{"id":86156,"date":"2026-04-27T17:43:08","date_gmt":"2026-04-27T17:43:08","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/86156\/"},"modified":"2026-04-27T17:43:08","modified_gmt":"2026-04-27T17:43:08","slug":"dollar-blockade-will-us-pressure-on-iraqs-militias-backfire","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/86156\/","title":{"rendered":"Dollar blockade: Will US pressure on Iraq’s militias backfire?"},"content":{"rendered":"

In a move that potentially has severe economic and security ramifications for Iraq\u2019s overall stability, the United States has\u00a0blocked the shipment of dollars<\/a> to Iraq and frozen funding for Iraqi security programs.<\/p>\n

The move followed months of US President Donald Trump warning Baghdad to do more to curtail the powerful Iran-backed militias<\/a> in the country, whose political factions wield substantial power.<\/p>\n

Last week, Washington reportedly<\/a> halted a shipment of almost $500 million in banknotes from going by plane to Baghdad. Revenue from Iraq\u2019s oil exports is deposited in an account at the US Federal Reserve Bank in New York City.<\/p>\n

Baghdad remains overwhelmingly reliant on this to pay its bloated public sector employees and could face a cash crisis if the dollar block is prolonged.<\/p>\n

Trump previously warned Iraq in January that he would withdraw Washington\u2019s support if Nouri al-Maliki<\/a> was nominated as the country\u2019s next prime minister. The US again bombed militia groups operating under the banner of the self-styled Islamic Resistance of Iraq during the recent Iran war<\/a>.<\/p>\n

These groups targeted US interests in Iraq and the Kurdistan Region with hundreds of drone attacks throughout that war. Iraq, meanwhile, still hasn\u2019t chosen its next prime minister,\u00a0despite the deadline<\/a>.<\/p>\n

Joel Wing, author of the Musings on Iraq blog<\/a>, warned that this latest American move could prove catastrophic for the Iraqi government, noting that the Iraqi state relies upon oil money to cover more than a whopping 90% of its revenue.<\/p>\n

\u201cIt is already suffering due to the impact of the Iran war, which has dramatically cut its petroleum exports,\u201d Wing told The New Arab. \u201cIf it doesn\u2019t have access to the money, it will not be able to pay its government workers and pensioners and will quickly lead to protests and social unrest.\u201d<\/p>\n

Washington has also gone further in its demands, he says. \u201cIt wants a government that does not have Iranian influence and for resistance leaders to be arrested for attacks upon Americans during the Iran War.\u201d<\/p>\n

The Iraq analyst believes that the move is driven more by \u201canti-Iranian elements\u201d in the US national security establishment than by Trump, \u201cwho doesn\u2019t know anything about foreign policy\u201d.<\/p>\n

Mohammed A. Salih, a non-resident senior fellow at the Foreign Policy Research Institute, believes the American move is significant.<\/p>\n

First and foremost, he said, it \u201csignals displeasure with the current course and policies\u201d of the Iraqi government and the political elites behind it, whom he notes are predominantly Shia.<\/p>\n

\u201cOn both Maliki\u2019s premiership and the militias\u2019 rogue and unruly behaviour during the recent war, the US is deeply infuriated with Iraq,\u201d Salih told TNA.<\/p>\n

The move to block dollar shipments followed months of warnings to Baghdad from US President Donald Trump to curtail Iraq’s powerful Iran-backed militias. [Getty]<\/p>\n

Unintended consequences<\/p>\n

It remains to be seen if the US move will achieve its goal of pressuring Baghdad to crack down on these militias.<\/p>\n

There is also a possibility that it could even backfire by hardening the resolve of these armed groups<\/a> and their powerful political factions to oppose US interests in Iraq. After Trump\u2019s January threat, Maliki notably remained defiant<\/a>.<\/p>\n

Wing argued that the self-styled Resistance factions in Iraq have already emerged as the \u201cclear winners\u201d from the Iran war.<\/p>\n

\u201cThey attacked Americans, the Kurds, and almost all the neighbouring countries without facing any real consequences,\u201d he said. \u201cThe attacks by the US and Israel lacked any kind of purpose or strategy. Baghdad also did little to stop them.\u201d<\/p>\n

According to Wing, the threats by the Trump administration could further reinforce militia narratives, which have repeatedly called for the US to leave Iraq.<\/p>\n

Salih similarly believes that the latest US move could well push these militias and factions to \u201charden their positions\u201d.<\/p>\n

After all, he noted, they demonstrated throughout the latest war that they do not act with Iraq\u2019s interests at heart. Instead, they \u201cprioritise and implement\u201d Iran\u2019s agenda in Iraq and the broader region.<\/p>\n

\u201cHowever, this is also a moment of reckoning for the Shia political factions outside of the Iran-controlled militias,\u201d he said. \u201cThey either confront the militias on their destabilising and destructive policies or will bring themselves and the entire country to pay for the unwise behaviour of the militias.\u201d<\/p>\n

The US move could prove catastrophic for the Iraqi government, which relies upon oil money to cover more than a whopping 90% of its revenue. [Getty]<\/p>\n

