US Resumes Dollar Shipment to Iraq After Long Suspension

The United States has resumed air shipments of U.S. dollars to Iraq this month, according to a report by The National, ending a several-month suspension that began in April over security concerns and regional tensions.

The decision comes amid shifting dynamics as Iraq's new government seeks to recalibrate ties with both Gulf states and Western partners.

Behind the Suspension

Washington had halted deliveries of approximately $500 million in cash in April, simultaneously pausing parts of its security cooperation with Baghdad. U.S. officials publicly attributed the suspension to repeated attacks by Iran-backed militias targeting American infrastructure across Iraq and the broader region.

At the time, the pause appeared designed to exert pressure on Baghdad to rein in militant groups while negotiations were underway to form a new Iraqi government. Despite the cash delivery freeze, electronic transfers for trade purposes continued uninterrupted throughout the period.

The suspended dollars—drawn primarily from Iraqi oil revenues held at the Federal Reserve Bank of New York—play a crucial role in meeting local retail and foreign-exchange demand within Iraq's economy.

New Leadership, New Priorities

The resumption coincides with Prime Minister Ali Al Zaidi's first full month in office. Having assumed power in early May, the prime minister has identified three central priorities in his administration's engagement with Washington:

• Disarming Iran-aligned militias operating within Iraq
• Fighting systemic corruption across government institutions
• Reforming financial oversight mechanisms

Under Zaidi's direction, the government has launched a high-profile anti-corruption campaign resulting in the arrest of dozens of officials and lawmakers. Authorities report having seized tens of millions of dollars in assets as part of these efforts.

On security matters, Zaidi has pledged to bring all weapons under exclusive state control—a longstanding U.S. demand following claims by various militias regarding responsibility for drone and rocket strikes on the U.S. Embassy in Baghdad and other targets during recent regional hostilities involving Iran.

Financial Oversight Measures

Addressing U.S. concerns about illicit diversion of funds, Zaidi's government has appointed a new governor for the Central Bank of Iraq. American officials had previously expressed worries that cash entering the country was being channeled to militia networks outside formal government channels.

Current indications suggest the policy shift represents recognition of Prime Minister Zaidi's early initiatives, yet U.S. officials have signaled that full normalization of the relationship remains contingent on measurable outcomes. Key benchmarks include verifiable progress on militia disarmament and demonstrable improvements in financial transparency.

Prime Minister Zaidi is scheduled to make an official visit to Washington later this month, where further discussions on cooperation frameworks are expected to take place.

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