More than 22 years after former Iraqi president Saddam Hussein invaded Kuwait after accusing its rulers of strangling Iraq by keeping oil prices low through pumping more than its quota and stealing from the two countries’ shared oil fields, relations between Iraq and its southern Gulf neighbour remain cool, signalling difficulties in resolving the long-running saga.

A key obstacle to warming relations are the UN sanctions imposed on Iraq following the invasion and Kuwait’s refusal to lift the punishment nearly ten years after the ouster of Saddam in the 2003 US-led invasion of Iraq, despite the Iraqis’ appeals to Kuwait to relieve them of the penalties.

Kuwait still receives five per cent of Iraq’s oil and gas revenues as compensation for the 1990 invasion, and it refuses to let up on other penalties imposed under chapter VII of the UN Charter.

Since 1994, when the UN set up a reparations fund, Baghdad has paid some $40 billion to Kuwait with a further $13 billion in compensation still due. There are also several other issues stemming from the Iraqi invasion, including land and maritime borders between the two countries.

The controversy came under the spotlight last week when UN Secretary-General Ban Ki-Moon visited Kuwait and Iraq in a bid to end the dispute. Kuwait’s Prime Minister Sheikh Jaber Al-Mubarak, is also expected to travel to Iraq next month for discussion on the issues that block normalising relations with Iraq.

A look back at the history of relations between the two neighbouring countries indicates that the row is deep-rooted. Successive Iraqi governments never accepted the British-drawn borders that established Kuwait as a separate sheikhdom after the signature of the Anglo-Ottoman Convention of 1913.

In 1961, Iraq’s then prime minister, Abdel-Karim Kassem, refused to recognise Kuwait’s independence of that year and declared the entity to be an integral part of Iraq. However, he did not send in troops to back up his claim.

Relations between the two countries deteriorated for economic and diplomatic reasons that culminated in Saddam’s invasion of Kuwait in 1990. Saddam alleged that Kuwait was conspiring with Iraq’s enemies to undermine its oil-based economy and that it was stealing oil by slant drilling across the border into Iraqi oil fields.

Later, Saddam justified the invasion by claiming that Kuwait was a “natural part” of Iraq carved off as a result of British imperialism.

However, Saddam’s army was driven out of Kuwait six months after the invasion by a US-led international coalition, and Iraq subsequently remained under scathing sanctions that claimed the lives of millions of Iraqi children and the sick and elderly, with particularly devastating effects on the country’s economy.

Most of the sanctions were removed after Saddam’s downfall, but the Iraq-Kuwait issues have remained a red line under the UN Security Council’s care, as Kuwait has insisted.

Among the issues Kuwait still insists on are war reparations, border demarcation, the restoration of Kuwaiti property, and the fate of Kuwaitis missing or taken prisoner by Saddam’s army.

While the Iraqis have complied with the UN resolutions and have remained committed to paying the remaining compensation due to Kuwait, as well as maintaining border signs and seeking means to determine the fate of the missing Kuwaitis, Iraq also wants Kuwait to negotiate bilaterally, and it has asked the United Nations to remove Iraq from the chapter VII sanctions.

“Frankly, we want to close the outstanding files, bearing in mind that it was not we who invaded Kuwait, but an adventurer who brought conflict to our two countries and slaughtered so many people,” Iraqi Prime Minister Nuri Al-Maliki told a group of Kuwaiti journalists last week, in a reference to Saddam.

On Monday, Iraq’s Foreign Minister Hoshyar Zebari, took the Iraqi move a step further and summoned the Baghdad ambassadors of the Security Council’s permanent member states to tell them that Iraq had fulfilled its commitments and that it was time to release the country from its chapter VII obligations.

Iraq has also taken steps to end the other remaining disputes with Kuwait, including sending back the remains of 265 people out of the about 600 declared missing since the invasion, and cooperating in returning Kuwaiti archives and documents.

The Iraqi government has recently approved a $500 million deal to settle a financial dispute between Kuwaiti Airways and Iraqi Airways and end litigation in a dispute over Kuwaiti civilian planes moved to Iraq during the occupation.

Last week, the Iraqi government named a technical team to take part in a joint border post maintenance project, and it said it would provide a list of Iraqi farmers on the border that were entitled to compensation after the demarcation.

On Sunday, Reuters reported that Iraq had asked Kuwait Energy to acquire shares in Turkey’s state-owned TPAO’s exploration block of nine oil fields after the Iraqi cabinet decided to expel the Turkish company from the project.

Iraq’s Deputy Prime Minister for Energy Hussein Sharastani also said on Sunday that the two governments had agreed to start investing jointly in oil fields along their common border as part of an effort to end remaining differences.

However, up till now Kuwait has remained defiant and has brushed off Iraqi demands to end the sanctions under the UN chapter, insisting that Iraq should be kept under UN scrutiny for now.

Ahead of Ban Ki-Moon’s visit, Kuwait’s permanent representative to the UN, Mansour Al-Otaibi, told the KUNA national news agency that his country “shall push for Iraq meeting what remains of its obligations, as stated by the UN Security Council resolutions”.

