State Dept warns Iraq over Iran proxies amid report US halted greenback funds

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The Trump administration has reportedly ramped up its punitive measures to compel Iraq to disband Iranian regime-backed militias referred to as the Widespread Mobilization Drive (PMF) that kind a part of its authorities after sustained assaults on U.S. personnel and services.

Amid a tenuous ceasefire between the U.S. and the Islamic Republic of Iran, the administration tightened the screws on Iraq by stopping U.S. greenback shipments to Baghdad. The rising disagreements over coverage between the U.S. and Iraq may result in weakening Iran’s presence within the area and advance U.S. conflict goals towards Tehran.

In a press release towards Iraq’s authorities, a State Division spokesperson instructed Fox Information Digital, “The US has persistently been clear we’ll take all measures to counter Iran’s destabilizing actions in Iraq, defend U.S. pursuits towards Iran-aligned terrorist militias in Iraq, and clarify our considerations in regards to the Iraqi authorities’s failure to stop this terrorism.”

US WARNS IRAQ MUST ACT AGAINST IRAN-BACKED MILITIA ATTACKS ON AMERICAN ASSETS

Fire and thick smoke rising after an explosion near the U.S. Consulate in Erbil, Iraq

An explosion occurred close to the U.S. Consulate and Erbil Worldwide Airport, the place a U.S. army base is situated, in Erbil, Iraq, on March 12, 2026, inflicting hearth and thick smoke to rise following the blast. (Ahsan Mohammed Ahmed Ahmed/Anadolu)

The spokesperson added that “Whereas we acknowledge the efforts of Iraqi Security Forces to answer terrorist assaults by Iran-aligned militia teams, we proceed to emphasise that the Iraqi authorities’s failure to stop these assaults whereas some components related to the Iraqi authorities proceed to actively present political, monetary, and operational cowl for the militias adversely impacts the U.S.-Iraq relationship. The US is not going to tolerate assaults on U.S. pursuits and expects the Iraqi authorities to instantly take all measures to dismantle the Iran-aligned militia teams in Iraq.”

The Wall Avenue Journal first reported final week in regards to the safety and monetary penalties imposed on Iraq. In response to the report, the U.S. halted safety cooperation applications with Iraq’s army and stopped “a cargo-plane supply of practically $500 million in U.S. banknotes, the proceeds from Iraqi oil gross sales from Federal Reserve Financial institution of New York accounts.”  

The newspaper stated it was the second blocked supply of {dollars} to the Central Financial institution of Iraq because the begin of the U.S.-Israel conflict on Feb. 28 towards Iran. 

The Treasury Division declined to touch upon the blocked funds.

Iraqi security forces standing guard during a funerary procession in Baghdad

Iraqi safety forces stand guard throughout a funerary procession in Baghdad on March 8, 2026, for a slain member of the Widespread Mobilisation Forces killed in a U.S.-Israeli airstrike in Mosul the earlier night. (Ahmad Al-Rubaye/AFP)

An Iraqi official instructed Fox Information Digital that “With regard to relations with the US, Iraq views them as an vital partnership based mostly on shared pursuits and cooperation. The 2 sides have fought collectively in a decisive battle towards ISIS, reflecting the depth and significance of this relationship.”

In reference to the pro-Iran militias, the Iraqi official stated, “As for the difficulty of armed factions, it is very important word that the Iraqi actuality is extremely complicated, with overlapping political, safety and social dimensions. A few of these factions additionally possess political and common affect. Accordingly, addressing this concern requires cautious and gradual approaches grounded in a deep understanding of the home context, in a method that strengthens state authority and ensures that weapons are confined to the arms of the state whereas sustaining inner stability.”

TRUMP THREATENS TO END IRAQ SUPPORT OVER AL-MALIKI COMEBACK BID TIED TO IRAN INFLUENCE

A billboard featuring a photo of Ali Khamenei along a street in Baghdad

A billboard that includes a photograph of Iran’s supreme chief Ali Khamenei is seen alongside a road in Baghdad on March 9, 2026. (Murtadha Al-Sudani/Anadolu)

The official added that “Exterior measures that fail to take note of the particularities of this actuality might result in counterproductive outcomes and negatively have an effect on inner balances, which might not serve the steadiness efforts undertaken by Iraq and its companions, foremost amongst them Washington.”

