BAGHDAD/WASHINGTON : The United States has formally warned Iraq’s political leadership that it is prepared to restrict Baghdad’s access to oil-export revenues if the Shiite Coordination Framework proceeds with nominating Nouri al-Maliki for a new term as prime minister, according to officials familiar with the discussions. The message, conveyed through financial and diplomatic channels rather than public statements, underscores Washington’s leverage over Iraq’s economy and marks a significant escalation in bilateral tensions at a sensitive stage of government formation talks.
Financial Pressure Delivered Through Central Bank Channel
The warning was delivered last week during a meeting in Turkey between senior U.S. officials and Ali Muhsin al-Alaq, the governor of the Central Bank of Iraq. According to multiple sources briefed on the meeting, U.S. representatives indicated that Washington could block or delay U.S. dollar transfers from the Federal Reserve Bank of New York to Iraq’s central bank.
Since 2003, proceeds from Iraq’s oil exports have been deposited into an account held at the New York Fed. These revenues finance roughly 90 percent of the Iraqi state budget, including public sector salaries, subsidies, and essential imports. Iraqi financial officials privately acknowledge that any sustained interruption to dollar transfers would place immediate pressure on the Iraqi dinar, reduce foreign currency liquidity, and threaten the government’s ability to meet payroll obligations.
U.S. officials have not publicly detailed the legal or technical mechanisms that could be used to impose such restrictions, but Iraqi policymakers interpret the warning as a reminder of Washington’s decisive role in safeguarding — or withholding — access to Iraq’s oil income.
White House Signals and Public Messaging
The private financial warning follows a series of public statements by Donald Trump, who has used social media to criticize the prospect of al-Maliki’s return to office. On January 27, Trump stated that the United States would “no longer help Iraq” if al-Maliki were reappointed, arguing that his previous tenure as prime minister from 2006 to 2014 was marked by economic decline and political instability.
Senior U.S. officials frame the stance as part of a broader effort to limit Iranian influence in Baghdad. Marco Rubio is reported to have reiterated these concerns in a phone call with caretaker Prime Minister Mohammed Shia al-Sudani, warning that Washington would not accept the formation of a government aligned with Tehran.
Al-Maliki’s Position Inside the Coordination Framework
Al-Maliki, who leads the State of Law Coalition, has rejected U.S. pressure and insisted that the selection of Iraq’s prime minister is a sovereign internal matter. In a televised interview on February 3, he confirmed that within the Coordination Framework — the largest bloc in parliament — ten factions support his candidacy, while two remain opposed.
He stated that he would withdraw only if the Framework collectively requested it, and said external pressure would not influence his decision. Al-Maliki also questioned the basis of President Trump’s remarks, suggesting they were informed by inaccurate political assessments.
During the same interview, he criticized what he described as regional interference, including by Turkey and Qatar, and called for decisions to be made strictly through constitutional processes.
Regional Context and Iranian Response
Iran has openly signaled its support for al-Maliki’s nomination. According to regional officials, Ali Khamenei sent a message congratulating al-Maliki following his nomination within the Coordination Framework, urging Iraqi political forces to resist external pressure. Tehran views the outcome of Iraq’s government formation as strategically significant, particularly amid heightened U.S.–Iran tensions.
At the same time, Iraqi officials have explored ways to reduce long-term dependence on the U.S. dollar. Recent discussions with the European Union have focused on trade expansion and investment mechanisms aimed at diversifying economic partnerships. Financial experts note, however, that as long as Iraq’s oil sales are denominated in dollars and routed through U.S.-overseen accounts, Washington retains effective leverage over Iraq’s fiscal stability.
Parliamentary Deadlock and Immediate Outlook
Iraq’s political process remains stalled. Parliament has yet to secure the two-thirds quorum required to elect a president, a prerequisite for formally tasking a prime minister-designate with forming a government. The impasse has prolonged caretaker governance and delayed budgetary and policy decisions.
If the Coordination Framework maintains its backing for al-Maliki and proceeds toward formal nomination, Iraqi officials warn that the country could face significant financial strain should U.S. restrictions be implemented. For now, negotiations continue behind closed doors, with Iraqi leaders weighing domestic political calculations against the economic consequences of a confrontation with Washington.
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