Iraq Removes Hezbollah and Houthis from Asset Freeze List After Government Calls Inclusion a ‘Mistake’
Iraq has decided to remove Lebanon’s Hezbollah and Yemen’s Houthis movement from a government asset freeze list after officials said their inclusion was the result of an administrative error. The correction, announced on Thursday, came after the initial publication caused confusion inside Iraq and drew international attention, as both groups are closely aligned with Iran and have long been viewed by Washington with deep concern.
The issue began when the Justice Ministry’s official gazette released a list last month identifying groups and entities whose financial assets would be frozen under Iraq’s counterterrorism regulations. The list names both Hezbollah and the Houthis, placing them alongside organisations linked to Islamic State and al Qaeda. The unexpected inclusion raised questions because Iraq’s asset freeze framework is legally designed to target groups affiliated with the Islamic State and al Qaeda, not regional militias or political movements backed by Iran.
Analysts said that if the listing had stood it would have marked a significant shift in Iraq’s balancing act between its relationships with Iran and the United States. The move would likely have been welcomed by Washington, which has been pressuring regional governments to curb the financial networks of Iran aligned groups. For Tehran and its regional partners however such a decision would have been viewed as a political setback.
Iraqi officials moved quickly to clarify that the listing was unintentional. A letter from the acting deputy governor of the Central Bank asked the Committee for the Freezing of Terrorists’ Funds to remove the clause containing the names of Hezbollah and the Houthis. The Central Bank said the original inclusion did not reflect government policy and had been added due to an internal procedural mistake.
Prime Minister Mohammed Shia al Sudani has ordered accountability for the error, directing relevant authorities to investigate how the names were included in the first place. He also stressed the importance of ensuring accuracy in sensitive government publications, particularly those relating to counterterrorism and international obligations. Officials said the government would issue a formal correction to prevent misunderstandings.
The incident underscores the delicate position Iraq occupies in regional geopolitics. Its security and political landscape is strongly influenced by Iran aligned groups, some of which maintain a significant presence inside the country. At the same time Iraq depends on its partnership with the United States for military cooperation, counterterrorism support and broader economic engagement. Small administrative missteps can therefore carry large diplomatic implications.
The swift removal of the two groups from the asset freeze list signals that Baghdad remains cautious about taking actions that could disrupt its ties with Iran or risk domestic instability. It also reflects Iraq’s continued effort to strike a balance in a region marked by competing interests and shifting alliances.
As the government reviews the procedures that led to the mistaken listing, officials have emphasized that Iraq’s counterterrorism measures remain focused on organisations formally designated under national and international frameworks. The correction is expected to ease concerns among political factions in Baghdad while limiting potential fallout with Iran and its regional allies.
