KUWAIT CITY, Aug 2: Kuwait and Iraq restored diplomatic relations on Monday, exactly 14 years after ties were severed when then Iraqi president Saddam Hussein sent his forces to occupy the small emirate.

"The two sides discussed ways of boosting cooperation between the two countries in all fields and agreed to resume full diplomatic relations," said a joint statement issued after a visit by Iraqi Prime Minister Iyad Allawi.

Kuwaiti Foreign Minister Sheikh Mohammed al Sabah said that ambassadors would be appointed in due course "because there are formalities" which must first be carried out. "But the important thing is the resumption of diplomatic ties, which happened. As to the (reopening of) embassies ... it will come," he told reporters after Allawi's departure.

The joint statement, issued on the anniversary of the August 2, 1990 invasion, said the two neighbours had also agreed to set up a higher committee co-chaired by their prime ministers to boost economic links.

"The Iraqi side expressed thanks and appreciation for the generous aid extended by Kuwait to Iraq, chiefly its contribution to (Iraq's) liberation from the deposed regime," the joint statement said. -AFP