I Do Not Think That Word Means What You Think it Means

From an AP article about Blackwater personnel firing upon Iraqis..."It is doubtful that foreign security contractors could be prosecuted under Iraqi law. A directive issued by U.S. occupation authorities in 2004 granted contractors, U.S. troops and many other foreign officials immunity from prosecution under Iraqi law."

Imagine that, one country, in this case the US, establishing for another nation, Iraq, who can and cannot be prosecuted within the first nation. So tell me, in what regard is Iraq a sovereign nation?