Iraq's leaders said Wednesdasy they have reached a $500 million deal with Kuwait to settle a legal dispute that has snarled business for Iraq's national airline since Iraq's 1990 invasion. (Khalid Mohammed/AP)

Iraqi leaders on Wednesday announced the conclusion of several agreements with Kuwait on long-disputed issues, marking the latest in a series of friendly moves toward countries in the region ahead of an Arab summit in Baghdad.

Officials said Iraq will pay $300 million to the Kuwaiti government and invest $200 million in an Iraqi-Kuwaiti company to settle a claim by state-owned Kuwait Airways that Iraq owes it $1.2 billion for planes and parts stolen after the Iraqi invasion of Kuwait in 1990.

“We have achieved a breakthrough in the relationship,” said Iraqi Foreign Minister Hoshyar Zebari, speaking by telephone from Kuwait, where he was traveling with Prime Minister Nouri al-Maliki. The airline dispute had led to several seizures by Kuwaiti authorities of overseas Iraqi assets.

“This has been very unsettling for us,” Zebari said.

He also said that Iraq had agreed to maintain borders with Kuwait in line with a U.N. Security Council resolution on the disputed boundary. The move brings Iraq closer to release from restrictions imposed on it by the United Nations when the Persian Gulf War ended after a U.S.-led intervention in 1991. Other disputes, including over the proposed construction of a vast port in Kuwait that Iraq fears would threaten traffic to its port in Basra, remain unresolved.

Zebari said the emir of Kuwait, Sabah Ahmed al-Sabah, will attend the Arab League meeting in Baghdad, which is set to begin March 27 after a year-long postponement because of turmoil in the Arab world and security concerns in Iraq.

Amid intermittent violence in Iraq, many observers have been skeptical that the summit would go ahead, despite the assiduous beautification of Baghdad’s fortified Green Zone and elaborate security plans.

However, Western and Iraqi officials now think that, barring a significant security incident in the next two weeks, the meeting is likely to take place and that the opportunity to discuss the pressing issue of the Syria crisis may draw representatives from influential nations, including Saudi Arabia and other Persian Gulf states.

The success of the summit matters greatly to Iraq’s leaders, according to analysts and officials, who say that since U.S. troops withdrew at the end of last year, the country has sought to present itself as a fully sovereign member of the Arab world.

Iraq has also recently announced agreements with Saudi Arabia and Egypt on relatively minor but long-standing disputes.

“I see this as mood music before the Arab League summit,” said Toby Dodge, an Iraq expert at the London School of Economics. “The summit is the baptism of Iraq as a normal Arab country. They see it as putting the invasion and the civil war behind them.”