On Monday Iraq announced that they had withdrawn the license of Blackwater Security, an American security firm working in Iraq, and would prosecute employees of the firm involved in a Baghdad shooting that ended with 11 dead.

A spokesman for the Iraqi Interior Ministry said that security staff working for Blackwater had opened fire after mortar rounds landed near their cars in the western Baghdad district of Mansour.

A spokesman for the U.S. Embassy said that the shooting occurred after a car bomb exploded while U.S. diplomats were nearby.

"The car bomb was in proximity to a place where State Department personnel were meeting. That is why Blackwater responded to the incident," said spokesman Johann Schmonsees.

However, Iraq has a slightly different take on the situation, saying:

"By chance the company was passing by. They opened fire randomly at citizens," said Brigadier-General Abdul-Karim Khalaf.

Eleven people were killed in the skirmish, including one police officer, and another thirteen were wounded.

The U.S. Embassy is taking the matter very seriously and said that they are cooperating with the Iraqi government, however, they have thus far declined to confirm that Blackwater's license had been revoked. Blackwater, who employs hundreds of foreign contractors in Iraq and is responsible for U.S. embassy security, was not immediately available for comment.

Blackwater's presence in Iraq is pretty visible, with their distinctive small, black helicopters dotting the skies above Baghdad, and fleet of armed vehicles that shadow convoys of senior officials through the city's streets.

Despite the lack of confirmation from the U.S. Embassy and Blackwater themselves, the Iraqis have made it pretty clear that Blackwater is no longer welcome in their country:

"We have withdrawn its license," Khalaf said. He also added that the ministry had also formed a committee to investigate the incident and "deliver those who committed this act to the court."

Iraqi Prime Minister Nuri al-Maliki also condemned the shooting, and vowed to punish the perpetrators and their employers, stating:

"We will work to punish and halt the work of the security company which conducted this criminal act."

The U.S. Embassy is now seeking clarification on whether the Blackwater employees could actually be prosecuted in Iraq.

Iraq's Interior Minister, Jawad al-Bolani, said that the contractors "must respect Iraqi laws and the right of Iraqis to independence on their land," adding that "these cases have happened more than once and we can't keep silent in the face of them," he told Arabiya television."