According to State Dept. officals, Donald Rumsfeld’s anger at losing control of funds to build the new embassy in Baghdad left State with no choice but to turn to Blackwater for its security.

In 2004 the State Department began planning for its new U.S. embassy in Baghdad and Rumsfeld lost a turf war for control of the billions in construction funds. As a result, Rumsfeld and Paul Wolfowits decided protecting State was no longer their concern:

A new executive order, signed in January 2004, gave State authority over all but military operations. Rumsfeld’s revenge, at least in the view of many State officials, was to withdraw all but minimal assistance for diplomatic security…

Meetings to negotiate an official memorandum of understanding between State and Defense during the spring of 2004 broke up in shouting matches over issues such as their respective levels of patriotism and whether the military would provide mortuary services for slain diplomats.