Iraqi Airways being dissolved, Iraq says

Iraq announced Wednesday that it was dissolving its national airline in a bid to evade claims for compensation dating to Saddam Hussein’s invasion of Kuwait 20 years ago.

The seemingly drastic move was the latest in a series of bitter recriminations between the two neighbors over the legacy of the 1990-91 war that have not been tempered by the passage of time or the demise and death of the dictator responsible for starting it.

The decision stems from the fiasco of the revived Iraqi Airways’ much-trumpeted inaugural flight to London late last month, which ended with an attempt by the British authorities to impound the plane and the brief detention of the airline’s chief executive, based on court warrants obtained by Kuwait Airways.

The Kuwaiti carrier is seeking up to $1.2 billion in compensation for the theft of 10 planes and spare parts by Iraqi Airways during the pillage of Kuwait that followed the 1990 invasion.

Iraq says it no longer has any of the planes; six were sent for safekeeping to Iran, which subsequently returned them to Kuwait, and four were blown up on the tarmac at Mosul airport by invading U.S. forces in 2003, Iraqi Transportation Minister Amer Ismail said.

He said Iraq believed that it had an agreement with Kuwait to repay $300 million of the claim, so the action in London was completely unexpected.

“It was a political escalation and an attempt to provoke a crisis for the Iraqi government, even though they know very well that the current government opposed Saddam Hussein’s regime,” Ismail said.

The plane and the executive were eventually released, after it was discovered that the aircraft was leased rather than owned by the airline. But the action prompted the Iraqi government to declare the airline bankrupt because it is financially unable to repay the Kuwaiti claim in full, he said.

The plan is to replace the state-owned carrier with a new airline that will be partially privately owned and immune from the Kuwaiti claims. In the meantime, Iraqi Airways will continue flying, though it has suspended flights to its two destinations in Europe, London and Stockholm, for fear of further action by Kuwait.

Whether the ploy will work is in question. Christopher Gooding, a lawyer for Kuwait Airlines, called it “a cynical tactic” and said the carrier would transfer its claims to the Iraqi government, which would become responsible for Iraqi Airways assets after any bankruptcy.

“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,” he said in a statement.

But Iraq has been chafing under its commitments to Kuwait ever since the U.S. military toppled Hussein in 2003 and a democratically elected Iraqi government came to power. Under the terms of the United Nations-sanctioned cease-fire that ended the 1990-91 Persian Gulf War, Iraq is obliged to pay $52 billion in reparations, mostly to Kuwait, of which about $25 billion is still owed.

Iraqi officials think the claims are exaggerated, said Ismail, and that oil-rich Kuwait should show them some benevolence now that Iraq is no longer ruled by Hussein and is struggling to emerge from the shadow of decades of war and sanctions.

“We don’t want our Kuwaiti brothers to treat every Iraqi as a Saddam Hussein, and we worry that this is the reason behind their attitude,” he said.

Kuwait, for its part, frets that Iraq has still refused to officially recognize the border between the two countries that was demarcated by the U.N. after the war, suggesting that Iraq may still have territorial claims to the tiny emirate and its substantial oil reserves.

The continuing tensions between the two countries are a source of worry to the United States, said Christopher Hill, the American ambassador to Iraq.

“We are concerned that that relationship needs to get better,” and improvements are unlikely at least until a new Iraqi government is in place, he told reporters Wednesday. After inconclusive elections in March, that is still thought to be months away.

liz.sly@latimes.com

Times staff writers Caesar Ahmed and Raheem Salman contributed to this report.