Deputy Foreign Minister Khaled Al-Jarallah told a local newspaper last week that the Gulf emirate would not relieve Iraq of either the war reparations or the debts, which Iraq says come to about $6 billion.

Kuwait says Iraq owes it around $16 billion as a result of loans made to Saddam to fight the 1980-88 Iraq-Iran War, which was largely bankrolled by the oil-rich Gulf state.

For its part, the United Nations, which should have the last word on whether Iraq has complied with its obligations, has remained undecided.

While in Kuwait last week, Ban Ki-Moon said he was “committed to normalisation and to ensuring that Iraq fulfills all of its outstanding international obligations regarding Kuwait, as the Security Council has mandated.”

That can hardly be seen by Iraqis as an encouraging sign. Many Iraqis are sceptical about the UN and believe that the organisation is acting as a proxy to keep Iraq under control.

In addition to freezing large amounts of Iraq’s revenues in UN-controlled bank accounts to pay compensation to those affected by the invasion, the chapter provisions allow the use of force against Iraq should it become a threat to international security.

On Saturday, an Iraqi lawmaker criticised the United Nations for still maintaining the “unjust” sanctions. “This injustice imposed on Iraq should be lifted as long as Iraq has fulfilled its obligations and is no longer a threat to international peace and stability,” Alia Nusaif wrote in a letter to the United Nations Assistance Mission in Iraq (UNAMI).

“The United Nations should shoulder its responsibility and end Iraq’s status under chapter VII and not leave that to Kuwait’s wishes,” she wrote.

Iraqi officials now hope that a visit by Kuwait’s Prime Minister Sheikh Jaber Al-Mubarak to Baghdad next month will contribute to the resolution of the remaining issues and pave the way for Iraq to be removed from the humiliating sanctions.

On Saturday, a Kuwaiti newspaper quoted Al-Mubarak as saying that his country was “ready to [do] whatever it takes to remove Iraq from chapter VII in line with the diplomatic framework and UN resolutions”.

However, understandable though these high Iraqi expectations and Kuwaiti measured promises may be, under prevailing circumstances a breakthrough in ending the penalties imposed under chapter VII soon does not look feasible.

Distrust and suspicion between the two countries are deeply rooted, and the way this dispute in Iraqi-Kuwaiti relations is handled will go a long way towards determining the nature of the society in each country and the Gulf’s security profile.

“I am concerned that progress could be threatened by the lack of confidence between the two countries and a lack of progress on outstanding issues,” Ban Ki-Moon said during his visit to the region last week.

When the United States invaded Iraq in 2003, many American supporters of the war argued that moving against former Iraqi president Saddam Hussein earlier rather than later would create the conditions for a new and more realistic Middle East peace process.

That grandiose hypothesis never came to pass, and now there is compelling evidence that Tehran, which has been increasing its influence in Iraq following the US withdrawal last year, is pushing its allies in Baghdad’s Shia-led government against Israel, Iran’s arch-enemy.

Iran’s new strategy in Iraq seems to be designed to push Iraq into the rejectionist front that urges permanent hostilities against Israel, in order to replace the tottering regime of President Bashar al-Assad in Syria.

Other members of the camp are the Lebanese Shia Hizbullah group and radical Palestinian factions such as Hamas and Islamic Jihad.

Last week, the visiting Iranian speaker of parliament, Ali Larijani, broke significant new ground in Iran’s ambitions in Iraq. During talks with senior Iraqi officials and top Shia clerics, Larijani emphasised the need for Iraq to back Iran’s bid for regional power.

“Iran and Iraq are among the key influential countries in the region, and they should have unified visions and positions vis-à-vis events in the region,” said Larijani while in Baghdad.

Upon his return to Tehran, Larijani said that all the Shia clerics whom he had met in Iraq “are aware of Tehran’s key role in regional developments, especially in Gaza,” adding that they considered “Iran to be the main cause of the Gazans’ victory over the Zionist regime” during last month’s eight-day Israeli assault on Gaza.

Iraq and Iran fought a war in 1980-1988 that cost the two nations some one million casualties, but Iran tightened its grip on its strife-torn neighbour following the US-led invasion of the country in 2003 by backing Iraq’s Shia political parties, which were sheltered in Iran under Saddam’s regime.

Since the downfall of Saddam’s regime in 2003, Iran and Iraq have enjoyed a good economic relationship. Iran’s exports and investment in Iraq are estimated at $10 billion, second only to Turkey, and reports suggest that the country plans to double its investment in Iraq to $25 billion next year.

Iran’s influence in Iraq also covers political, military, religious and social ties.

Since the American departure last December, Iran has managed to protect its core alliance and increase its standing with Iraq’s Shia political groups, which dominate the government in Baghdad.

In October, Iranian Defence Minister Brigadier-General Ahmed Vahidi said the countries had signed a bilateral defence cooperation agreement.

During his visit to Baghdad, Larijani appeared to be using Iran’s massive influence in Iraq to shape the country’s policies on several key issues, including Israel’s recent war on Gaza, which has been ruled by Hamas since 2007.

