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The Trump administration has reportedly ramped up its punitive measures to compel Iraq to disband Iranian regime-backed militias known as the Popular Mobilization Force (PMF) that form part of its government after sustained attacks on U.S. personnel and facilities.
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. dollar shipments to Baghdad. The growing disagreements over policy between the U.S. and Iraq could lead to weakening Iran’s presence in the region and advance U.S. war aims against Tehran.
In a statement against Iraq’s government, a State Department spokesperson told Fox News Digital, “The United States has consistently been clear we will take all measures to counter Iran’s destabilizing activities in Iraq, protect U.S. interests against Iran-aligned terrorist militias in Iraq, and make clear our concerns about the Iraqi government’s failure to prevent this terrorism.”
US WARNS IRAQ MUST ACT AGAINST IRAN-BACKED MILITIA ATTACKS ON AMERICAN ASSETS
An explosion occurred near the U.S. Consulate and Erbil International Airport, where a U.S. military base is located, in Erbil, Iraq, on March 12, 2026, causing fire and thick smoke to rise following the blast. (Ahsan Mohammed Ahmed Ahmed/Anadolu)
The spokesperson added that “While we acknowledge the efforts of Iraqi Security Forces to respond to terrorist attacks by Iran-aligned militia groups, we continue to emphasize that the Iraqi government’s failure to prevent these attacks while some elements associated with the Iraqi government continue to actively provide political, financial, and operational cover for the militias adversely impacts the U.S.-Iraq relationship. The United States will not tolerate attacks on U.S. interests and expects the Iraqi government to immediately take all measures to dismantle the Iran-aligned militia groups in Iraq.”
The Wall Street Journal first reported last week about the security and financial penalties imposed on Iraq. According to the report, the U.S. halted security cooperation programs with Iraq’s military and stopped “a cargo-plane delivery of nearly $500 million in U.S. banknotes, the proceeds from Iraqi oil sales from Federal Reserve Bank of New York accounts.”
The newspaper said it was the second blocked delivery of dollars to the Central Bank of Iraq since the start of the U.S.-Israel war on Feb. 28 against Iran.
The Treasury Department declined to comment on the blocked payments.
Iraqi security forces stand guard during a funerary procession in Baghdad on March 8, 2026, for a slain member of the Popular Mobilisation Forces killed in a U.S.-Israeli airstrike in Mosul the previous evening. (Ahmad Al-Rubaye/AFP)
An Iraqi official told Fox News Digital that “With regard to relations with the United States, Iraq views them as an important partnership based on shared interests and cooperation. The two sides have fought together in a decisive battle against ISIS, reflecting the depth and significance of this relationship.”
In reference to the pro-Iran militias, the Iraqi official said, “As for the issue of armed factions, it is important to note that the Iraqi reality is highly complex, with overlapping political, security and social dimensions. Some of these factions also possess political and popular influence. Accordingly, addressing this issue requires careful and gradual approaches grounded in a deep understanding of the domestic context, in a way that strengthens state authority and ensures that weapons are confined to the hands of the state while maintaining internal stability.”
TRUMP THREATENS TO END IRAQ SUPPORT OVER AL-MALIKI COMEBACK BID TIED TO IRAN INFLUENCE
A billboard featuring a photo of Iran’s supreme leader Ali Khamenei is seen along a street in Baghdad on March 9, 2026. (Murtadha Al-Sudani/Anadolu)
The official added that “External measures that fail to take into account the particularities of this reality may lead to counterproductive outcomes and negatively affect internal balances, which would not serve the stability efforts undertaken by Iraq and its partners, foremost among them Washington.”
The PMF is an umbrella organization of militias largely loyal to the Islamic Republic of Iran — the world’s worst state-sponsor of terrorism, according to the State Department. Members of the PMF have launched attacks on U.S. assets in Iraqi Kurdistan and against Iraqi Kurds — a valuable U.S. ally in the Mideast.
A senior Kurdish official told Fox News Digital, “The dollar pause is part of the nuclear option in the Treasury Department, and the Americans have always been reluctant to leverage it. The Iraqis, meanwhile, have been cruel to their partners — Americans and the KRG [Kurdish Regional Government], as this war has shown — and now Washington is drawing a red line.”
The Kurdish official said, “They’ve made it clear things will only get worse for Iraq if militias resume attacks against U.S. interests, including in the Kurdistan Region. It’s high time the Americans pulled this lever; for too long, it has allowed Iran to pick a premier and dictate the rules, despite repeated encouragement to veto Iran’s cut-outs in Iraq.”
Both Iraqi and Kurdish officials said the government is in flux as the differnt sides position themselves to select a new Iraqi prime minister.
IRAQI STATE BANK ACCUSED OF PROCESSING PAYMENTS FOR HOUTHI TERRORISTS WHO DISRUPT RED SEA COMMERCE
Smoke rises from the U.S. embassy building in Baghdad, Iraq, on March 14, 2026, following an attack on the diplomatic mission. (Ali Jabar/AP)
The Trump administration opposes the return of former Iraqi Prime Minister Nouri al-Maliki because of his close ties to Iran.
The Kurdish official stressed the role of the majority Shiite population in Iran: “In the end, though, it’s still the Shia house that chooses the premiership. They have some latitude, but ultimately, they will select a candidate acceptable to both Iran and the United States. That’s the game — and America has always reacted to Iran’s game. This time, however, Washington appears intent on influencing the outcome rather than just observing it.”
The official added, “This matters especially because Iraq depends on oil, and its proceeds are deposited in the U.S. Federal Reserve and American banks. How Washington behaves vis-à-vis those deposits influences the process and reconfigures the balance within the Shia house. It matters enormously.”
Entifadh Qanbar, a former spokesman for the deputy prime minister of Iraq, warned that there is a pressing need for the Iraqi Prime Minister Mohammed Shia’ al-Sudan to swiftly dismantle the PMF because they represent a clear and present danger to the U.S. Embassy in Baghdad.
Iraqi Shiite men hold pictures of Iranian Supreme Leader Ayatollah Ali Khamenei during a symbolic funeral in Najaf, Iraq, on March 1, 2026. (Anmar Khalil/AP)
He told Fox News Digital, The Iraqi government also provides these groups with state identification cards, vehicles, and official government license plates under the cover of the PMF structure. This allows them to enter Baghdad’s high-security Green Zone at will and threaten the U.S. Embassy or any Iraqi state institution.”
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To underscore the dangers of the PMF, the U.S. Department of Justice announced on Monday a $10 million bounty on the terrorist leader 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 attacks across Iraq and the region, including the April 8 ambush of U.S. diplomats near the Baghdad International Airport. HAAA terrorists continue to undermine Iraqi sovereignty while threatening the safety and security of both Iraqi and U.S. civilians. We will not tolerate attacks on U.S. interests and expect all measures will be taken to dismantle Iran-aligned terrorist militia groups in Iraq.”