Iraq OKs $500m for Kuwait airline dispute

Iraq’s Cabinet has agreed to allocate US$500m to resolve a long-running dispute with Kuwait over the debts of Iraqi Airways.

The Cabinet asked parliament to approve the allocation of US$300m from next year’s budget and another US$200m the following year, State Minister Ali Al Dabbagh told Bloomberg.

Kuwait Airways has been seeking US$1.2bn in compensation for ten aircraft taken during Saddam Hussein’s invasion of Kuwait in 1990. Iraq in March said it had agreed to pay Kuwait US$300m in cash and invest US$200m in a joint Iraqi-Kuwaiti airline venture.

In return, Kuwait agreed to suspend legal actions against Iraqi Airways.

Iraq said the long-running dispute had prevented its airline from flying into Europe due to the threat of its planes being confiscated. In 2010 Kuwait’s lawyers tried to seize an Iraqi Airways plane on a flight to London.

The issue of Iraqi Airways' debts is part of a long-running dispute between Iraq and Kuwait over billions of dollars of reparations dating back to 1990-91. Iraq still owes the Gulf state around US$20bn, which it is paying into a United Nations compensation fund, despite its struggling economy.