The Trump administration has reportedly escalated its efforts to pressure Iraq into dissolving the Popular Mobilization Force (PMF), militias supported by the Iranian regime that are integrated into the Iraqi government. This move follows a series of attacks targeting U.S. personnel and facilities.

In the midst of a fragile truce between the U.S. and Iran, the administration has increased pressure on Iraq by halting the shipment of U.S. dollars to Baghdad. The rising tensions over policy decisions between the U.S. and Iraq could potentially diminish Iran’s influence in the area and further U.S. objectives against Tehran.

A State Department spokesperson conveyed to Fox News Digital that the U.S. remains committed to combating Iran’s destabilizing actions in Iraq, safeguarding American interests from Iran-backed militant groups, and expressing concerns over the Iraqi government’s inability to curb terrorism.

On March 12, 2026, an explosion was reported near the U.S. Consulate and Erbil International Airport, where a U.S. military installation is situated, in Erbil, Iraq, leading to flames and dense smoke emanating from the site. (Ahsan Mohammed Ahmed Ahmed/Anadolu)

The spokesperson further emphasized that although the efforts of Iraqi Security Forces to counter attacks by Iran-affiliated militias are recognized, the persistent failure of the Iraqi government to prevent such attacks, along with some government elements continuing to support these militias politically, financially, and operationally, is detrimental to U.S.-Iraq relations. The U.S. expects the Iraqi government to take immediate action to dismantle Iran-aligned militia groups.

The Wall Street Journal initially disclosed last week about the security and financial sanctions imposed on Iraq. The report highlighted that the U.S. had suspended security cooperation programs with the Iraqi military and halted a cargo-plane transfer of nearly $500 million in U.S. banknotes, which are the proceeds from Iraqi oil sales managed through 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 Mobilization Forces killed in a U.S.-Israeli airstrike in Mosul the previous evening. (Ahmad Al-Rubaye/AFP)

An Iraqi official told Fox News Digital, “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.”

A billboard featuring a photo of Iran’s deceased supreme leader, Ali Khamenei, is seen along a street in Baghdad on March 9, 2026. (Murtadha Al-Sudani/Anadolu)

The official added, “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 different sides position themselves to select a new Iraqi prime minister.

Smoke rises from the U.S. Embassy 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 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 Iran’s former 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.”

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.”