Contracting exceptional divisors by the Kähler-Ricci flow

We give a criterion under which a solution g.(t) of the Kähler-Ricci flow contracts exceptional divisors on a compact manifold and can be uniquely continued on a new manifold. As t tends to the singular time T from each direction, we prove the convergence of g.(t) in the sense of Gromov-Hausdorff and smooth convergence away from the exceptional divisors. We call this behavior for the Kähler-Ricci flow a canonical surgical contraction. In particular, our results show that the Kähler-Ricci flow on a projective algebraic surface will perform a sequence of canonical surgical contractions until, in finite time, either the minimal model is obtained, or the volume of the manifold tends to zero.