UPDATE — In the wake of the ensuing controversy, the U.S. Department of Defense issued a denial on its website, of Secretary Gates’ earlier statement (also posted on the DoD website, reproduced after the denial below):

Denial (22 January 2010)
Q (Inaudible.) We have great respect for the American media. (Inaudible.) Every week, there’s a new story.
(Cross talk, laughter.)
SEC. GATES: And I probably contributed yesterday.
All I can tell you is, I don’t follow every contractor the Department of Defense has around the world. I can tell you subsequent to the question I got last night, the Department of Defense does not use Blackwater in Pakistan. [Emphasis added.]
We have no connection with Blackwater here in Pakistan. I don’t know where these stories come from. (Laughter.) I mean, the fiction writers are working overtime.
Q Okay.

Original Statement (21 January 2010)
Q All right.  And I want to talk, of course, about another issue that has come up and again — (inaudible) — about the phone [sic. – private?] security companies that have been operating in Iraq, in Afghanistan and now in Pakistan.  Xe International, formerly known as Blackwater or Data Corp. [sic. – DynCorp?] Under what rules are they operating here in Pakistan?
SEC. GATES:  Well, they’re operating as individual companies here in Pakistan in Afghanistan and in Iraq.  Because they are theaters of war involving the United States, there are rules concerning the contracting companies.  If they’re contracting with us or with the State Department here in Pakistan, then there are very clear rules set forth by the State Department and by ourselves.

Daily Times | 22 January 2010
‘Blackwater, DynCorp working in Pakistan’:
US considering giving Pakistan drones: Gates

US officials say Gates referring to unarmed Shadow drones
Washington mulling ways to share intelligence with Pak military

ISLAMABAD: Visiting US Defence Secretary Robert Gates has said the US is considering giving Pakistan drones for intelligence and reconnaissance purposes, a private TV channel reported on Thursday.

In an interview with the channel, Gates said he was expanding the programme by buying more aircraft – a reference to, according to US officials, a proposed deal for 12 unarmed Shadow aircraft.
Gates said drone attacks had been successful in Afghanistan, Iraq and Pakistan. He said the US was considering ways to share intelligence with the Pakistani military.

Blackwater: Gates conceded that US security companies Blackwater and DynCorp are operating in Pakistan in private capacities. He said the companies would comply with Pakistani laws.

He said a proposal was not under consideration for Afghan forces’ training by India.

About Indo-Pak relations, he said the countries should deal with issues bilaterally. “I have raised [with India] Pakistani concerns over Indian involvement in Pakistan’s internal affairs.” He made it clear that the US had “no military relationship with India”.

Separately, Gates warned that Taliban safe havens along the Pak-Afghan border must be tackled or both nations would suffer “more lethal and more brazen” attacks.

Gates also called on President Asif Ali Zardari – who said drone attacks undermined national consensus against militancy.

A statement by the US embassy said Gates praised the army’s recent successes. It said Gates was in Pakistan to consult leaders on broader strategic dialogue.

Also, Gates met Army chief Gen Ashfaq Kayani, Joint Chiefs of Staff Committee Chairman Gen Tariq Majid and ISI chief Ahmed Shuja Pasha separately. daily times monitor/staff report.

Source: The Daily Times