(CBS) The government of Iraq has notified private security firms their immunity from Iraqi law is about to end, CBS News national security correspondent David Martin reports.

The title of a letter sent by the interior ministry - and obtained exclusively CBS News - says it all: “Removing the legal immunity.” Until now, security firms like Blackwater have operated under a grant of immunity issued in 2004 by the then-top American in Iraq, L. Paul Bremer.

But the draft of a new law says “all immunities … shall be cancelled."

That law still must be ratified by the Iraqi parliament, and if and when it is, private security firms would almost certainly pull out of Iraq.

“There’s no question it’s a disaster if this got passed,” said Carter Andress, one of an estimated 8,500 private security contractors guarding diplomats, convoys and reconstruction sites for the U.S. He is not willing to let his employees be subject to arrest by an Iraqi police force he believes is riddled with corruption and infiltrated by enemy fighters.

“How do we determine in that situation whether or not it's legitimate use of the rule of law or whether or not this is someone trying to kidnap one of us and take advantage of the situation,” he said.

Despite troubles caused by out-of-control contractors American officials say they are indispensible to U.S. operations in Iraq. They're counting on the Iraqi parliament not to ratify the law.

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Read the Nov. 1 letter sent by the Iraqi Interior Ministry informing private security companies.
A draft copy of new legislation being prepared for the Iraqi parliament formalizing the order to remove legal immunity.

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But Andress, who knows first hand the public anger triggered by last September’s infamous Blackwater shooting, is not so sure.

“This may be the first law that parliament gets passed,” he said. “Here's one they can all agree upon.”

If the parliament strikes back, the shooting, which left 17 Iraqis dead could end up killing off the entire network of private contractors on which the U.S. depends.

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