First real action<\/p>\n

Wing outlined how the US move isn\u2019t merely symbolic, noting that US policy toward Iraq has often been \u201chaphazard,\u201d with Washington and the US Embassy invariably demanding that Baghdad end Iranian influence and doing little else.<\/p>\n

Therefore, the dollar blockage marks the \u201cfirst real action\u201d taken to compel the Iraqis to do something.<\/p>\n

\u201cThe most important thing to consider in this turn of events is that the Iraqi government cannot fulfil American demands,\u201d Wing said. \u201cIt doesn\u2019t look like Maliki will become premier, but whoever does will have pro-Iran politicians and Resistance members in his coalition. It\u2019s unclear if the US will object to that or only cares about blocking Maliki.\u201d<\/p>\n

More generally, Baghdad isn\u2019t in a position to hold these groups accountable even if it sought to do so. Wing noted that they can arrest some low-level members but described such action as mere \u201ctheatre\u201d as these individuals are protected by the powerful pro-Iran political wings that are part of the government. Therefore, anyone arrested in Baghdad can count on being released.<\/p>\n

\u201cTouching resistance leaders will disrupt the political system because again they hold positions within the ruling coalition and government offices,\u201d Wing said. \u201cIran is also Iraq’s neighbour and therefore has much more power within Iraq than the US does.\u201d<\/p>\n

In the meantime, any prolongation or regular recurrence of the US ban on dollar deliveries will no doubt harm the Iraqi economy and finance sector. FPRI\u2019s Salih predicts it would \u201cgenerate panic\u201d about Iraq\u2019s future and the possibility of more punitive measures down the road by Washington.<\/p>\n

\u201cWe\u2019ve already seen the dollar’s value increase vis-\u00e0-vis dinar,\u201d Salih said. \u201cIt could have serious repercussions for trade and the general stability of the Iraqi economy and markets, and the population’s faith in the political elites and Baghdad government to handle relations with the US in a right or productive way.\u201d<\/p>\n

Fragile security<\/p>\n

As mentioned, the US also froze some security funding. For over a decade, the US military in Iraq has helped its Iraqi counterparts and the Kurdish Peshmerga fight the Islamic State (IS) group. IS lost all the Iraqi territory it had conquered in 2014 by the end of 2017, but some militants remain, mostly hiding in rural parts of the country.<\/p>\n

The US has also provided intelligence, surveillance, and reconnaissance capabilities to help the Iraqis locate and target remaining militants.<\/p>\n

Salih described Iraq\u2019s security as still \u201cquite fragile,\u201d especially given the prevailing regional conditions.<\/a><\/p>\n

\u201cIraq has particularly come to rely much on the US over the years for countering the IS threat at military and intelligence levels,\u201d he said. \u201cSuspension of security cooperation would certainly be detrimental to Iraq\u2019s security and stability.\u201d<\/p>\n

Wing is less concerned about IS remnants exploiting the current tensions between Baghdad and Washington.<\/p>\n

\u201cIS is literally dead in Iraq,\u201d he said. \u201cA lot more would have to happen for it to even have a chance of reviving.\u201d<\/p>\n

Cornered KRG<\/p>\n

It\u2019s unclear how this whole situation will affect the autonomous Kurdistan Region. The US has close ties with Erbil, although the region remains part of Iraq and will likely feel some impact.<\/p>\n

Wing pointed out that the Kurdistan Regional Government remains \u201ceconomically dependent\u201d upon Baghdad for monthly budget payments.<\/p>\n

\u201cIf the central government is not getting its revenues, the Kurds won’t be getting their money either, so it all trickles down throughout society,\u201d he said.<\/p>\n

In the 1990s, when the Iraqi dinar collapsed under the sheer weight of the UN sanctions against Saddam Hussein, the nascent KRG found itself under a double embargo. One by the world because it was part of Iraq, and another by Baghdad that sought to undermine its self-rule. Kurdish leaders were understandably embittered by this farcical position they found themselves in.<\/p>\n

\u201cThe Americans do not have a policy for the Kurds,\u201d veteran leader Masoud Barzani told<\/a> journalist Amberin Zaman in 1998. \u201cThey have sentenced us to remain the enemies of Iraq and also remain part of Iraq.\u201d<\/p>\n

Today, Salih believes that the KRG is \u201cdouble paying\u201d for Baghdad\u2019s irresponsible behaviour and the militias that are on the central government\u2019s payroll.<\/p>\n

\u201cOn the one hand, it has been unfairly pressured by Baghdad and the militias for years in both security and economic\/financial domains,\u201d he said.<\/p>\n

\u201cAnd now, given the failure of the federal government and ruling Shia elites to establish strong relations with the US and their failure to rein in the militias directed by Tehran, the Kurdistan Region will have to pay for US sanctions or punitive measures against Baghdad, as Kurds are part of Iraq.\u201d<\/p>\n

Paul Iddon is a freelance journalist based in Erbil, Iraqi Kurdistan, who writes about Middle East affairs.<\/p>\n

Follow him on Twitter:\u00a0@pauliddon<\/a><\/p>\n

Edited by Charlie Hoyle<\/p>\n