The Iraqi government has informed the U.S. Embassy in Baghdad that it will not issue a new operating license to Blackwater Worldwide, the embassy’s primary security company, which has come under scrutiny for allegedly using excessive force while protecting American diplomats, Iraqi and U.S. officials said Wednesday.

I’ll say this on Blackwater’s behalf: it’s less a company than it is a symbol, and it gets treated accordingly. Alas, that symbol is one of a dystopian future where private mercenaries replace professional soldiers and rewrite the rules of war to suit their company’s bottom line. (Or, as the United Nations puts it, Blackwater and its ilk represent “new modalities of mercenarism.”)

And it’s getting more and more complex. Yochi Dreazen recently reported in the Wall Street Journal that Afghan companies are hiring private military companies to protect their businesses.

Blackwater, though, has prided itself on operating on the bleeding edge. In 2007, the International Peace Operations Association — basically, the merc’s lobby — parted ways with Blackwater after the shooting of 17 unarmed Iraqi civilians in Baghdad exposed the company’s inability to live up to the professional code of conduct that the IPOA insists upon upholding. Now, Blackwater’s offering its naval services against the Somali pirates. All of this should make for great material in Blackwater founder Erik Prince’s forthcoming Regnery memoir, “We Are Blackwater.”

Iraq’s move, though, is one of the first concrete steps taken by a war-torn and private-military-company-infested nation to reassert authority over the contractors. The provisions of the U.S.-Iraq Status of Forces Agreement on contractors assert wide Iraqi latitude to bring them into compliance with Iraqi law. I’ll have a story Monday about the surprising extent of such discretion.