The Trump administration is increasing pressure on Baghdad by cutting off key channels of U.S. support, including dollar cash transfers and parts of its military assistance, as Washington demands action against Iranian-backed militias operating in Iraq, Iraqi and U.S. officials said.
At the center of the dispute is a blocked shipment of nearly $500 million in U.S. currency that was set to be flown to Iraq’s central bank, The Wall Street Journal reported Tuesday.
The cash came from Iraqi oil revenues held in accounts at the Federal Reserve Bank of New York, but Treasury Department officials stopped the transfer over concerns tied to militia activity, officials told the Journal.
It was the second such delay since fighting with Iran erupted in late February.
Washington has also reportedly told Iraqi leaders it is pausing some funding for counterterrorism efforts and military training until attacks on U.S. interests end and concrete moves are made to break up the armed factions.
The tougher posture comes after repeated militia strikes on U.S. sites in Iraq and nearby countries, which American officials say were carried out in support of Tehran. It also reflects a broader push by the United States to move Iraq’s government away from Iran’s orbit during the nearly two-month conflict involving the U.S., Israel, and Iran.
