Iraq deeply mistrusts private security companies and wants to limit their operations here, officials say, while the contractors themselves have faced bureaucratic delays and detentions.
This mistrust stems from perceived arrogant behaviour by employees of these firms in the past and various incidents of violence involving them.
The most infamous incident was the 2007 killing of at least 14 civilians in Baghdad's Nisur Square by gunmen from the Blackwater firm guarding a US embassy convoy.
While Blackwater, now called ACADEMI, was later banned from the country, security contractors still guard US diplomats in Iraq and provide security for various foreign companies.
"Iraq is not looking to expand the security companies' work here," government spokesman Ali al-Dabbagh said in an interview with AFP.
"We feel that Iraq should move to the normal life -- we don't want to see the tens of the security companies taking the job of the ministry of interior.
"Iraq has got a not friendly history with the security companies, especially ... Blackwater, and we don't want to repeat that crisis again. So, we would like to limit their work here in Iraq, but we don't want to stop them," Dabbagh said.
The firms "have to understand that ... they don't have free (movement) in the country. They have to follow the instruction, they have to hold the permit, a valid permit, and they are not allowed to violate the Iraqi laws."
"They are not exempted as before, and they are not getting any sort of immunity," he said.
"We do need them, definitely, we do need them, (and) we are not going to stop them, but definitely, we will limit their work," Dabbagh said.
The matter has also drawn the attention of parliament's security and defence committee.
"After discussions with the interior ministry, we found that there are around 65 security companies, more than half of them Iraqi and the remainder foreign," committee member MP Abbas al-Bayati told AFP.
Bayati said a small committee created to study the issue wants security companies to use only light weapons, and that they should obtain permission to move outside pre-determined areas.
The large number of contractors "negatively impacts the security situation in the country," Iskander Witwit, another member of the committee, told AFP.
"There will be strict conditions for the sake of maintaining security," though the companies will not be banned completely, with the goal being to reduce their number to the minimum, Witwit said.
He added that the committee has the right to ban any company that does not follow the rules.
For his part, Deputy Interior Minister Adnan al-Assadi said on Iraqiya television that "the issue of the security companies is dangerous and we have to control it."
However, he said it will take "at least five years" for foreign companies to trust Iraqi forces to see to their security.
Doug Brooks, president of the International Stability Operations Association (ISOA), whose members include firms guarding the US embassy and diplomats in Iraq, discussed difficulties that contractors have faced here.
"Essentially, if you need a permit, if you need a license, if you need a visa, all those sorts of things -- big delays, big hassles. It's very, very hard to get your licenses on time," Brooks told AFP.
"It's not just security contractors. Yes, security contractors have particular problems, but all the companies are facing pretty much the same sorts of issues," he said.
In a January letter to US Secretary of State Hillary Clinton, ISOA said "the lack of visas or renewals is preventing our member companies from deploying into Iraq in support of embassy contracts and has led to the detention and expulsion of a number of member companies’ employees."
"Approved movements have been subject to stops, detentions and confiscation of equipment without justification, impacting delivery of equipment, supplies, and materials to the US embassy, bases and offices throughout the country," said the letter, a copy of which was obtained by AFP.
The Congressional Research Service said last May that the State Department estimated the number of security contractors working for it in Iraq would reach 5,500, "with some 1,500 providing personal security for diplomatic movements and an additional 4,000 providing perimeter security."
Brooks said "our hope is that the US government will be a bit more proactive," as the government and embassy, in "our impression, has not been very active in trying to help the Iraqis address this problem."
US embassy spokesman Michael McClellan told AFP that "the embassy is well aware of the problems contractors have been having with respect to visas and other permissions required to operate in Iraq."
"We are working very closely with contractors and the Iraqi government to address these issues and to ensure all visitors to Iraq are in compliance with Iraqi immigration laws," he said.
Brooks said improvements in the situation cannot come soon enough.
"This is an industry that's used to working in these kind of environments," he said, but "this bureaucratic hassle is getting to the point where it's even more difficult to operate than in a war zone."