By Leila Fadel | McClatchy Newspapers

BAGHDAD — Army Gen. Ray Odierno, the top U.S. military commander in Iraq, informed Iraqi officials last week that if their country doesn't agree to a new agreement governing American forces in Iraq, it would lose $6.3 billion in aid for construction, security forces and economic activity and another $10 billion a year in foreign military sales.

The warning was spelled out in a three-page list that was shown to McClatchy on Monday. Iraqi officials consider the threat serious and worry that the impasse over the so-called status of forces agreement could lead to a crisis in Iraq. Without a new agreement or a renewed United Nations mandate, the U.S. military presence would become an illegal occupation under international law.

Odierno's spokesman, Lt. Col. James Hutton, said that the list "provided information as a part of our normal engagements with many in the government of Iraq."

If no new mandate or agreement is in place on Jan. 1, the U.S. would stop sharing intelligence with the Iraqi government and would cease to provide air traffic control, air defense, SWAT team training or advisers in government ministries, according to the document. The list also says that there'd be no "disposition of U.S.-held Iraqi convicts" without a security agreement.

Odierno's letter adds that American forces would stop training Iraq's Security Forces and its barely functioning navy and air force, patrolling its borders and protecting its waterways. The U.S. military would stop employing some 200,000 Iraqis and wouldn't refurbish 8,500 Humvees it's given to the Security Forces. Nearly every Iraqi unit works in tandem with the roughly 151,000 U.S. troops in Iraq, and American training teams are training Iraqi Security Forces nationwide.

With no agreement, U.S. troops would pull back to their bases and begin to withdraw from Iraq, American officials have said.

Without coalition forces, Iraq would virtually shut down.

The U.S. military controls the Iraqi intelligence services and Iraqi airspace, and Iraqi officials often use American military aircraft to travel safely. The Iraqi government is unable to monitor air traffic over the country, so commercial airplanes flying over Iraq would have to be rerouted and flights to and from the country would be grounded.

The Iraqi government is examining contingency plans. Prime Minister Nouri al Maliki wants an extension of the U.N. security mandate, but with changes that would allow Iraq to prosecute private contractors in Iraq. The U.S. would veto any changes to the mandate, however, which provides immunity from prosecution for American troops and contractors.

At a recent meeting of Iraq's Political Council for National Security, the ministers of finance, planning, defense and interior argued that not signing the agreement would be a mistake. Despite their concerns, the country's dominant Shiite Muslim alliance is demanding changes to the latest draft of the security agreement between the nations. Iran is pressuring Shiite Iraqi officials not to sign the agreement.

The amendments were supposed to be presented to Cabinet members Sunday, but on Monday the Shiite alliance still hadn't finalized its changes. It's been insisting that Iraq have the right to search American cargo, mail and military bases, which the U.S. would never accept. The alliance also wants to delete a provision that gives the Iraqi government the right to extend the security agreement beyond 2011.

An agreement by Dec. 31 is virtually impossible at this point, Iraqi officials said in interviews this week, and a number of officials have told McClatchy that Maliki won't sign the current draft of the agreement.

U.S. officials have hardened their public stance on the draft but have been unwilling to shut the door on negotiations. Last week Defense Secretary Robert Gates said, "There is great reluctance to engage further in the drafting process. I don't think you slam the door shut, but I would say it's pretty far closed."

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