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Iraq and Israel do not have any formal diplomatic relations as the former does not recognize the latter. Iraq declared war on the newly established Jewish state in 1948 and since then the relations between the two states have remained hostile at best. Iraqi forces also participated in the subsequent wars against Israel in 1967 and 1973.
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In 1981, Israel, afraid of another attack from Iraq, bombed an Iraqi nuclear reactor under construction at Al Tuwaitha, southeast of Baghdad, claiming a threat to national security. Iraq did not respond. During the Persian Gulf War, Iraq fired 39 modified Scud ballistic missiles at Israel despite there being no aggression from Israel at the time. Israel, under pressure from the United States, never retaliated.
Both countries are Ottoman successor states.
Until the 2003 Iraq War
An oil line was built by the British in the 1940s, which crossed from Western Iraq through the British-ruled Emirate of Transjordan to British-ruled Palestine. After the 1948 birth of Israel, war erupted immediately with Iraq, Transjordan and other Arab countries. This forced the shutdown of the oil line and resulted in the diversion of Iraqi oil through a branch line to Syria.
Since 1948, Israel and Iraq have been implacable foes. Technically, Baghdad has been in a continuous state of war with Israel since 1948. It sent armies to fight Israel in 1948 and 1967. Iraq also sent troops to provide back up for Syria's armed forces in the Yom Kippur War in 1973.
Military action was taken by Israel when they bombed Iraq's Osirak nuclear reactor in 1981, citing that Saddam might use it to develop nuclear weapons. Iraq did not respond.
During the Persian Gulf war in 1991 Iraq fired 39 Scud missiles at Israel.
In 1995, according to British author Nigel Ashton, Israeli Prime Minister Yitzhak Rabin sent a message to Saddam Hussein through King Hussein of Jordan requesting a meeting between him and Saddam. Rabin hoped peace with Iraq might encourage Iran and Syria to do the same. Rabin was assassinated in November, ending the contact between governments. Rabin had previously supervised Operation Bramble Bush, a failed 1992 plan to assassinate Saddam with Sayeret Matkal commandos.
Saddam Hussein was widely revered in Arab world for his pro-Palestinian stance and he supported several Palestinian guerrilla and militant organisations. During the second Palestinian intifada, Iraq sent monetary support to the families of Palestinian martyrs (that included suicide bombers).
Since the 2003 war in Iraq
In 2003, a US-UK led coalition of nations toppled Hussein's government in an effort called Operation Iraqi Freedom. Although, Israel was not included in the coalition, there were indications for its support. According to John Kerry, Netanyahu (as a private citizen) was profoundly forward-leaning and outspoken about the importance of invading Iraq. It was reported in the Washington Post that Israel is urging United States' officials not to delay a military strike against Iraq's Saddam Hussein It was also reported that Israeli intelligence provided Washington with alarming reports about Iraq's alleged program to develop weapons of mass destruction.
On the contrary, some have argued that Israel did not have much role in pushing for the war. According to former US undersecretary of defense Douglas Feith, Israeli officials did not push their American counterparts to initiate the war in Iraq. In an interview with Ynet, Feith stated that "what you heard from the Israelis was not any kind of advocacy of war with Iraq" and that "[w]hat you heard from Israeli officials in private discussions was that they were not really focused on Iraq... [t]hey were much more focused on Iran."
Former Iraqi Prime Minister Ayad Allawi said in 2004 that Iraq would not reconcile its differences with Israel.
On 1 July 2008, Israeli Defense Minister Ehud Barak shook hands and met briefly with Iraqi President Jalal Talabani at a conference of Socialist International in Greece. Barak and Talabani were both at the conference as representatives of their respective political parties, Labour and Patriotic Union of Kurdistan.
Iraqi MP Mithal al-Alusi has twice visited Israel; once in 2004 and once in 2008, drawing protest from many in the Iraqi government. He has called for diplomatic relations and military intelligence sharing between Iraq and Israel.
During the 2008-2009 Israel-Gaza Conflict, the Iraqi government condemned the attack, stating that: "the Iraqi government demands a halt to the military operations, that civilians’ lives are not unnecessarily exposed to danger and requests that the international community honour its responsibilities and take the required measures to stop the attack". The Dawa Party of Prime Minister Nouri al-Maliki called on Islamic countries to cut relations with Israel and end all "secret and public talks" with it. Also the Iraqi Shia leader Ali al-Sistani, has called for decisive action by Arab and Muslim states for an end to Israeli attacks on Gaza. Though he condemned the operation, he stated that "supporting our brothers only with words is meaningless, considering the big tragedy they are facing." After the 2010 Gaza flotilla raid, an Iraqi government official, MP Khairallah al-Basri (a member of former premier Nouri al-Maliki's Islamist State of Law Coalition), condemned the attack and described it as a "new humanitarian disaster," as well as, "a violation of human rights and a breach of international standards and norms." On 1 July 2012 Iraqi Prime Minister Nouri al-Maliki said that Iraq will establish diplomatic relations with all countries except Israel.
Some Iraqi officials and Kurdish leaders have accused Iraqi government of secretly smuggling oil to Israel. Kurdish MP Farhad al-Atroushi accused the Iraqi government of smuggling oil to Israel via Jordan. This allegation was denied by Iraq's Deputy Prime Minister Hussain al-Shahristani and Jordan's Information and Communication Minister Rakan al-Majali. Iraqi Prime Minister Nouri al-Maliki denied this allegation as well and criticised the Iraqi Kurdistan for smuggling oil to Israel.