U.S. holding Iraqi funds for security deal

NEW YORK, June 6 (UPI) -- The U.S. government is threatening to withhold $50 billion in Iraqi funds if Baghdad doesn't sign on to a new security agreement, The Independent said Friday.

The Independent's Patrick Cockburn, continuing a series of reports on the security arrangement currently in negotiations between Washington and Baghdad, says U.S. officials are pressuring Iraq to sign onto the deal by "holding hostage" money held in the Federal Reserve Bank of New York.

Cockburn says that the United States is able to use the funds as a bargaining chip because Iraq is still limited by U.N. resolutions enacted when Saddam Hussein invaded Kuwait in 1990.

Under the current U.N. Chapter Seven mandate authorizing the use of force in Iraq, Iraqi financial reserves are held in the Development Fund for Iraq at the Federal Reserve Bank of New York.

U.S. officials say that in order for Iraq to escape limitations under Chapter Seven, Iraq needs to embrace the new security arrangement, which Washington wants signed by July.

Several Iraqi officials have expressed dissatisfaction with the draft version of the agreement, but Cockburn says the deal is likely to "go through with only cosmetic changes."