The No. 2 U.S. commander in Iraq said Thursday that a seven-month-old security operation has cut violence in Baghdad by half, but he acknowledged that civilians were still dying at too high a rate.

The comments came as relations between the U.S. and Iraqi governments remained strained in the wake of Sunday's shooting involving Blackwater USA security guards, which Iraqi officials said left at least 11 people dead. Prime Minister Nouri al-Maliki suggested the U.S. Embassy find another company to protect its diplomats.

The Moyock, N.C.-based company has said its employees acted "lawfully and appropriately" in response to an armed attack against a State Department convoy.

But a survivor who said he was three cars away from the convoy denied the American guards were under fire, claiming they apparently started shooting to disperse more than two dozen cars that were stuck in a traffic jam.

"It is not true when they say that they were attacked. We did not hear any gunshots before they started shooting," lawyer Hassan Jabir said from his hospital bed.

On Thursday, Lt. Gen. Raymond Odierno told reporters that car bombs and suicide attacks in Baghdad have fallen to their lowest level in a year, and civilian casualties have dropped from a high of about 32 to 12 per day.

He also said violence in Baghdad had seen a 50 percent decrease, although he did not provide details about how the numbers were obtained and said that was short of the military's objectives.

"What we do know is that there has been a decline in civilian casualties, but I would say again that it's not at the level we want it to be," Odierno said. "There are still way too many civilian casualties inside of Baghdad and Iraq."

Al-Qaida in Iraq was "increasingly being pushed out of Baghdad, "seeking refuge outside" the capital and "even fleeing Iraq," Odierno said.

Lt. Gen. Abboud Qanbar, the Iraqi military commander, said that before the troop buildup, one-third of Baghdad's 507 districts were under insurgent control.

"Now, only five to six districts can be called hot areas," he said. "Al-Qaida now is left only with booby-trapped cars and roadside bombs as their only weapons, which cannot be called quality operations, and they do not worry us."

Qanbar also reported the release of 1,686 detainees from Iraqi jails.

Odierno said the U.S. military had separately released at least 50 detainees per day, or a total of at least 250, since beginning an amnesty program for inmates as a goodwill gesture linked to the Islamic holy month of Ramadan.

Meanwhile, an Iranian officer accused of smuggling powerful roadside bombs into Iraq was arrested Thursday, the military said. The suspect — a member of the Quds Force, an elite unit of Iran's Revolutionary Guards — was detained in the Kurdish city of Sulaimaniyah, the military said.

He was allegedly involved in transporting roadside bombs, including armor-piercing explosively formed penetrators, or EFPs, into Iraq, according to a statement. It said intelligence reports also indicated he was involved in the infiltration and training of foreign fighters into Iraq.

After the shooting Sunday in the Mansour district of western Baghdad, Blackwater spokeswoman Anne E. Tyrrell said the employees acted "lawfully and appropriately" in response to an armed attack against a U.S. State Department convoy.

But Iraqi witnesses claim seeing Blackwater security guards fire at civilians randomly.

Speaking from his bed in the Yarmouk hospital four days after the incident, Jabir said he was one of the wounded when Blackwater's security guards opened fire in Nisoor Square.

He said he was stuck in a traffic jam near Nisoor Square in western Baghdad when he saw the American convoy of armored vehicles and black SUVs parked about 20 yards away at an intersection, apparently following an explosion.

Jabir said the Americans began yelling to disperse the vehicles, then opened fire as the cars were trying to turn around.

"Some people, including women and children, left their cars and began crawling on the street to avoid being shot but many of them were killed. I saw a 10-year-old boy jumping in fear from one of the minibuses and he was shot in his head. His mother jumped after him and was also killed," Jabir said, adding that his car flipped over in the chaos.

The incident has angered Iraqis, uniting them in blaming U.S. forces for the violence in their country and backing the government's announcement to ban Blackwater from Iraq.

Al-Maliki, who disputed Blackwater's version of what happened, spoke out sharply against the company, saying the government would not tolerate the killing of its citizens "in cold blood."

U.S. and Iraqi officials announced they would form a joint committee to try to reconcile widely differing versions of the incident. Conflicting accounts were circulating among Iraqi officials themselves.

In Anbar province west of Baghdad, meanwhile, a U.S. soldier died Wednesday in a non-combat incident, the military said, adding that the incident was under investigation.

A car bombing at an Iraqi checkpoint in Baghdad's Sadr City neighborhood killed two Iraqi soldiers and a civilian, and wounded seven others. A roadside bomb struck an Iraqi police patrol near a stadium in eastern Baghdad, killing one officer and wounding five people.

Meanwhile, the U.S. military said seven Shiite extremists were detained following a pre-dawn raid by Iraqi special forces and U.S. troops in Sadr City. Residents claimed a civilian and a 5-year-old boy were killed in the raid.