"Cut into" is often used in respect to finances, budgets, etc. It broadly means to reduce, or divert to another purpose. I think in your sentence it means take away supply. It can also be used for time:
"Holiday trips cut into school time." [Headline] (Time that should be spent at school is being spent on holiday trips.)
The collective filching undermines Iraq’s ability to provide essential services, a key to sustaining recent security gains, according to American military commanders. It also sows a corrosive distrust of democracy and hinders reconciliation as entrenched groups in the Shiite-led government resist reforms that would cut into reliable cash flows.
Does that mean "because entrenched groups resist reforms that would disrupt reliable cash flows, the collective filching sows a corrosive distrust of democracy"?
I have trouble understanding what the sentence underlined means.
It also sows a corrosive distrust of democracy and hinders reconciliation as entrenched groups in the Shiite-led government resist reforms that would cut into reliable cash flows. (source)
I have difficulty in understanding the phrase underlined.
I think reforms that would cut into reliable cash flows are not good in terms of economics. So resisting the reforms means something good.
Then why does it sow a corrosive distrust of democracy and hinder reconciliation?
Could somebody explain this example to me?
I suspect that cut into is here used in a journalese sense of 'lead to': I suppose this derives from sense B20 of cut here http://www.wordreference.com/definition/cut (or is it B27?). I agree this is confusing: until I thought about it at length, I assumed that cut into must be used in the opposite sense of reduce.