Iraq slams new US sanctions, says measures 'harmful' to economy

Prime Minister Mohammed Shia' al-Sudani's government has condemned recent US sanctions on Iraqi individuals, banks, and companies accused by the US of ties to Iran-backed groups, calling the measures unilateral and damaging to Iraq’s financial system.

Iraqi government spokesperson Basim Al-Awadi said Baghdad rejects foreign sanctions that harm Iraq's economy and banking sector, arguing such actions undermine trust in the financial system and complicate currency stabilisation and investment.

Al-Awadi said the government was monitoring the situation and will pursue diplomatic and legal steps to protect compliant Iraqi institutions.

He noted that the Prime Minister has formed a national committee comprising representatives from the Finance Ministry, Supreme Audit Board, Integrity Commission, and Central Bank to review the case and submit recommendations within 30 days, including legal and administrative measures.

He emphasised the state's duty to protect civilian workers and vital projects, ensure uninterrupted services, and prevent corrective measures from infringing on the rights of uninvolved citizens or employees.

The government affirmed Iraq rejects economic or financial activity outside the national legal framework or used to support armed groups, stressing its commitment to transparency, protection of public funds, and rejection of any external interference in Iraq’s internal affairs.

The US sanctions announced Thursday target several Iraqi individuals and entities.

US officials accuse them of facilitating financial and arms transfers for Iran's Islamic Revolutionary Guard Corps and affiliated militias, including Kataib Hezbollah.

Those sanctioned include Aqeel Muftin Khafeef al-Baidani, head of Iraq's National Olympic Committee, and his brother Ali Muftin. US authorities allege the brothers are responsible for money laundering and channelling funds to Iran-backed groups.

The sanctions freeze assets in the US, prohibit transactions by American entities with designated parties, and extend restrictions to foreign firms operating in US dollars.

Kataib Hezbollah, identified by US officials as a major faction within Iraq's Iran-aligned militias, called the US-imposed sanctions "ridiculous" and denied any connection to the individuals named in the measures.

Kataib Hezbollah military commander Abu Ali al-Askari said, "The latest US sanctions on alleged Kataib Hezbollah affiliates are ridiculous and reflect weak US intelligence. We categorically deny any link to the names in the US Treasury report."

He added: "Claims that we gather information on foreign forces and threaten occupation troops are central to our mission and never concealed. We will continue as long as the occupation exists. Accusations will not discredit the resistance."

 "The Islamic Resistance sacrificed to free Iraq and worked to spare it from wars. Its members make decisions independently, without outside interference."

He also referred to the Coordination Framework, the pro-Iran alliance supporting Prime Minister Mohammed Shia al-Sudani, stating that Kataib Hezbollah respects its perspectives but cautioned against advising the resistance on matters of conflict.

Commenting on weapons outside state control, al-Askari said: "The people's weapons are a trust from Imam al-Mahdi with honourable fighters," and he refused to discuss the matter with what he termed "cowards and collaborators."

The US Treasury considers the measures part of ongoing efforts to disrupt corruption networks and illicit financial flows benefiting Iran and its regional proxies.

Editor's note: The quote in the second paragraph is from Iraqi government spokesperson Basim Al-Awadi not the spokesperson for Iraq's General Commander of Security Forces, Sabah Al-Nueman. We apologise for this error.