Kuwait MPs Tuesday overwhelmingly ratified a settlement deal between the Kuwaiti and Iraqi national carriers under which Baghdad will pay $500m in compensation, ending a 22-year-old dispute. Under the deal reached in July, Iraqi Airways agreed to pay the said compensation to state-owned Kuwait Airways Corp.

(KAC) for damages caused by the then Iraqi troops of Saddam Hussein during the 1990-91 invasion of Kuwait. Kuwait's Communications Minister Salem al-Othaina, who chairs KAC, told MPs that Iraq as a sign of goodwill has deposited all the $500 million in a special bank account and "we can withdraw them after ratifying the settlement."

The settlement, however, amounts to less than half of the $1.2 billion KAC had said Iraq's flag carrier owed it. Kuwait says 10 of its planes as well as aircraft parts were plundered after its airport was seized during the invasion. In October, Emir Sheikh Sabah al-Ahmad al-Sabah issued a decree ratifying the deal ahead of the December 1 parliamentary election.

Under Kuwaiti law, the new parliament must ratify decrees issued by the emir to become legal. An Iraqi foreign ministry statement said in October that the settlement "cancels all restrictions and complications in rebuilding Iraqi Airways, and it is now free to buy new planes and build a fleet." On Tuesday, 46 Kuwaiti MPs and cabinet ministers voted for the settlement, one voted against and another abstained. There were 48 MPs and cabinet ministers present when the voting took place.

Iraq invaded Kuwait in 1990, after which flights between Iraq and its small neighbour to the south were suspended. Authorities last year gave approval for direct flights between the two countries to resume. Several outstanding issues are still to be sorted out between the two Arab neighbours including the payment by Baghdad of around $20 billion in war reparations and about $16 billion in debt.