Iran is Hamas’s strongest regional ally and the main supplier of weapons to the Palestinian factions.

More than 1,200 rockets believed to be manufactured or shipped by Iran were fired from Gaza during Israel’s war on the Strip last month. The weapons included Fajr-5 rockets believed to have been used by the Palestinians factions to hit Israeli cities during the eight-day war.

Iran prides itself on this missile, described by its media as a two-stage weapon system appropriate for asymmetric wars, such as the one Hamas and Israel fought last month.

Iraqi officials have not publicly commented on the new Iranian resolve to nudge Iraq closer to the rejectionist front in anticipation of the collapse of the Al-Assad regime, but Tehran has received sympathetic hearings from Iraqis in Shia theological institutions and in parliament.

Mohamed Bahr Al-Ulloum, a top cleric in the Najaf theological seminary, last week thanked Iran for what he called its military assistance to the Palestinian resistance groups during the recent Israeli offensive in the Gaza Strip.

Shia lawmaker Jawad Al-Bazouni said “Iran’s Fajr-5 missiles restored the Arabs’ and Muslims’ dignity.”

These statements echoed those of Hizbullah leader Hassan Nasrallah, who urged the Arab states during the war to use all political means possible, including raising oil prices, to end the Israeli attacks on Gaza and suggested that these could be as effective as military action against Israel.

Beyond the rhetoric, however, Iran seems to be making headway. 

At a press conference with Larijani, Iraq’s parliamentary speaker Osama Al-Nujaifi said he was planning a meeting of the heads of parliaments in neighbouring countries in Baghdad soon to address regional issues.

Larijani praised Iraq’s proposal and suggested that regional governments “should take this initiative as an opportunity to solve the Gaza crisis.”

Meanwhile, Al-Nujaifi traveled to Gaza last week taking with him $2 million in cash donated by the Baghdad government to the Palestinians.

His trip came hard on the heels of a visit by Iraq’s foreign minister, Hoshyar Zebari, who headed an Arab delegation to Gaza to show solidarity with the territory.

The head of the pro-government Iraqi Journalists Syndicate, Moaed Al-Lami, also travelled to Gaza, while an Iraqi football team plans to hold a friendly match in the Palestinian territories soon.

Such visits are considered to be landmarks because Iraqi Shia officials have previously shied away from the Palestinians, whom they had previously accused of supporting Saddam and hailing him as a hero.

Of even greater significance is the fact that Iraq has called for the holding of a meeting of the Arab states’ chiefs of staff over the ongoing Gaza violence.

Arab League Secretary-General Nabil Al-Arabi said Iraq had suggested the meeting to “discuss the risks the region is exposed to amid the Israeli aggression on Gaza”.

Ahead of an Arab foreign ministers meeting on the Israeli onslaught on Gaza last month, Iraq’s envoy to the Arab League, Kais Al-Azzawi, announced that Baghdad would invite the Arab states to use oil as a weapon to press for a halt to the Israeli attacks on Gaza.

He later withdrew the remarks, apparently after other Arab governments objected.

Iran has also used its growing influence in Iraq to shape the country’s policies on Syria, including efforts to breathe new life into the struggling Al-Assad regime.

Tehran is Al-Assad’s strongest regional ally, and it stands to lose considerable influence in the region if the regime falls.

Iraq is believed to have allowed Iran to transport arms to Syrian government forces through Iraqi airspace, despite US demands to stem the shipments.

American officials told the New York Timeson Saturday that Iraq continued to allow Iranian aircraft carrying weapons through its airspace to Syria in defiance of the American concerns.

For his part, Iraqi Prime Minister Nuri Al-Maliki said that his country was unable to search all Syria-bound Iranian planes that fly through Iraqi airspace. Iraqi minister of transportation Hadi Al-Amiri, whose ministry is responsible for the inspections, warned that the goal of the US efforts was “to weaken the armies of Iraq and Syria in line with Israel’s interests”.

Al-Amiri, also secretary-general of the Badr Organisation, a pro-Iran Shia militia, cautioned that “a serious and clandestine plot is underway to weaken and target the two armies of Syria and Iraq.”

One reason for Iran to step up its pressure on Iraq to join its crumbling rejectionist club appears to be the rapid and drastic changes in Middle East geopolitics triggered by the Arab Spring.

In the latest conflict in Gaza, Iran watched warily as the new Islamist president of Egypt, Mohamed Morsi, reaped the returns of long-term investments in Hamas.

Iran believes that while Morsi is taking advantage of the Palestinian-Israeli conflict to improve his Islamist movement’s standing with the United States and become a major Middle East player, it is losing influence among the militant Palestinian factions and probably its long-standing alliances with them.

In the absence of the Al-Assad regime in Syria, Iran hopes that Iraq’s predominantly Shia government will be a new key Arab ally in the region.

Unfortunately for Iran, its endeavour to push beleaguered Iraq into the Israel-Palestine conflict doesn’t make sense. Furthermore, in a new Middle East shaped by the Arab Spring old-style political gambits are becoming increasingly irrelevant.