Report says US blocked $500 million cash shipment to Iraq over pro-Iran attacks

Washington: The United States blocked a plane carrying nearly $500 million in banknotes from delivering the cash to Iraq, US media reported on Tuesday, piling pressure on Baghdad to fight Iran-backed militant groups.

The Wall Street Journal reported that Washington has suspended cash shipments to Iraq and frozen funding for security programs following attacks on US interests in the country by groups showing solidarity with Iran.

Iraq has long walked a tightrope between the competing influences of its allies, neighboring Iran and the United States.

Get updated faster and for FREE: Download the Gulf News app now - simply click here.

However, Iraqi leaders have struggled to maintain that delicate balance as war engulfs the Middle East.

An Iraqi government official told AFP only one shipment has not arrived, citing "logistical reasons due to the war" and airspace closure.

An Iraqi central bank official also downplayed the issue, telling AFP that dollar shipments have ceased during the regional war "due to the suspension of flights and the security situation."

He added that the central bank has not requested more US dollars as it has sufficient reserves and there is "no current need to boost them."

But an Iraqi security official confirmed to AFP that the United States has suspended its security cooperation with Iraq over factions targeting US interests.

US State Department spokesman Tommy Pigott acknowledged efforts by Iraqi security forces to respond to attacks but said that some elements in the Iraqi government "actively provide political, financial and operational cover for the militias adversely impacts the US-Iraq relationship."

"The United States will not tolerate attacks on US interests and expects the Iraqi government to immediately take all measures to dismantle the Iran-aligned militia groups in Iraq," he said.

The State Department said this month it had summoned Iraq's ambassador to Washington to express "strong condemnation" of attacks by pro-Iran groups on US interests, including an "ambush" on US diplomats in Baghdad on April 8.

Pigott did not comment on any actions. The US Treasury Department declined comment.

Damage in war

Iraq was drawn into the Middle East war with strikes targeting Iran-backed groups, which in turn have claimed attacks on US interests, mostly in Iraq but also across the Gulf states.

The US embassy in Baghdad and a logistical and diplomatic center inside the city's airport have been repeatedly targeted by rockets and drones, with most intercepted.

Missile and rocket attacks also targeted the US consulate in Erbil in Iraq's northern Kurdistan region, as well as the city's airport, where US-led anti-jihadist coalition troops are deployed.

The United States has leverage over Iraq because the country's oil export revenue is largely held at the Federal Reserve Bank in New York, under an arrangement reached after the 2003 US-led invasion that toppled former ruler Saddam Hussein.

The Wall Street Journal, quoting unidentified sources, said that the blocked shipment involved nearly $500 million in cash from Iraqi oil sales.

The Central Bank of Iraq said Tuesday it was not lacking US dollars and that it had "fulfilled all requests from banks and exchange companies for US dollars, which are intended for pilgrims, travelers and foreign transfers."

The funding freeze to security programs includes training for Iraq's army and counter-terror efforts against the Islamic State group, The New York Times reported.

Fighting Daesh jihadists is a key part of Washington's military cooperation with Iraq, after the group swept across Iraq and neighboring Syria in 2014.

Iranian commander Esmail Qaani arrived in Baghdad on Saturday for meetings with political leaders and commanders of armed factions, a senior Iraqi official said, aiming to "address regional de-escalation and its impact on Iraq."

Pro-Iranian armed groups announced on April 8 that they would suspend their attacks for two weeks, following the announcement of a ceasefire between the United States and Iran.