," Dabbagh told reporters at the White House .

"There is an anger, a great anger among the Iraqis against Blackwater. They should be kept accountable, this is what the Iraqi government needs. It is a crime what they did in Baghdad, we have declared it," he added.

But State Department spokesman Tom Casey said no final decision had been taken on Blackwater and the department was awaiting the outcome of several investigations, including a top-level review of security contractors.

"The position of the State Department is that we have an ongoing investigation and a senior level team looking at it. We have not made a decision. They have not yet made their recommendations to the Secretary," he said, referring to Secretary of State Condoleezza Rice.

HIGH-LEVEL MEETINGS

Gates said he planned soon to discuss with Rice how better to coordinate the work of private contractors and ensure their mission did not conflict with the overall goal of the U.S. mission in Iraq.

"The mission ... is to get the security situation under control in Iraq, train and equip the Iraqi forces and in the process bring stability to Iraq by bringing more and more Iraqis onto the side of the Iraqi government and more and more Iraqis who see the coalition forces as their friends and their allies, with whom they want to cooperate," said Gates.

"As I see it, right now those missions are in conflict."

The State Department's Casey said the goal of using private security contractors was to ensure that U.S. diplomats were well protected but that there was not any "undue impact or loss of life or damage done to Iraqi citizens."

Pressure is growing on Blackwater to leave Iraq but company spokeswoman Anne Tyrrell said the firm had not been told to go. "We have received no official word requesting that we leave Iraq," she said in an e-mail to Reuters.

Blackwater employs about 1,000 people in Iraq and the company has said its guards responded lawfully to a hostile threat on Sept. 16. Baghdad has asked Blackwater for compensation of $8 million for each victim's family.

A State Department review panel looking into the incident and the role of security contractors in Iraq, came back from Baghdad this week and plans to present its findings in the coming days to Rice, who returns to Washington on Friday from a trip to the Middle East and Europe.

The panel made preliminary recommendations that U.S. diplomatic security agents should accompany all Blackwater convoys and cameras should be mounted on vehicles.

Blackwater has a security contract with maximum value of $1.2 billion with the State Department. Under that deal, it currently has three work orders, including one to protect diplomats in Baghdad that is set to expire in May 2008.

"No decision has been made regarding anything that might happen in the future. That is a decision we will make in due course," said Casey. (Additional reporting by Jeremy Pelofsky)

AlertNet news is provided by