The Iraq security deal and $50 billion

Now this is an interesting story, even if the body doesn't quite measure up to the headline:

U.S. keeps $50bn to pressure Iraq to sign military deal - newspaper

London, Jun 6, (VOI)- The U.S. is holding hostage some $50bn of Iraq's money in the Federal Reserve Bank of New York to pressure the Iraqi government into signing a security agreement, according to information leaked to The Independent newspaper.

“U.S. negotiators are using the existence of $20bn in outstanding court judgments against Iraq in the U.S., to pressure their Iraqi counterparts into accepting the terms of the military deal,” the British daily said.
“Iraq's foreign reserves are currently protected by a presidential order giving them immunity from judicial attachment but the U.S. side in the talks has suggested that if the UN mandate, under which the money is held, lapses and is not replaced by the new agreement, then Iraq's funds would lose this immunity. The cost to Iraq of this happening would be the immediate loss of $20bn,” the newspaper added.

(Aswat Aliraq)

The Iraqi paper Aswat Aliraq is not the entity ultimately responsible for the headline, of course, and an angy tone might be anticipated even if the details behind the story are somewhat mundane, as appears to be the case.

Iraq's foreign reserves are currently protected by a presidential order giving them immunity from judicial attachment but the US side in the talks has suggested that if the UN mandate, under which the money is held, lapses and is not replaced by the new agreement, then Iraq's funds would lose this immunity. The cost to Iraq of this happening would be the immediate loss of $20bn. The US is able to threaten Iraq with the loss of 40 per cent of its foreign exchange reserves because Iraq's independence is still limited by the legacy of UN sanctions and restrictions imposed on Iraq since Saddam Hussein invaded Kuwait in the 1990s. This means that Iraq is still considered a threat to international security and stability under Chapter Seven of the UN charter. The US negotiators say the price of Iraq escaping Chapter Seven is to sign up to a new "strategic alliance" with the United States.
(The Independent UK)

On the face of it, the above explanation doesn't make much sense. How could the president of the United States keep Iraq in Chapter Seven of a UN charter? That would seem to require pardon power respecting international law and agreements unless the UN Charter is itself somehow partially based on the workings of U.S. civil law.

If the immunity enjoyed by the Iraqi funds is at the president's pleasure, as the story appears to indicate, then it is a legitimate issue of negotiation. I don't trust the British press to provide a fair picture of the tone of negotiations even if they were privy to the details. The objective model of journalism largely ends at American shores.

And, predictably, the blame-America-first crowd will be up in arms with cries of "Blackmail!" and the like.

An alliance with the U.S. is in Iraq's best interests. Europe isn't going to intervene if Iran decides to claim Iraqi territory. U.S. negotiators would quite simply be foolish to ignore bargaining chips in their possession.