The US has blocked a plane carrying nearly $500 million in banknotes from delivering the cash to Iraq. This move comes after Washington suspended cash shipments and frozen funding for security programs due to attacks on US interests by groups showing solidarity with Iran, according to the Wall Street Journal.
Iraq has long balanced influences from its allies, neighboring Iran and the United States. However, maintaining this balance has been challenging as war engulfs the Middle East. An Iraqi government official stated that only one shipment has not arrived due to logistical reasons related to the war and airspace closure.
An Iraqi central bank official downplayed the issue, stating that dollar shipments have ceased during the regional conflict due to flight suspensions and security concerns. The central bank has sufficient reserves and does not currently need more US dollars.
An Iraqi security official confirmed to AFP that the United States has suspended its security cooperation with Iraq over factions targeting US interests. Iraq was drawn into the Middle East war, with strikes targeting Iran-backed groups, which in turn have claimed attacks on US interests across the Gulf states.
The US State Department summoned Iraq’s ambassador to Washington to express strong condemnation of these attacks, including an ambush on US diplomats in Baghdad on April 8. The Wall Street Journal reported that the US Treasury Department blocked a shipment of nearly $500 million in cash from Iraqi oil sales, citing US and Iraqi officials.
The US has leverage over Iraq due to its oil export revenue being largely held at the Federal Reserve Bank in New York. An unidentified US official stated that the suspension of cash shipments is temporary. The Central Bank of Iraq said it was not lacking US dollars and had fulfilled all requests from banks and exchange companies for US dollars 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 Daesh group. Iranian commander Esmail Qaani arrived in Baghdad on Saturday for meetings with political leaders and armed factions, aiming to address regional de-escalation and its impact on Iraq. Pro-Iranian armed groups announced they would suspend their attacks for two weeks following a ceasefire announcement between the US and Iran.