Ba'athist Iraq reducing international oil prices, further weakened the Iraqi economy. In response to this, Saddam threatened Kuwait that, unless it reduced its oil output, Iraq would invade. Negotiations broke down, and on 2 August 1990, Iraq launched an invasion of Kuwait. The resulting international response led to the Persian Gulf War, which Iraq lost. The United Nations (UN) initiated economic sanctions in the war's aftermath to weaken the Ba'athist Iraqi regime. The country's economic conditions worsened during the 1990s, and at the turn of the 21st century, Iraq's economy started to grow again as several states ignored the UN's sanctions. In
Lockheed C-130 Hercules in Australian service that country. An operation to fly about 95 Australians and New Zealanders directly out of Iraq and Kuwait was also planned, but would have only been conducted as a last resort due to the great dangers involved. These evacuation flights were not required as Iraq did not invade Saudi Arabia, and the Australians in Iraq departed by road. A proposal to deploy some of the Hercules as part of Australia's contribution to the ensuing Gulf War was also rejected in late 1990 as the aircraft had to be held in reserve in case fighting on the Pacific island of Bougainville