Trump administration warns Iraq over Iran terror proxies amid reports of blocked US cash payments

(SeaPRwire) –   The Trump administration has reportedly intensified its punitive actions to pressure Iraq into dissolving the Iranian-backed militias, known as the Popular Mobilization Force (PMF), which are integrated into its government. This follows persistent assaults on American personnel and assets.

During a fragile ceasefire between the U.S. and Iran, the administration increased pressure on Iraq by halting shipments of U.S. dollars to Baghdad. The escalating policy disputes between the U.S. and Iraq may result in diminishing Iran’s regional influence and further U.S. strategic objectives against Tehran.

In a statement critical of Iraq’s government, a State Department spokesperson told Digital, “The United States has been consistently clear that we will employ all necessary measures to counter Iran’s destabilizing actions in Iraq, safeguard U.S. interests from Iran-aligned terrorist militias there, and express our concerns regarding the Iraqi government’s inability to prevent such terrorism.”

The spokesperson continued, “While we recognize the attempts by Iraqi Security Forces to counter terrorist attacks from Iran-aligned militia groups, we must reiterate that the Iraqi government’s failure to prevent these attacks, coupled with the ongoing political, financial, and operational support some government-linked elements provide to the militias, is harming the U.S.-Iraq relationship. The United States will not accept attacks on its interests and demands the Iraqi government act immediately to dismantle the Iran-aligned militia groups within its borders.”

Last week, The Wall Street Journal initially reported on the security and financial sanctions levied against Iraq. The report indicated the U.S. suspended security cooperation programs with Iraq’s military and blocked “a cargo-plane delivery of nearly $500 million in U.S. banknotes, the proceeds from Iraqi oil sales held in Federal Reserve Bank of New York accounts.”

The publication noted this was the second instance of a blocked dollar delivery to the Central Bank of Iraq since the commencement of the U.S.-Israel conflict with Iran on February 28.

The Treasury Department offered no comment on the withheld payments.

An Iraqi official stated to Digital, “Iraq considers its relations with the United States a vital partnership founded on mutual interests and cooperation. Our joint decisive fight against ISIS demonstrates the depth and importance of this relationship.”

Regarding the pro-Iran militias, the Iraqi official said, “Concerning the matter of armed factions, it is crucial to understand that Iraq’s situation is extremely complex, with intertwined political, security, and social aspects. Some of these groups also wield political and popular support. Therefore, resolving this issue demands cautious, step-by-step strategies based on a thorough grasp of the domestic landscape, aiming to reinforce state control, ensure only the state holds weapons, and preserve internal stability.”

The official added, “External actions that ignore the specifics of this reality could produce adverse results and disrupt internal equilibriums, undermining the stability initiatives pursued by Iraq and its partners, notably Washington.”

The PMF is a coalition of militias predominantly loyal to Iran, which the State Department labels the world’s leading state sponsor of terrorism. PMF members have targeted U.S. assets in Iraqi Kurdistan and attacked Iraqi Kurds, a key U.S. ally in the Middle East.

A senior Kurdish official told Digital, “Halting the dollar shipments is a severe Treasury Department measure, one the Americans have historically been hesitant to use. The Iraqis, for their part, have mistreated their partners—both the Americans and the KRG [Kurdish Regional Government], as this conflict has revealed—and now Washington is establishing a firm boundary.”

The Kurdish official said, “They have communicated that conditions for Iraq will deteriorate further if the militias restart attacks on U.S. interests, including within the Kurdistan Region. It is past time for the Americans to use this tool; for too long, it has enabled Iran to select a prime minister and set the terms, despite ongoing urging to reject Iran’s proxies in Iraq.”

Officials from both Iraq and Kurdistan indicated the government is unstable as various factions maneuver to choose a new Iraqi prime minister.

The Trump administration objects to the potential return of former Iraqi Prime Minister Nouri al-Maliki due to his strong connections to Iran.

The Kurdish official highlighted the influence of the majority Shia population: “Ultimately, it is still the Shia political sphere that decides the premiership. They have some flexibility, but in the end, they will choose a candidate agreeable to both Iran and the United States. That is the dynamic—and America has traditionally responded to Iran’s moves. This time, however, Washington seems determined to shape the result, not merely witness it.”

The official added, “This is particularly significant because Iraq relies on oil, and the revenue is held in the U.S. Federal Reserve and American banks. Washington’s handling of those deposits affects the political process and reshapes the balance of power within the Shia political sphere. It is extremely consequential.”

Entifadh Qanbar, a former spokesman for an Iraqi deputy prime minister, warned of an urgent need for Prime Minister Mohammed Shia’ al-Sudani to quickly dismantle the PMF, as it poses an immediate threat to the U.S. Embassy in Baghdad.

He told Digital, “The Iraqi government also furnishes these groups with official state IDs, vehicles, and government license plates under the guise of the PMF framework. This enables them to freely enter Baghdad’s high-security Green Zone and menace the U.S. Embassy or any Iraqi government institution.”

Highlighting the PMF’s threat, the U.S. Department of Justice announced a $10 million reward on Monday for the leader of the pro-Iranian militia Harakat Ansar Allah al-Awfiya (HAAA).

On Monday, the U.S. embassy posted on X that the pro-Iran militia “Harakat Ansar Allah al-Awfiya (HAAA) terrorists have carried out attacks throughout Iraq and the region, including the April 8 ambush of U.S. diplomats near Baghdad International Airport. HAAA terrorists persistently erode Iraqi sovereignty and endanger the safety of Iraqi and American civilians alike. We will not accept attacks on U.S. interests and anticipate all necessary steps will be taken to dismantle Iran-aligned terrorist militia groups in Iraq.”