Iraq invaded Kuwait on August 2, 1990 largely for economic reasons, but the contiguous Gulf countries had long-standing territorial conflicts as well. The decision to attack was based on the need to erase Iraq’s massive debt: Iraq had largely financed its 1980-1988 war with Iran through loans and owed some $37 billion to Gulf creditors by 1990. It argued that Kuwait and the United Arab Emirates should consider the loans as payments to Iraq for protecting the Arabian Peninsula from Iranian expansionism, but they refused to forgive the debt.
At the same time, Iraqi leader Saddam Hussein accused Kuwait of over-producing crude oil for export and depressing prices, depriving Iraq of critical oil revenues, and of slant drilling into the Rumayla field on the shared border. After Kuwait refused to cancel the debt, Saddam threatened to reignite a long-standing quarrel over ownership of the strategically important Bubiyan and Warbah Islands, demanding that Kuwait cede control of the islands to Iraq. Read more