The nagging question of who controls U.S. contractors in Iraq surfaced violently Sunday when employees of Blackwater USA, a firm providing security services to the U.S. government, took part in a Baghdad shootout that killed Iraqi civilians. On Monday the Iraqi government said it would revoke the firm's license, but yesterday officials backed off that threat.

The question of who fired first -- Iraqis attacking a U.S. convoy or Blackwater employees defending it -- remains unclear. At least eight Iraqis are dead and the Ministry of the Interior declared that Blackwater's license to operate could be revoked.

It is unclear whether the government of Prime Minister Nouri Kamal al-Maliki has the authority to take such a step or to prosecute Blackwater employees for killing Iraqis. A regulation promulgated by U.S. authorities early in the occupation exempted American contractors from such prosecution. Yet the United States, theoretically at least, handed over authority in Iraq to the elected government headed by Mr. Maliki.

Contractor personnel, who are nearly as numerous in Iraq as U.S. troops, inhabit a gray zone in terms of chain of command and authority. In practice, they do not answer to U.S. authorities -- neither the U.S. military commander, Gen. David Petraeus, nor U.S. Ambassador Ryan Crocker. They answer, in principle, to their employer, in this case Blackwater USA, based in Moyock, N.C. That firm, in turn, answers to the Department of State, which gave Blackwater the contract. If a Blackwater employee kills someone in Iraq, he is, in principle, answerable in U.S. courts, if Iraqi courts do not have jurisdiction over him. In fact, there have been no prosecutions of contractors' employees for such possible crimes.

The administration of President Bush has been liberal in contracting with companies like Blackwater to minimize U.S. government personnel in Iraq and, no doubt, to spread the war spending around. Blackwater has some $800 million in contracts; some of the work is in security, while other projects involve construction.

This fatal incident urgently demands resolution of some long-standing, sensitive questions of U.S. and Iraqi authority and, more fundamentally, of justice. The deaths of the Iraqi civilians cannot be written off as an administrative error in execution of a contract. Nor can the Bush administration ignore the authority of the al-Maliki government to provide justice in Iraq, without throwing out any pretense that it is in charge.

The tragic and difficult Blackwater situation needs to be addressed by the U.S. government, in close coordination with the al-Maliki government, quickly and clearly.