The United States Department of Defense plans to let a security assistance agreement with Iraq’s semi-autonomous Kurdistan region expire on September 30, ending millions in funding for the Peshmerga amid escalating Iranian drone and missile attacks.
Washington is preparing to dismantle a key pillar of its regional security architecture in northern Iraq. Defence Department officials have informed leaders of Iraq’s semi-autonomous Kurdistan region that the administration does not plan to renew an expiring agreement that provides vital financial and military assistance to the Peshmerga, the Kurdish security force. The BBC spoke to two officials who participated in the talks and two other sources with direct knowledge of the issue, who spoke on the condition of anonymity.
The memorandum of understanding between the Pentagon and the Kurdish Regional Government (KRG) is set to expire on September 30. The expiration date coincides precisely with the planned withdrawal of the last remaining American troops from Iraq, a move that will formally end the international military campaign against IS. 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.
Peshmerga Funding and Budget Battles
The financial stakes for the Kurdish forces are substantial. The Peshmerga, which fields approximately 180,000 troops in Iraqi Kurdistan, received $61m (£45m) in the fiscal year 2026 for weapons, military training, and troop stipends through the Pentagon’s counter-IS programme.
While the Pentagon proposed cutting all security aid to the group in its fiscal year 2027 budget request—arguing that the territorial defeat of the Islamic State means funds should be reallocated—that spending plan remains on hold amid a broader budget battle in Congress. Even so, defense department officials have confirmed in recent talks with Kurdish and Iraqi leaders that the US was not planning to extend the memorandum of understanding. 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, and the US is considering ways to maintain some security support in both Iraq and Iraqi Kurdistan after the troop withdrawal. The KRG declined to comment.
Escalating Iranian Attacks and Regional Anxieties
The impending cutoff arrives as Iraqi Kurdistan faces a punishing campaign from Iran and aligned militias. Kurdish officials warn that stripping away security assistance will create a dangerous power vacuum and embolden Tehran, which has fired hundreds of missiles and drones into Iraqi Kurdistan since US President Donald Trump started the war with Tehran.
Research compiled by the Foundation for Defense of Democracies shows that Iran and Iranian-backed militias had conducted 158 missile or drone attacks inside Iraqi Kurdistan by late May. Analysts note that abandoning the Peshmerga at this juncture sends the message that the US cannot be trusted to back its allies in the region.
Yerevan Saeed, the director of the Global Kurdish Initiative for Peace at American University, stated that the US would be cutting off the Kurds, who had shed so much blood to help the Americans achieve their goals in Iraq and the wider Middle East.
Saeed added that it was going to be a big win for Iran, China, and Russia if the Kurds were left so exposed.
Shifting US Posture Across the Middle East
The policy shift in northern Iraq mirrors broader recalculations regarding America’s military footprint across the wider Middle East. President Donald Trump declined to confirm whether Washington would draw down forces in Kuwait and Bahrain, telling reporters aboard Air Force One that he did not want to comment on that when asked about a potential drawdown of U.S. forces in the two nations.
Those remarks followed a report by the Wall Street Journal indicating that Washington is actively re-evaluating its military posture in Kuwait. Regional infrastructure in both Kuwait and Bahrain has faced persistent attacks, with Armed Conflict Location & Event Data project figures showing Kuwait was targeted 64 times by Iran or aligned groups between mid-June and August 3, while Bahrain experienced 39 attacks. Kuwait and Bahrain host a combined U.S. military presence typically exceeding 20,000 personnel.
Eighteen U.S. service members have died in the Middle East since the conflict began, including six U.S. Army Reserve soldiers killed in an Iranian strike in Kuwait on March 1. More than 30 others were wounded when a drone breached air defenses at a command center in Port Shuaiba.
Official Rationales and Unresolved Security Questions
Defending the administration’s trajectory, the White House referred the BBC to the Pentagon where a spokesperson pointed to a statement. The U.S. Central Command (CENTCOM), which oversees all U.S. forces in the Middle East, referred queries to the White House and doesn’t usually comment on troop deployments because of operational security concerns, and a Pentagon official declined to comment on the Kuwait and Bahrain posture.
Trump also stated Sunday that regional allies, including Qatar, Saudi Arabia, and the UAE, had dissuaded him from launching an operation of the magnitude of the biggest attack since World War II on Iran. Yet, with the sole remaining US military base in Irbil scheduled to close next month, the long-term security architecture for Iraqi Kurdistan remains uncertain as final reviews continue.
