If you can force Iraq to give up its plans of invading instead of going to war with them, you can save lives, money, and ultimately boost your popularity. If you do anything, try to sabotage Iraq's national assets to drive its social outcry up to 75% (it starts at about 30%); at that point, supply arms to rebels and try to stage a coup d'etat. Once the coup succeeds, immediately invade Iraq and take it over using the troops you've based in Turkey, Saudi Arabia, and Kuwait, or a similar government will take its place.
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