U.S. Blocks USD500M Cash Transfer to Iraq

(MENAFN) The United States has blocked hundreds of millions of dollars in currency transfers to Iraq and suspended key security cooperation programs, part of a broader push to dismantle Tehran-linked armed factions operating in the country, the Wall Street Journal reported Tuesday, citing officials familiar with the matter.

In one of the most concrete signs of Washington's escalating pressure campaign, Treasury Department officials intercepted a cargo aircraft transporting nearly $500 million in cash before it could reach Iraqi territory, according to the report. Concerns over the funds potentially benefiting Iranian-aligned militias drove the decision.

The Wall Street Journal further noted this marks the second consecutive dollar transfer to Iraq's central bank that Washington has blocked since the Iran war erupted on Feb. 28 — a period marked by sustained militia assaults on American installations across Iraq and the broader region.

Beyond the financial freeze, Washington has formally informed Baghdad that funding for select counterterrorism operations and military training initiatives will remain on hold until militia strikes stop and Iraqi authorities move to dissolve the factions behind them. U.S. officials characterized the currency suspension as temporary but stopped short of outlining the specific conditions Iraq must meet before transfers resume.

State Department spokesperson Tommy Pigott issued a pointed warning over Baghdad's inaction.

"The Iraqi government's failure to prevent these attacks while some elements associated with the Iraqi government continue to actively provide political, financial and operational cover for the militias adversely impacts the U.S.-Iraq relationship," Pigott said.

He added: "The United States will not tolerate attacks on U.S. interests and expects the Iraqi government to immediately take all measures to dismantle the Iran-aligned militia groups in Iraq."

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