Source: Journal of Strategy and Decision-Making, No.6, 2023

Abstract: This article analyzes the principal- agency relationship between the United States and Saddam regime of Iraq from the 1980s to the early 1990s via the perspective of trade space. Accounting for this failing relationship, experts and scholars mostly came out with explanations from three perspectives: interest differentiation, energy security and sanction. However, these perspectives were all theoretically “America-centric” and not paying enough attention to the dynamic role played by the Saddam's regime in the relationship. From the 1970s to the early 1980s, the deterioration of Soviet-Iraqi relations and the expansion of Iran's Islamic Revolution provided the basis for the United States and Iraq to develop trade. As a result, U.S.- Iraqi relations experienced a subtle period of warming up. The Reagan administration changed its predecessor's neutrality policy and increased its economic, military and diplomatic assistance to Iraq, while the Saddam's government had taken that opportunity to enhance its regional power, expand shares in the Western energy markets as well as purchase more advanced weapons. From the mid- 1980s to the late 1980s, although the United States gradually withdrew its tilted policies, the intensity and determination were not enough then. Meanwhile, the Saddam Hussein's regime abused U.S. sponsorship in reverse, namely suppressing dissidents and using chemical weapons in blatant violation of international law. Its contradiction with the United States became prominent. Then around the 1990s, relations between the United States and the Soviet Union improved, while the conflict of interests between the U.S. and Iraq became difficult to reconcile. Saddam's Iraq strongly resisted the idea of integrating into the new Middle East order planned by the United States, triggering an escalation of U.S. punishments. In the end, the regime of Saddam took the risk of invading Kuwait, destroyed the U.S.- Iraqi trading space completely so as their principal-agent relationship.

Key words: Principal-agent Relationship; Trade Space; Ronald Reagan Administration; Saddam Regime of Iraq