The United Nations released $650 million in Iraqi compensation to Kuwait on Thursday, the latest payment of a war reparation scheme that began in 1994.

The payment brings the total sum of compensation paid to Kuwait to $30.1 billion dollars. A further $22.3 billion is due to Kuwait.

Most of the latest round went to state and private companies, governments and international organisation, according to a statement from the UN Compensation Commission, which is a subsidiary of the United Nations Security Council.

Following the 1991 invasion of Kuwait by Saddam Hussein’s regime, Iraq is required to put five percent of its oil and gas revenues into the UN reparations fund.

As it has struggled with insecurity and a raft of economic problems since 2003, Iraq has been appealing for its payments to be reduced.

In May, Iraqi Oil Minister Hussein al-Shahristani renewed the call for Kuwait to “forget the past,” saying his country could not sustain the obligation.

(Sources: AFP, UN Compensation Commission)

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The Iraqi council of ministers has decided to dissolve Iraqi Airways and liquidate its assets after the airline dropped flights to England and Sweden in a row with Kuwait over war reparations.

Aqeel Kawther, a transportation ministry spokesman, said that the decision was made Tuesday, but implemented Wednesday.

The move came amid pressure from Kuwait, which claims that Iraq stole its fleet of airlines in the 1990 invasion. A British court recently froze the airline’s assets at the request of Kuwait Airways Corporation.

Kuwait says that when then-Iraqi leader Saddam Hussein’s army invaded the country, they stole about $1.2 billion in aircraft and parts.

The move to dissolve Iraqi Airways came less than a month after Iraq flew its first commercial flight to the United Kingdom in 20 years.

On April 25, the passport of the airline’s head Captain Kifah Hassan was seized. He was eventually allowed to return home.

“We were pleased to return Capt Kifah’s passport and wish him Godspeed on his way back home. We trust that he will be able to fully comply with the order for disclosure of worldwide assets when back at his desk with all his files to hand and will be fully briefed for his return to England for cross examination,” said the law firm Fasken Martineau, that is representing Kuwait Airways Corporation.

30 May 2010 - Financial Times

The Iraqi government on Wednesday said it would dissolve the national airline amid a legal dispute with Kuwait over reparations dating from Iraq’s invasion of its neighbour in 1990.

The $1.2bn (£837m, €979m) reparations relate to aircraft and parts taken by Iraq during its occupation of Kuwait. The decision to wind up Iraqi Airways is an attempt to avoid the claims filed by Kuwait Airways.

The quarrel highlights the lingering tensions between the two countries and the long shadow cast by Saddam Hussein’s rule. Despite the dictator’s downfall in 2003, Kuwait insists Iraq’s government must pay a total of $24bn in outstanding reparations. Iraq still transfers 5 per cent of its quarterly oil and gas revenues to Kuwait to meet this obligation.

The airline dispute came to a head last month after Iraqi Airways made its first flight to London in 20 years, only for its aircraft to be met by a lawyer representing Kuwait Airways.

The Kuwaiti airline had obtained a High Court order in London providing for the freezing of Iraqi Airways’ assets. Its director-general was forced to hand over his passport. However, the aircraft that landed was chartered from a Swedish company, so it could not be seized. The Iraqi Airways executive was also eventually allowed to return to Baghdad.

“They didn’t leave any chance for Iraqi Airways to operate,” Ali al-Dabbagh, a government spokesman, told the Financial Times. “We feel this needs to be closed … needs to solved in a friendly way, not in the court.”

Mr Dabbagh said the government had yet to decide whether to sell the Iraqi Airways aircraft or establish another company to bypass the legal claims.

“We have to find out the legal way – is there a legal way to avoid the Kuwait claim on the Iraqi Airways property or on the new airline?” Mr Dabbagh said. “If that is still there, then we will not form [an alternative airline].”

Kuwait Airways filed its first claim in Britain in 1991, alleging that Iraq stole 10 civilian aircraft.

Christopher Gooding, a lawyer at Fasken Martineau, which represents Kuwait Airways, said any move to dissolve Iraqi Airways and declare it bankrupt would not lead to the claims being dropped.

“First, it appears to me to be a sorry reflection of Iraq’s attitude to its international commitments that liquidating its own national airline is seen as preferable to addressing those commitments,” said Mr Gooding in a statement.

“Threatening to start a new airline merely demonstrates what a cynical tactic this is.”

Baghdad, 27 May 2010 - Associated Press

The Iraqi government has dissolved state-owned Iraqi Airways over a decades-old financial dispute dating back to Saddam Hussein’s invasion of his oil-rich neighbor Kuwait, the Transportation Ministry said on Wednesday.

Kuwait has long demanded $1.2 billion in reparations from the airliner for alleged theft of 10 airplanes and millions of dollars worth of spare parts during the 1990 invasion.

It had sought to freeze the company’s assets worldwide.

A Transportation Ministry spokesman said the company will continue to operate until it is fully dismantled, but he did not give any timeframe.

“Iraq decided to close Iraqi Airways and announced its bankruptcy because it doesn’t own any airplanes and because of the Kuwaiti government’s cases raised against the company,” spokesman Karim al-Tamimi told AP.

“We hope in the future to replace it by two or three companies to resume its operations.” The government made the decision on Tuesday.

Iraqi Airways did not own any of its own planes, but chartered them from other companies.

On Tuesday, the airline said it had canceled routes to Britain and Sweden after Kuwait tried last month to confiscate the airliner’s first plane to fly to London in 20 years.

Lawyers working for Kuwait attempted to confiscate the airplane that made the flight, but were not able to when it turned out to be chartered from a Swedish company.

At the time, Iraqi Airways Chief Kifah Jabar Hassan had his passport seized in Britain and was forced to stay there for more than a week in connection with the Kuwaiti claims.

Hassan issued a statement Tuesday on the cancellation of routes in which he criticized Iraq’s government for failing to resolve the prolonged dispute with Kuwait.

Iraq has said in the past that repeatedly called for talks over the case to solve it in a “friendly way,” but the Kuwaitis did not respond.