BAGHDAD, Oct 10 (Reuters) - Car bombs, assassinations, kidnappings, mortar attacks and suicide bombers aside, it's convoys of private security guards hurtling through Baghdad streets that strike fear into many Iraqis.

Incensed with the involvement of a U.S. security firm in the killing of 17 civilians at a busy Baghdad junction last month, Iraqis were again furious after guards from another foreign company shot dead two women in a car on Tuesday.

But the government of Prime Minister Nuri al-Maliki came in for almost as much criticism as the foreign guards.

"As long as the state is weak and cannot impose its control on the security situation, so the security companies will act freely in the streets," said a man, giving his name as Muhanad.

"All this is linked to the power of the government. The government's only obsession is to protect itself and its friends while the Iraqi citizens can go to hell. The citizen is the victim, that's the truth," he said.

U.S. defence officials says contractors in Iraq serve critical roles that free U.S. troops for other duties. But senior U.S. officers, including the chief of staff for U.S. forces in Iraq, have said some contractors do over-react.

Iraq says there are more than 180 mainly U.S. and European security companies in the country, with estimates of the number of private contractors ranging from 25,000 to 48,000.

Many Iraqis see them as private armies who can shoot and kill civilians with impunity. The firms are immune from Iraqi law under a 2004 ruling issued by the U.S.-led authority that ruled Iraq after Saddam Hussein was toppled a year earlier.

When a convoy of heavily armed sports utility vehicles approaches, lights flashing, guards atop bristling with guns, drivers veer quickly aside and hit the brakes. They are all too aware of the dangers.

"Of course I'm afraid. You can't see anything but their guns pointing at people. Maybe they will open fire randomly and we will be killed," said a man, who gave his name as Hasan. "The security companies are wrong and endanger peoples' lives."

SHOOT FIRST

A U.S. congressional report said this month that U.S. security firm Blackwater has been involved in 195 shooting incidents since 2005 and shot first in 84 percent of them, despite a contract agreement to use force only in defence.

Adopting the high-profile, strong-arm approach to driving through the Baghdad streets brings its own dangers as convoys are then hit by insurgents hoping to kill a VIP passenger.

"The situation is not safe because the companies are also targeted in the streets, but what did the people who were killed in the car do wrong?" said Hasan.

Iraq wants Blackwater to pay $8 million to each of the 17 families who lost loved ones in the Sept. 16 shooting in Baghdad. Blackwater says it acted "appropriately" in that incident after its convoy came under small-arms fire.

Private security contractors in Iraq are now the subject of several U.S. reviews. U.S. Secretary of State Condoleezza Rice had ordered tighter controls on Blackwater, including putting cameras on their convoys.

However Maliki has said Blackwater has no future in Iraq, and a government spokesman has also accused the guards in Tuesday's incident of an "unprovoked" attack. The company involved said it deeply regretted the incident and that a vehicle had failed to stop despite warnings.

The buzz and whine of the small helicopters used by Blackwater is a daily reminder the company is still very much out and about on Baghdad's streets.

"We look at the security companies as a mafia, not as security companies working to make the situation more secure for the people, or even the delegations they are guarding," said a man, who gave his name as Kasi.

"Even the Iraqi government cannot impose its control. People run away from them, they are afraid to cross the street in front of them. This is a horror, not a security patrol," he said.

"Even the guards during the Saddam era did not behave in this way."