The United States blocked a plane carrying nearly $500 million in banknotes from delivering the cash to Iraq, US media reported on Tuesday, piling pressure on Baghdad to fight Iran-backed armed factions.
The Wall Street Journal reported that Washington has suspended cash shipments to Iraq and frozen funding for security programs following attacks on US interests in the country by groups showing solidarity with Iran.
Iraq has long walked a tightrope between the competing influences of its allies, neighboring Iran and the United States.
However, Iraqi leaders have struggled to maintain that delicate balance as war engulfs the Middle East.
The US State Department said this month it had summoned Iraq's ambassador to Washington to express "strong condemnation" of attacks by pro-Iran groups on US interests, "including the April 8 ambush of US diplomats in Baghdad".
The Wall Street Journal reported that the US Treasury Department blocked a shipment of nearly $500 million in cash from Iraqi oil sales, quoting US and Iraqi officials.
AFP has contacted the Treasury Department for comment.
The United States has leverage over Iraq because the country's oil export revenue is largely held at the Federal Reserve Bank in New York, under an arrangement reached after the 2003 US invasion that toppled Saddam Hussein.
The Wall Street Journal quoted unidentified US officials as saying that the suspension on cash shipments was temporary.
The Central Bank of Iraq has not commented specifically about the reports.
However, it said on Tuesday it was not lacking US dollars and that it had "fulfilled all requests from banks and exchange companies for US dollars, which are intended for pilgrims, travelers and foreign transfers."
The funding freeze to security programs includes training for Iraq's army and counterterror efforts against the ISIS group, The New York Times reported.
