U.S. Freezes Iraqi Funding and Security Coordination Over Militia Attacks

The Federal government of the United States has suspended security coordination and blocked a shipment of nearly $500 million in banknotes from Iraqi oil sales to pressure Baghdad into dismantling pro-Iranian militias. These measures follow a series of attacks on the U.S. Embassy in Baghdad, the U.S. Consulate General in Erbil, and the Baghdad Diplomatic Support Center, including an April 8 ambush of U.S. diplomats. Washington is demanding the formation of a new Iraqi government and intelligence on the militia members responsible for the strikes.

Beyond financial curbs, the U.S. has frozen funding for counter-terrorism efforts against the Islamic State and Iraqi army training. The U.S. Department of State offered a $3 million reward for information leading to the identification of those targeting diplomatic sites and sanctioned seven commanders from four hard-line militia groups. The U.S. Embassy in Baghdad renewed travel warnings on April 20, urging citizens to leave Iraq immediately due to threats from Iran-aligned militias.

While the Central Bank of Iraq attributed the missing currency shipment to logistical issues and airspace closures, U.S. officials assert that elements within the Iraqi government provide political and operational cover for these groups. This escalation follows a broader regional conflict triggered by joint U.S.-Israeli strikes against Iran on February 28. Despite a Pakistan-mediated ceasefire announced on April 8, tensions persist as Iran has decentralized its command structure, granting Iraqi militias greater operational autonomy.