Okay, let me revise this.
Since the general opinion here is that Kuwait won't be bullied around, let's say the following happens...
1. Saddam tries to bully Kuwait, asking them for 5% of their income.
2. Kuwait says no.
3. Saddam threatens to use force, a couple of Presidential Guards divisions move towards the border.
4. Kuwait freaks out and calls for help. At the same time, Keyhole satellites see the divisions moving.
5. The US issue a warning, reminding Saddam of the trouble he is gonna get into, if he doesn't stand down. A carrier battle group is ordered to head for the Gulf, the story is made public.
6. Saddam realises he has lost the element of surprise and orders his forces to stand down.
During the following years Saddam does not try anything else against Kuwait. With the Iran-Iraq war over he has a lot on his hands to take care of. Iraq starts investing heavily in the oil industry, importing foreign equipment and modernising the infrastructure. The oil industry is partially sold to foreign bidders, with the French and the US gaining large shares. The Iraqi economy progresses.
Iraq is being modernised, with a large shift to better infrastructure. Since most of the country's population are however Shiites, Saddam does not spend that money to improve the everyday life of his citizens.
The nuclear arms programme continues to flurish and leads to growing concerns in Israel. Iraq strikes a deal with the North Koreans, exchanging know-how on ballistic missiles, nuclear, chemical and biological weapons.
So now what?
What does Iraq go from here?
Can they develop their nukes before Israel strikes?
Will Israel strike before Iraq get's ready, risking a chemical and biological retaliation or is the risk of waiting for Iraq to finish its nukes to big?
Does the international community react to Iraq's weapons proliferation?