US plans to cut off military aid to key Middle East ally, BBC told

In his second term Trump has pledged to reduce America’s foreign entanglements in regions like the Middle East. He also launched the war with Iran, which reached the six month mark on Friday with no end in sight.

The memorandum of understanding between the Pentagon and the Kurdish Regional Government (KRG) is set to expire on 30 September, the same day the US and other nations are withdrawing their last remaining troops from Iraq.

The troop withdrawal will formally end the international military campaign against IS, in which the Peshmerga fought alongside coalition troops to end the jihadist group’s control of parts of Iraq and Syria. The sole remaining US military base in the country, located in the Iraqi Kurdish capital of Irbil, is set to close next month once coalition troops leave.

The Peshmerga, which has approximately 180,000 troops in Iraqi Kurdistan, received $61 million in fiscal year 2026 for weapons, military training and stipends through the Pentagon’s counter-IS programme. The Pentagon proposed cutting all the group’s security aid in its fiscal year 2027 budget request – arguing that since IS was defeated the money should now be reallocated – but the spending plan is on hold amid a broader budget battle in Congress.

The request raised alarm bells in Iraqi Kurdistan, but officials had held out hope that the US would renew the funding through an extension of the deal set to expire in September.

The fears have only grown as Iran has stepped up attacks against the KRG. Iran and Iranian-backed militias had conducted 158 missile or drone attacks inside Iraqi Kurdistan by late May, according to reasearch on the latest available data compiled by the Foundation for Defense of Democracies, a Washington DC think tank.

But despite the surge in attacks, in recent talks with Iraqi and Kurdish leaders, defence department officials said the US was not planning to extend the memorandum of understanding, multiple sources with knowledge of the discussions said. The Pentagon signed the initial memorandum of understanding giving military assistance to the Peshmerga in 2016, and renewed it in 2022.

A final decision on security engagement between the US and Kurdistan is still being reviewed, according to one source familiar with the Pentagon’s thinking. The US is considering ways to maintain some security support in both Iraq and Iraqi Kurdistan after the troop withdrawal, the sources said.