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
Invasion of Kuwait Republican Guard or fell back to neighbouring Saudi Arabia and Bahrain. Iraq set up a puppet government known as the "Republic of Kuwait" to rule over Kuwait and then annexed it outright, when Saddam Hussein announced a few days later that it was the 19th province of Iraq. When the Iran–Iraq War broke out, Kuwait initially stayed neutral and also tried mediating between Iran and Iraq. In 1982, Kuwait along with other Arab states of the Persian Gulf supported Iraq in order to curb the Iranian Revolutionary government. In 1982–1983, Kuwait began sending significant financial loans to Iraq. Kuwait's large-scale