Washington has told Iraq to dismantle Iran‑backed militias after a series of attacks on U.S. sites, including the embassy and a base in northern Iraq. The demand follows a March drone strike that killed three militia members and sparked retaliatory drone assaults near diplomatic convoys. U.S. Deputy Spokesman Tommy Pigott warned that any further aggression will not be tolerated in the region.

In response, the State Department halted security cooperation and funding for Iraq’s police and counter‑terrorism units, a move confirmed by two Iraqi officials. The suspension cuts U.S. aid that fell to $49 million last year and threatens logistical support for the Iraqi air force and militia‑training programs. Baghdad officials say the pause will stay until a new government is formed for the coming months.

Analysts warn that forcing militia disbandment could destabilize a fragile state where armed groups are woven into political and economic structures. Geopol Labs founder Ramzy Mardini said any coercive push risks a collapse, noting Washington’s assumption of a unified Iraqi authority is flawed. With U.S. consular services suspended, investors watch for spill‑over effects on regional energy contracts across the Middle East.