Kuwait clears Gulf War Iraqi airline deal

Kuwait's government has given final approval to settlement with Iraq to end a standoff over Gulf-War-era debts and lift restrictions on Iraqi Airways flying to destinations in the West, Iraq's government said on Tuesday.

The airline row was part of a broader dispute over billions of dollars in reparations dating back to Iraqi leader Saddam Hussein's invasion of Kuwait in 1990-1991 when his forces seized aircraft and parts.

Iraq and Kuwait in March reached an agreement under which Iraq will pay Kuwait $300m in cash and invest $200m in a joint airline venture in return for Kuwait lifting legal actions against Iraqi Airways.

"According to the decision all restrictions and difficulties rebuilding Iraqi airlines and on its freedom to buy new planes and establish its fleet will be lifted," the Iraqi Foreign Ministry statement said.

Iraqi Airways has regular flights to Middle Eastern destinations such as Beirut, Dubai, Tehran and Amman, but legal cases made it difficult to start flights to European destinations where it risked its planes being confiscated.