Baghdad: Lower oil prices are threatening Iraq's efforts to build a military capable of defending the country, raising the possibility that the Iraqis will need substantial US help for years after the Americans leave by 2012.

The budget crunch not only affects ground forces that bear the brunt of the fight against Sunni and Shiite extremists, it also slows development of an air force.

All that is forcing US and Iraqi planners to make tough choices during the countdown to the withdrawal of all American troops by the end of 2011.

With the Obama administration shifting resources to Afghanistan, the US is not in a position to finance the Iraqi budget shortfall.

"Realistically, as we look out to 2011, this year's budget will not keep them on track they need to be on," said Army Lt. Gen. Frank Helmick, officer-in-charge of security training.

"These ministers in defense and interior are having to make very, very difficult decisions, having to prioritize their requirements," Helmick said.

Iraq's security plans have gone off course because of the slump in oil prices, which now stand around $60 a barrel after hitting highs last summer of nearly $150 a barrel.

Helmick said the Defence Ministry this year needed $8.5 billion but received about $4.5 billion, and the Interior Ministry needed about the same and received about $5 billion.

If oil prices fail to rebound, Iraq's budget and its defence spending in 2010 and 2011 will again be curtailed, making it nearly impossible to have enough training and equipment for its security forces.

"It would be a really tough year in 2010, if they get the same budget or less," Helmick said.