Days after the Soleimani assassination and a move in Iraq's parliament to begin the process of expelling American forces from the country, Trump issued threats of severe economic reprisal against Baghdad should it move forward with booting US troops. "We have a very extraordinarily expensive air base that’s there. It cost billions of dollars to build. Long before my time. We’re not leaving unless they pay us back for it," he said at the time in an initial veiled threat.

And now the US State Department has confirmed it and the Pentagon are preparing to cut all $250 million of foreign military aid for Iraq from the 2020 military aid budget already approved. Further they've already requested the budged office should prepare to additionally cut $100 million from the 2021 request.

US soldiers in Iraq file photo.

There are currently some 5,300 American soldiers stationed in Iraq, ostensibly as part of the 'anti-ISIL coaltion' — however Pentagon priorities have shifted to "curtailing Iran" in the region after the dramatic recent events which have seen the US and Iran clash both directly and indirectly via Iraq's paramilitary Shia proxies.

The Wall Street Journal reports that while no final decision to cut the aid has been made, emails confirm it's being discussed and planned for at the highest levels:

The State Department and the Department of Defense have discussed the military assistance funds in emails reviewed by The Wall Street Journal. The emails indicate that the State Department’s Bureau of Near Eastern Affairs is working to cut all $250 million in funds under the U.S. foreign military financing program for Iraq for the current fiscal year.

As a reminder of where things stand and America's "popularity" or lack thereof inside Iraq, parliament already voted to expel US troops and all foreign forces in a clearly decisive 170-0 vote. However, that vote only began or initiated the political process.

Since 2017 Washington has given $250 million annually in military aid to the Iraqis, most of which goes back into purchases of US defense hardware, as well as training and other military support efforts.

"Cutting or reallocating the military-financing funding, which is appropriated by lawmakers to allow Iraq to purchase American military equipment, would require approval from Mr. Trump, as well as congressional notification, and the State Department is currently working on all necessary steps, the emails indicate," the WSJ report continues.

Iraq parliament, via MSNBC.

More crucial, however, is Iraq's oil revenue which accounts for some 90% of the country's annual budget, now under threat after Trump vowed that if Baghdad moves to expel US forces, “we will charge them sanctions like they’ve never seen before.”

Earlier this week top Iraqi officials told the AFP that they fear economic "collapse" would be the end result of such threatened Trump administration sanctions, creating a domino effect of blocked government salaries, stalled public serves, and a plummeting of the dinar.

“We’re an oil-producing country. Those accounts are in dollars. Cutting off access means totally turning off the tap,” one Iraqi official said. “It would mean collapse for Iraq,” another confirmed.