US blocks $500 million cash shipment to Iraq over pro-Iran attacks

WASHINGTON,— The United States has blocked a plane carrying nearly $500 million in banknotes from reaching Iraq, US media reported Tuesday, increasing pressure on Baghdad to act against Iran-backed Iraqi Shiite armed groups.

The Wall Street Journal reported that Washington suspended cash shipments to Iraq and froze funding for security programs after attacks on US interests by groups aligned with Iran.

Iraq has long balanced ties between neighboring Iran and the United States, both key partners with competing influence. Officials in Baghdad have found it harder to keep that balance as conflict spreads across the Middle East.

An Iraqi security official told AFP the United States halted security cooperation because of attacks by pro-Iran factions targeting US interests.

The State Department said earlier it summoned Iraq ambassador in Washington to express strong condemnation over attacks including an April 8 ambush on US diplomats in Baghdad.

Since fighting began on February 28, 2026 the US embassy in Baghdad and a diplomatic facility at the airport have faced repeated rocket and drone attacks, most intercepted. Missiles and rockets also struck the US consulate in Erbil and the city airport where coalition troops are based.

The Wall Street Journal said the Treasury Department blocked the cash shipment from Iraqi oil revenues, citing US and Iraqi officials.

US authorities hold significant influence because Iraq oil income is largely kept at the Federal Reserve Bank in New York under a system set after the 2003 invasion. Unnamed US officials said the halt in cash deliveries is temporary.

The Central Bank of Iraq did not directly address the reports but said it still had enough dollars and met all requests from banks and exchange firms for travel and transfers.

The New York Times reported the funding freeze covers military training and counter terror programs including efforts against Islamic State. Such operations are central to US cooperation after the group took large areas of Iraq and Syria in 2014.

A senior Iraqi official said Iranian commander Esmail Qaani arrived in Baghdad Saturday to meet leaders and armed factions to discuss de escalation and its effects on Iraq.

Pro-Iran Shiite groups said on April 8 they would pause attacks for two weeks after a ceasefire announcement between the United States and Iran.

Iraq continues to face pressure as violence and regional tensions shape decisions involving security ties financial flows and diplomatic contacts between Washington Tehran and Baghdad officials said.

The developments follow repeated incidents targeting American personnel and facilities while Iraqi authorities attempt to manage internal factions and maintain relations with both countries under changing regional conditions.

Officials have not given a timeline for restoring programs or resuming cash transfers as discussions continue between governments involved in the situation.

(With files from AFP)