ERBIL () - The Trump administration has warned Iraq that monthly dollar transfers could be suspended unless Iran-aligned armed factions surrender their weapons by Sept. 30, two sources familiar with the Iraqi government told, tying one of Washington’s most powerful financial levers over Baghdad to an increasingly contentious disarmament deadline.
The sources said the warning was delivered directly to Prime Minister Ali al-Zaidi during his visit to Washington, where U.S. officials made clear that failure to curb armed groups threatening American and regional interests would carry consequences for bilateral relations and Iraq's access to dollar liquidity.
has not independently obtained a U.S. government document setting out the warning, and no public statement from Washington confirming the ultimatum was included in the reporting. The account rests on two Iraqi government sources familiar with the discussions.
One source said Washington had already demonstrated its ability to exert pressure through the timing of dollar transfers early in al-Zaidi's tenure.
"From the beginning of Ali al-Zaidi's time in office, America delayed the timing of dollar transfers, and this had a direct impact on the value of the dinar,"the source told.
The source said transfers later returned to normal following al-Zaidi's Washington visit after the two sides reached an understanding.
According to the same source, U.S. officials told the Iraqi prime minister that Baghdad's inability to prevent armed groups from targeting American interests or neighboring countries would damage relations and that the problem had to be addressed at its source.
The warning substantially raises the stakes surrounding the Sept. 30 deadline.
Until now, the dispute over weapons outside direct state control has largely been framed as a security and sovereignty issue. The reported U.S. position adds a potentially immediate economic consequence to Baghdad's handling of Iran-aligned factions.
Pressure on Baghdad After Washington Visit
According to's sources, al-Zaidi returned from Washington convinced that a disruption to dollar flows represented a genuine risk.
He subsequently pushed through the Coordination Framework for armed factions to accelerate the surrender of weapons, the sources said.
That effort initially moved with greater urgency, but several armed groups responded with threats against the prime minister, prompting the issue to be handed to the Coordination Framework for further negotiations, according to the reporting.
Several factions, including Kataib Hezbollah, Harakat al-Nujaba, Kataib Sayyid al-Shuhada, Saraya Awliya al-Dam, Ashab al-Kahf and the Karbala Battalions, have resisted the weapons handover process.
Some have sought to portray the process as a reorganization rather than disarmament and have attached conditions that include a complete withdrawal of U.S. forces from Iraq.
Those positions illustrate the political difficulty facing Baghdad: Washington is demanding measurable action by a fixed deadline, while some of the factions expected to disarm reject the premise or conditions of the process.
Why Dollar Transfers Matter
The significance of the U.S. warning stems from the structure of Iraq's oil-dependent financial system.
Economic observers note that Iraq's oil revenues are held through the Central Bank of Iraq's account at the Federal Reserve Bank of New York, with dollar liquidity subsequently made available to Iraq's financial system.
The arrangement gives Washington considerable influence over the movement of U.S. currency into Iraq.
Disruptions to that flow can put pressure on the dinar's market exchange rate and complicate the Central Bank's ability to supply foreign currency to an economy heavily dependent on imports.
The report cited an earlier delay in a $500 million dollar shipment in April 2026 as an example of the market's sensitivity to interruptions.
The backgrounder also placed Iraq's foreign-currency reserves at $79.2 billion in August, down from $97.8 billion in April.
Those figures help explain why the reported U.S. warning carries consequences beyond the immediate security dispute.
A prolonged restriction on dollar liquidity could affect exchange-rate stability, import financing and the government's broader fiscal position. The exact economic effect would depend on the scope and duration of any U.S. measure, and the supplied reporting does not establish that Washington has yet implemented a cutoff.
Sept. 30 Becomes a Wider Pressure Point
The date has acquired broader strategic significance.
According to's follow-up, Sept. 30 also coincides with the scheduled conclusion of the international anti-ISIS coalition's military mission in Iraq, while Baghdad has been pressing armed factions to bring weapons under state authority.
Washington's reported ultimatum therefore connects three issues that have often been treated separately: the future of the U.S.-led military presence, the status of Iran-aligned armed groups and Iraq's access to dollar liquidity.
For al-Zaidi's government, that creates a compressed timetable.
The prime minister must navigate factions that retain significant armed and political influence while also avoiding a confrontation with Washington that could spill rapidly from security relations into the economy.
The sources who spoke to portrayed the dollar warning as an attempt to force that choice.
If their account is borne out, the Sept. 30 deadline is no longer simply a test of whether Baghdad can persuade armed factions to relinquish their weapons.
It is also a test of how far Washington is prepared to use financial leverage to compel Iraq's government to enforce state control over armed actors, and how much economic risk Baghdad is willing to carry if the disarmament process falls short.
