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U.S. pressures Iraq for Iranian influence, as it controls the oil dollars

Sources say that the U.S. is pushing Iraqi politicians to avoid armed groups in the new government

Iraqi MPs with Iran links are to be excluded from the cabinet

The Federal Reserve Bank controls the dollars of Iraq's oil revenues

Maha El Dahan and Humeyra Pauk

DUBAI/WASHINGTON - Four sources have confirmed that Washington has threatened to impose sanctions on the Iraqi government if Iran-backed groups were included in the new government. This could include a potential cut-off of the vital oil revenue coming from the Federal Reserve Bank of New York. This warning is the most stark example of President Donald Trump’s campaign to curb Iran linked groups' influence in Iraq. The country has been walking a tightrope for years between Washington and Tehran, its closest allies.

Joshua Harris, the U.S. Charge d'Affaires at Baghdad's Embassy, has repeatedly warned Iraqi officials, influential Shi'ite leadership, and even'some heads of Iran linked groups' via intermediaries in the last two months, according to three Iraqi official sources and one source who is familiar with this matter. This story was written by a source familiar with the matter and three Iraqi officials.

Harris and the Embassy did not respond to comments. Sources?requested anonymity in order to discuss private conversations.

Since taking office one year ago, Trump has taken steps to weaken Iran's government, including through its neighbor Iraq.

U.S. officials and Iraqi officials claim that Iran has used Baghdad's bank system for years to avoid the sanctions. In an attempt to choke off this dollar flow, successive U.S. Administrations have placed sanctions on more than a dozen Iraqi Banks over the last years. The New York Fed has never stopped sending dollars to the Central Bank of Iraq.

"The United States support the sovereignty of Iraq and every country in the area." This leaves no place for Iran-backed groups that spread sectarian rifts, pursue malign objectives, or cause terrorism in the region.

The spokesperson refused to answer any questions regarding the sanctions threats.

Trump, who bombed Iran’s nuclear program in June, threatened to intervene militarily again in the country when protests took place last week.

The office of Iraqi Prime Minister Mohammed Shia al-Sudani, the Central Bank of Iraq, and the Iranian mission to the United Nations have not responded to requests for comments. (Reporting and editing by Frank Jack Daniel; Additional reporting and reporting by Ahmed Rasheed.

(source: Reuters)