American forces began transitioning authority to their Iraqi counterparts as part of the Status of Forces Agreement reached between Baghdad and Washington in 2008.

Technological warfare provides U.S. forces with actionable intelligence, but officials say reward money gives troops on the ground the opportunity to build strong networks with local residents while combating insurgent activity, Stars and Stripes, the official newspaper of the U.S. armed forces, said Friday.

Iraqi security officials, however, said they are concerned about evaporating funds as Iraqi forces move to take over for U.S. troops.

"When the coalition forces pull out, we're going to lose all our sources," said Iraqi Capt. Mohammad Fadal, who commands a unit in Sadr City.

U.S. military officials said some combat brigades paid more than $1 million in several Baghdad districts in the past year, adding the "money as a weapons system" is more effective than combat in some environments.

Iraqi authorities said they lobbied for additional intelligence money at the Ministry of Defense, but expressed reservations as Iraq struggles to reformulate its budget amid a weak energy market.