The company provides security to all US state department employees in Iraq.
It had been ordered by the Iraqi government to halt operations while a joint US-Iraqi inquiry was held.
A US embassy spokeswoman said the decision to allow Blackwater to resume work had been taken in consultation with the Iraqi government.
The spokeswoman, Mirembe Nantongo, said Blackwater operations would be limited to essential missions only outside Baghdad's heavily-fortified Green Zone....
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