The security firm "Blackwater" protects American government civilian employees in Iraq.
It has been ordered to suspend operations, following a shooting incident on Sept. 16 that left at least 11 Iraqis dead.
President Bush has asked his national security advisers to find out what happened.
Blackwater USA has a reputation for aggression in Iraq, but now it's on the defense.
Iraq's Prime Minister Al Maliki said, "We don't accept Iraqis being killed like this."
He charged the company with a "major crime" and said it is not the first but the seventh time.
While the Iraqi Ministry of Defense reiterated it had revoked Blackwater's license. The U.S. could not or would not say whether Blackwater even has an Iraqi license, or, is under a U.S. government contract.
"It's not as simple as people would like it to appear. There are many ramifications to this whole case," U.S. Embassy Spokeswoman Mirembe Nantongo said.
If Blackwater is under a U.S. contract there are still rules that apply. Security contractors can fire only aimed shots with due regard for the safety of innocent bystanders.
For now, Blackwater and the U.S. officials they protect, are confined to the green zone.
"It has a significant impact on our operations but there are other imperatives at play here," Nantongo added.
Imperatives such as helping the Iraqi government quell public outcry without crippling U.S. operations along with Blackwater.
The Iraqis are now saying Blackwater won't be kicked out of the country, but that the guards involved in the incident must be held accountable.