Good resource: Country Study & Country Guide for Iraq:
Concern about the 1979 Islamic Revolution in Iran and about the Soviet invasion of Afghanistan prompted Iraq to reexamine seriously the nature of its relationship with the United States. This process led to a gradual warming of relations between the two countries. In 1981 Iraq and the United States engaged in lowlevel , official talks on matters of mutual interest such as trade and regional security. The following year the United States extended credits to Iraq for the purchase of American agricultural commodities, the first time this had been done since 1967. More significant, in 1983 the Baathist government hosted a United States special Middle East envoy, the highest-ranking American official to visit Baghdad in more than sixteen years. In 1984, when the United States inaugurated “Operation Staunch” to halt shipment of arms to Iran by third countries, no similar embargo was attempted against Iraq because Saddam Husayn’s government had expressed its desire to negotiate an end to the war. All of these initiatives prepared the ground for Iraq and the United States to reestablish diplomatic relations in November 1984.
In early 1988, Iraq’s relations with the United States were generally cordial. The relationship had been strained at the end of 1986 when it was revealed that the United States had secretly sold arms to Iran during 1985 and 1986, and a crisis occurred in May 1987 when an Iraqi pilot bombed an American naval ship in the Persian Gulf, a ship he mistakenly thought to be involved in Iran-related commerce. Nevertheless, the two countries had weathered these problems by mid-1987. Although lingering suspicions about the United States remained, Iraq welcomed greater, even if indirect, American diplomatic and military pressure in trying to end the war with Iran. For the most part, the government of Saddam Husayn believed the United States supported its position that the war was being prolonged only because of Iranian intransigence.
Data as of May 1988