Iraqi assets already frozen in the United States may soon help the Iraqi people, now that President Bush has signed an executive order directing the Treasury Department to seize $1.74 billion in Iraqi funds.
The U.S. government will use the money for humanitarian purposes in Iraq, the order says.
"Today we launched a financial offensive against the regime of Saddam Hussein," Treasury Secretary John Snow said in a statement Thursday.
"The United States calls today upon the world to identify and freeze all assets of Saddam Hussein, the Iraqi regime, and their agents pursuant to established international obligations," he said. "We are directing a worldwide hunt for the blood money that Hussein and his cronies have stolen from the Iraqi people."
Global cooperation seizing Iraqi assets and severing diplomatic ties is essential, said Snow.
"The success of economic sanctions requires international cooperation and effective enforcement," he said. "The United States is committed to helping enforce these international obligations…The world must find, freeze, and return Iraqi money for the Iraqi people and their future."
The assets, which were frozen by the government in 1990, are currently sitting in accounts at 17 banks, including Citigroup, Bank of America and Wachovia, in the United States. They will likely be transferred to an account at the Federal Reserve Bank of New York.
Bush's order "authorizes Treasury to marshal the assets and to use the funds for the benefit and welfare of the Iraqi people," Snow said.
Of the total seized, roughly $1.4 billion will be made available to help the people of Iraq, a senior Treasury official said. Roughly $300 million will be set aside for payments on legal claims by people who say they were victims of the Iraqi regime, the official said.
The assets are being held in bank accounts under the names of the Government of Iraq, the Central Bank of Iraq, Rafidain Bank, Rasheed Bank and the State Organization for Marketing Oil.
The move was separate from an authorization Bush made on Thursday, making available up to $22 million in assistance for those fleeing Iraq.
Bush said the money may be needed "to meet unexpected urgent refugee and migration needs that are anticipated in the event of a future humanitarian emergency in the Middle East."
In another, non-military offensive, the State Department Thursday asked countries who have diplomatic relations with Baghdad to sever them immediately.
In a cable delivered overnight to embassies, the United States asked some 60 nations worldwide to expel Iraqi ambassadors and staff, freeze all assets and protect facilities for the new government of a free Iraq.
The three Iraqi diplomats that made up the Iraqi Interests Section in Washington, D.C., have already been told to leave town as soon as possible, and State Department officials said they expected the three to be gone by the end of the day. Earlier in the week, the FBI sent out a warning telling law enforcement to keep an eye out for vehicles belonging to Iraqi diplomats who are not permitted to leave the Washington, D.C., and New York areas where they were stationed.
State Department officials told Fox News that the Washington-based Iraqi diplomats, who were operating out of the Algerian embassy, were told to safeguard the property before they left, being informed: "There is a rightful owner to this property and assets and that's the Iraqi people. And after we get to Baghdad we will work with the Iraqi people to establish a government that can reopen these missions and speak as the true voice of the Iraqi people."
There is some speculation the diplomats will seek asylum in a third country before they head back to Iraq. A similar situation happened in 1991, when much of the diplomatic staff, including Ambassador Mohammed al Mahshat, ended up in Canada.
Fox News' Carl Cameron and The Associated Press contributed to this report.