American soldiers joined security men from Global at the first checkpoint at the entrance to the airport and were blocking Interior Ministry troops, who had been sent to reopen the facility. The Iraqi soldiers eventually withdrew late yesterday.
"This issue is related to Iraq and, and nobody is authorised to close the airport,"the acting Transport Minister Esmat Amer said. He added that the cabinet approved the use of Interior Ministry troops.
Baghdad international airport is the safest link between the Iraqi capital and the outside world. All the roads out of Baghdad are highly dangerous because of attacks by insurgents and bandits.
Global said in a statement: "Global has been in constant negotiations with senior members of the Iraqi government, which is currently not paying the company. Once payment has been made by the client, Global will resume its work and thus allow normal air operations to resume."
Global says that only its staff is qualified to screen passengers and luggage. But Iraqi Airways, the main user of the airport, said it would fly.
The action by the British company may bring to a head growing hostility between the Iraqi government and foreign security firms employing 20,000 men in the country. Some are paid £750 a day. US officials say security eats up 22 per cent of reconstruction contracts.
The Iraqi Interior Ministry issued orders this week that foreign security companies must provide details of their operations and get its approval for their weapons, which include everything from machine guns to heavily armed helicopters.
The row between Global and the Iraqi government burst into the open in June this year when the company threatened to withdraw its staff, forcing the closure of the airport. It cited non-payment of bills but Iraqi officials say the firm wanted to roll over without renegotiating a $4.5m (£2.5m) contract signed in June 2004 with the US-controlled Coalition Provisional Authority.
The US embassy sought to defuse the dispute to avoid an airport closure. Ahmed Chalabi, the Deputy Prime Minister, who heads a government committee in charge of reviewing contracts, refused to bow to Global's threat. When the airport did close, the Iraqi Transport Ministry, which owns it, drew up its own plan to protect it.
The US Army, which has its headquarters at the airport, rejected this, saying it needed to work with people it knew. Mr Chalabi sought bids to provide security for the airport from other Western security firms already working with the US.
Iraqi officials, none of whom wished to be named, claimed that he called Global's bluff and the British company reopened the airport after two days.
All sides are agreed that Global has still not been paid, but officials in Baghdad say that the present confrontation is not in the company's interest.
They claim Iraq agreed to pay part of the debt and renegotiate the rest. "If I was Global I would take the deal on offer in a heartbeat," said an official source. He said the dispute was no longer just about business but affected Iraq's sovereignty.
The halcyon days for Western security companies in Iraq may be running out. Encouraged to work in Iraq by the US occupation authorities after the fall of Baghdad in March 2003, many firms proved highly expensive and dubiously effective.
The Iraqi government of Ibrahim al-Jaafari is also wary of contracts awarded by its predecessor under Iyad Allawi. Global has more than 1,100 staff in Iraq. In addition to the airport, it handles security for the fortified Green Zone, which houses the US and British embassies, Iraqi government offices and parliament.