The August 2 assault was rapidly met with a concerted international military response that pushed Saddam's forces out of the emirate and eventually led to his ouster by a US-dominated coalition in 2003.
As a result of that invasion, Iraq continues to pay war reparations to Kuwait, and disagreements over the two countries' land and maritime borders persist.
"This was one of the most dreadful decisions he (Saddam) ever, ever took," Foreign Minister Hoshyar Zebari told AFP.
"Really, Iraq has been suffering from that decision ever since -- the sanctions, the (UN) Security Council resolution. Over the last seven years, I, as a foreign minister, have been struggling to get my country back to where it was before August 2nd."
Since 1994, when the United Nations set up a reparations fund, Iraq has repaid USD 30.15 billion to Kuwait, with a further USD 22.3 billion in compensation still due.
Baghdad is required to put five per cent of its oil and gas revenues into the fund.
That is in addition to an estimated USD eight billion in bilateral debt and around USD one billion owed to Kuwait as a result of a court judgement over a dispute between the two countries' state airlines.
Those obligations remain crippling to a country where infrastructure and the economy are in dire need of rebuilding after having been hammered by years of violence and sanctions.
"Until Iraq achieves internal stability and the government is capable of achieving a unitary foreign policy... Iraq-Kuwait relations will remain a controversial subject," Massouma al-Mubarak, the chair of the Kuwaiti parliament's foreign affairs committee, told AFP.
"The wounds are very deep," she added. "It is very difficult for us to forget, but we are trying to turn a new page in Kuwait-Iraq relations."
Crucial issues between the two countries remain unresolved, chief among which is the agreement of land and maritime borders which the United Nations officially demarcated in the early 1990s.
While Saddam accepted those borders, set out in Security Council Resolution 833, the current Iraqi government has yet to do so, a decision described by Zebari as "political."
"I was hoping... to resolve this before the end of this year, to close this chapter," he said.