Iraq demands compensation from Blackwater

BAGHDAD (Reuters) - The Iraqi government wants U.S. security firm Blackwater to pay $8 million (4 million pounds) in compensation to each of the families of 17 people killed in a shooting last month, a senior government source said on Tuesday.

The source said the figure was roughly in line with compensation paid by the Libyan government to the families of the 270 people killed in the 1988 Lockerbie airline bombing over Scotland.

"We want them to pay $8 million for each family," the source told Reuters. "The same level as the compensation for the Lockerbie victims."

Blackwater, which has a U.S. State Department contract to protect its diplomats in Baghdad, has been told of the demand, the source said.

It was unclear what Blackwater's response was and the North Carolina-based firm did not immediately respond to e-mailed questions from Reuters.

In Washington, State Department spokesman Sean McCormack declined comment on how much compensation its contractor had been asked to pay for the September 16 shootings.

"Obviously, the issue of what some refer to as bereavement payments -- or a number of different names for them -- is an issue of some sensitivity that we are taking a look at," McCormack told reporters.

"It is an issue that commonly turns up when you have security incidents in which there is a loss of life. As with other previous incidents throughout Iraq, civilian or military, we are taking a look at the issue."

There are four separate investigations into Blackwater's actions in Iraq and McCormack cautioned people about "jumping to conclusions" on the private security contractor's conduct.