The Trump administration has suspended a cash shipment worth nearly half a billion US dollars to Iraq, in an attempt to pressure Baghdad to dismantle pro-Iranian armed factions. Analysts agree that freezing these funds threatens to destabilize Iraq's fragile economy.

Published on: 04/24/2026 - 16:22

The Wall Street Journal, which was the first to publish the news on Tuesday, citing American and Iraqi officials, reported that the US government prevented the arrival of an air shipment carrying about $500 million in cash to Baghdad, and froze funding allocated to security programs, following attacks carried out by Iraqi factions on American interests during the war in the Middle East.

Official sources told the newspaper that this shipment is the second of its kind that has been delayed since the start of the American-Israeli war against Iran in late February.

These measures come in the wake of a series of attacks on American facilities in Iraq and neighboring countries, carried out by factions that Washington says are loyal to Tehran and have shown its solidarity with them since the start of the war.

Philippe Tourl, France 24's international affairs editor, confirms that Iran "finances the militias in Iraq, which have been launching raids on some of Iran's neighboring countries since the start of the war."

Read also: The flames of the Israeli-American war against Iran continue to burn in Iraq

Turley says that the attacks were widespread, as about a thousand drone strikes were launched on Saudi Arabia, as well as on Kuwait, Bahrain, and even the American embassy in Baghdad, which was evacuated several times.

Turley added that the current escalation is driven by the militias themselves feeling threatened.

He explains: "The attack by the United States and Israel on the Iranian regime made them feel threatened and they suddenly escalated the severity of their attacks."

The United States turns off the tap

Iraqi oil revenues, estimated at billions of dollars annually, have been deposited at the Federal Reserve Bank of New York for 20 years.

Adel Bakwan, director of the European Institute for Middle East and North African Studies, says: “Since the fall of Saddam Hussein in 2003, Iraq no longer has a monopoly on its economy or its money.”

This system was created after the US invasion, when Iraq was burdened with huge debts. The United States agreed to deposit Iraqi funds in New York to protect them from creditors.

In this regard, Bakwan justifies, saying: “If these funds had arrived directly to Iraq, that is, to the Central Bank of Iraq, every company or country that won a court ruling against Iraq would have the right to claim them. But if these funds were under American protection, no one could touch them.”

Read also: Seven members of the Iraqi army were killed in a new strike on a military site, and Baghdad intends to file a complaint with the Security Council

Since then, the Federal Reserve has been sending about $13 billion annually in cash to Iraq to enable it to manage state affairs and pay the salaries of its six million government employees.

It is noteworthy that Washington had previously carried out the same operation in 2015, due to fears that money would reach ISIS fighters.

In addition, the Wall Street Journal quoted unnamed American officials as saying that the suspension of cash shipments is temporary, without providing any additional details about when and how to resume sending money.

The Federal Reserve Bank of New York and the US Treasury did not respond to a request for comment.

Baghdad is at a dead end

For its part, the Central Bank of Iraq, which has not yet commented specifically on the press reports, announced on Tuesday that it does not suffer from a shortage of US currency, and that it “met all requests from banks and exchange companies to obtain funds in US dollars allocated to pilgrims, travelers, and foreign transfers.” Meanwhile, an Iraqi official confirmed to The National newspaper on Tuesday that dollar shipments had stopped.

Read also: Iraq: The “coordination framework” confirms its adherence to Maliki’s nomination to head the government

The source told the Emirati government newspaper, saying: “The Americans informed senior politicians of the decision to stop supplying Iraq with hard currency, which is usually transported by air, until the next government is formed and the militia members accused of attacking the American embassy and forces in Iraq are arrested.”

The source added that Washington "also suspended participation in security meetings, which is necessary for Iraq to cooperate in this field, including the exchange of intelligence information."

For his part, Bakwan warns that this comment may have dire consequences for the Iraqi people, who depend mainly on the cash economy, stressing that "the country's only currency is that coming from oil revenues."

He adds, "These proceeds are deposited in an account at the Federal Reserve in New York. If the money does not arrive, salaries will not be paid, and the state's coffers will remain empty."

"Let's restore Iraq's greatness!"

The most powerful armed groups in Iraq, which include the Badr Brigade, Asaib Ahl al-Haq, and Kataib Hezbollah, enjoy enormous influence in the financial and governmental sectors, with some of their units officially integrated into the Iraqi armed forces.

Read also: Trump threatens to stop Washington’s support for Iraq if Nouri al-Maliki returns to the presidency

While Baghdad is currently conducting the process of selecting its new prime minister, Tehran and the armed factions loyal to it are seeking to nominate a political figure who maintains close relations with Iran.

US President Donald Trump warned last January that he would cut off aid to Iraq if former Prime Minister Nouri al-Maliki, leader of the pro-Iranian Islamic Dawa Party, returned to power.

Trump wrote on his social media network, Truth Social: “This should not be allowed to happen again. Because of his extremist policies and ideologies, if elected, the United States of America will not provide any assistance to Iraq. If we are not there to provide assistance, Iraq will have no chance of success, prosperity, or freedom. Let’s make Iraq great again!”

"US-Iranian joint management"

For his part, Al-Maliki initially rejected Trump's threat, describing it as "blatant American interference," and pledged to "continue working until the end." However, speculation about his possible withdrawal has increased in recent weeks.

Read also: The war in the Middle East... In the heart of the storm, Iraq is losing its balance between Tehran and Washington

For many years, Iraq has strived to maintain a balance between its relations with the United States on the one hand and its close relationship with Tehran on the other. According to Adel Bakwan, the country is still stuck more than ever in a dilemma.

“The Iraqi government has never been able to choose between the United States and Iran,” Pakwan explains. He says that a "US-Iranian joint administration system" rules the country. He adds: "When the joint management system collapses, all of Iraq collapses with it."

As war swept through the region, Iraq's quest to achieve balance in its relations with both powers became more difficult.

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