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U.S. Warns Iraq It Could Cut Off Oil Dollars Over Iran-Linked Cabinet Picks

The threat leverages U.S. control of Iraqi oil revenues kept at the New York Fed since 2003.

A general view shows al-Firdous Square in Baghdad, Iraq July 27, 2022. REUTERS/Ahmed Saad

Overview

  • U.S. officials conveyed that dollar transfers from Iraq’s oil revenues could be halted if parties tied to Iran secure cabinet posts in the next government, according to multiple sources.
  • Chargé d’Affaires Joshua Harris delivered the warning repeatedly over the past two months in talks with Iraqi leaders and via intermediaries to some militia-aligned figures.
  • The message focused on 58 lawmakers Washington views as linked to Iran, with a stated intent to suspend engagement with any cabinet that includes them.
  • Washington objected to Adnan Faihan of Asaib Ahl al-Haq serving as first deputy speaker, and sources say the group signaled willingness to remove him, yet he remains in the post.
  • The U.S. has not executed the threat, the State Department reaffirmed opposition to Iran-backed militias, and Iraq’s cabinet formation remains unresolved with oil dollars comprising the bulk of Baghdad’s budget.