The PMF is an umbrella group of militias largely loyal to the Islamic Republic of Iran — the world’s worst state-sponsor of terrorism, in line with the State Department. Members of the PMF have launched assaults on U.S. property in Iraqi Kurdistan and towards Iraqi Kurds — a priceless U.S. ally within the Mideast.

A senior Kurdish official instructed Fox Information Digital, “The greenback pause is a part of the nuclear possibility within the Treasury Division, and the People have all the time been reluctant to leverage it. The Iraqis, in the meantime, have been merciless to their companions — People and the KRG [Kurdish Regional Government], as this conflict has proven — and now Washington is drawing a pink line.”

The Kurdish official stated, “They’ve made it clear issues will solely worsen for Iraq if militias resume assaults towards U.S. pursuits, together with within the Kurdistan Area. It’s excessive time the People pulled this lever; for too lengthy, it has allowed Iran to pick a premier and dictate the principles, regardless of repeated encouragement to veto Iran’s cut-outs in Iraq.”

Each Iraqi and Kurdish officers stated the federal government is in flux because the differnt sides place themselves to pick out a brand new Iraqi prime minister.

IRAQI STATE BANK ACCUSED OF PROCESSING PAYMENTS FOR HOUTHI TERRORISTS WHO DISRUPT RED SEA COMMERCE

Smoke rising from the U.S. embassy building in Baghdad

Smoke rises from the U.S. embassy constructing in Baghdad, Iraq, on March 14, 2026, following an assault on the diplomatic mission. (Ali Jabar/AP)

The Trump administration opposes the return of former Iraqi Prime Minister Nouri al-Maliki due to his shut ties to Iran. 

The Kurdish official harassed the function of the bulk Shiite inhabitants in Iran: “Ultimately, although, it’s nonetheless the Shia home that chooses the premiership. They’ve some latitude, however in the end, they’ll choose a candidate acceptable to each Iran and the US. That’s the sport — and America has all the time reacted to Iran’s recreation. This time, nevertheless, Washington seems intent on influencing the result reasonably than simply observing it.”

The official added, “This issues particularly as a result of Iraq is determined by oil, and its proceeds are deposited within the U.S. Federal Reserve and American banks. How Washington behaves vis-à-vis these deposits influences the method and reconfigures the stability throughout the Shia home. It issues enormously.”

Entifadh Qanbar, a former spokesman for the deputy prime minister of Iraq, warned that there’s a urgent want for the Iraqi Prime Minister Mohammed Shia’ al-Sudan to swiftly dismantle the PMF as a result of they signify a transparent and current hazard to the U.S. Embassy in Baghdad.

Iraqi Shiite men holding pictures of Ayatollah Ali Khamenei during a gathering in Najaf

Iraqi Shiite males maintain photos of Iranian Supreme Chief Ayatollah Ali Khamenei throughout a symbolic funeral in Najaf, Iraq, on March 1, 2026. (Anmar Khalil/AP)

He instructed Fox Information Digital, The Iraqi authorities additionally offers these teams with state identification playing cards, automobiles, and official authorities license plates below the quilt of the PMF construction. This enables them to enter Baghdad’s high-security Inexperienced Zone at will and threaten the U.S. Embassy or any Iraqi state establishment.”

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To underscore the risks of the PMF, the U.S. Division of Justice introduced on Monday a $10 million bounty on the terrorist chief of the pro-Iranian militia Harakat Ansar Allah al-Awfiya (HAAA).
 

The U.S. embassy on Monday wrote on X that the pro-Iran militia “Harakat Ansar Allah al-Awfiya (HAAA) terrorists have launched assaults throughout Iraq and the area, together with the April 8 ambush of U.S. diplomats close to the Baghdad Worldwide Airport.  HAAA terrorists proceed to undermine Iraqi sovereignty whereas threatening the protection and safety of each Iraqi and U.S. civilians.  We is not going to tolerate assaults on U.S. pursuits and anticipate all measures shall be taken to dismantle Iran-aligned terrorist militia teams in Iraq.”
 



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