Iraq is reported to have cancelled a series of arms contracts with Russia worth over three billion euros.
The deal was only signed by both country’s prime ministers last month.
The Iraqi premier Nouri al-Maliki says he has suspicions over corruption within his own team.
However, the Defence Minister has denied the deal has been cancelled. The prime minister’s spokesman says new negotiations are underway.
Precise details are not known, but it is thought the sales would make Moscow Iraq’s second biggest arms supplier. They are said to include attack helicopters and ground-to-air missiles.
Iraq’s principal supplier is the US. Analysts have suggested the Americans would not look kindly upon Baghdad buying in bulk from Moscow. At least one expert has said the real reason for contracts being cancelled is not corruption, but pressure from Washington.
Russia has been looking to renew its ties with Iraq, which were broken after Saddam Hussein’s fall from power in 2003. Moscow’s main ally in the region is Syria.