Ba'athist Iraq covers the history of the Republic of Iraq from 1968 to 2003, during the period of the Arab Socialist Ba'ath Party's rule. This period began with high economic growth and soaring prosperity, but ended with Iraq facing social, political, and economic stagnation. The average annual income decreased because of several external factors, and several internal policies of the regime.
Iraqi President Abdul Rahman Arif, and Iraqi Prime Minister Tahir Yahya, were ousted during a July 17 coup d'état led by Ahmed Hassan al-Bakr of the Ba'ath Party, which had previously held power in 1963 and was led primarily by al-Bakr, its leader, and Saddam Hussein. Saddam through his post as de facto chief of the party's intelligence services, became the country's de facto leader by the mid-1970s, and became de jure leader in 1979 when he succeeded al-Bakr in office as President. During al-Bakr's de jure rule, the country's economy grew, and Iraq's standing within the Arab world increased. However, several internal factors were threatening the country's stability, among them the country's conflict with Iran and the Shia Muslim community. An external problem was the border conflict with Iran, which would contribute to the Iran–Iraq War.
Saddam became President of Iraq, Chairman of the Revolutionary Command Council, Prime Minister and General Secretary of the Regional Command of the Ba'ath Party in 1979, during a wave of anti-regime protests in Iraq led by the Shia community. The Ba'ath Party, which was secular in nature, harshly repressed the protests. Another policy change was Iraq's foreign policy towards Iran, a Shia Muslim country. Deteriorating relations eventually led to the Iran–Iraq War, which started in 1980 when Iraq launched a full-scale invasion of Iran. Following the 1979 Iranian revolution, the Iraqis believed the Iranians to be weak, and thus an easy target for their military. This notion proved to be incorrect, and the war lasted for eight years. Iraq's economy deteriorated during the war, and the country became dependent on foreign donations to fund their war effort. The war ended in a stalemate when a ceasefire was reached in 1988, which resulted in a status quo ante bellum.
When the war ended, Iraq found itself in the midst of an economic depression, owed millions of dollars to foreign countries, and was unable to repay its creditors. Kuwait, which had deliberately increased oil output following the war, 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 August 2, 1990, Iraq launched an invasion of Kuwait. The resulting international outcry led to the Persian Gulf War, which Iraq lost. The United Nations (U.N.) initiated economic sanctions in the war's aftermath to weaken the Ba'athist Iraqi government. 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 U.N. sanctions. In the wake of the September 11 attacks of 2001, the United States, under President George W. Bush, initiated a Global War on Terrorism, and labelled Iraq as a part of an "Axis of Evil". The United States, along with several other allied countries, invaded Iraq in March 2003, and the Ba'athist Iraqi government was deposed less than a month later.