KUWAIT, July 10 (Reuters) - Kuwait said on Thursday it planned to name an ambassador to Iraq soon because security in its neighbouring country had improved enough to allow the reopening of an embassy.

"This step comes after our brothers in Bahrain and the United Arab Emirates named ambassadors to Iraq," the state news agency KUNA quoted Foreign Minister Undersecretary Khaled Jarallah as saying.

No Arab ambassador has been stationed in Iraq since Egypt's envoy was kidnapped and killed shortly after arriving in 2005.

Neighbouring Sunni Arab governments cite poor security and the Shi'ite-led government's close ties to Iran for their reluctance to engage Iraq since the U.S.-led invasion toppled Saddam Hussein.

The United States has been pressing its Arab allies to aid Iraq's recovery by forgiving its debts and restoring top-level diplomatic ties.

In a step toward easing Iraq's regional isolation, the United Arab Emirates waived all of Iraq's almost $7 billion debt this week and formally appointed an ambassador to Baghdad.

In June, Bahrain said it would set up a new embassy in Baghdad and was selecting an ambassador, although no timeframe was given.

Jordan and Saudi Arabia have also said they planned to open an embassy in Iraq soon, Turkish Prime Minister Tayyip Erdogan visited Iraq on Thursday.

Kuwait's own ties to Iraq are more complicated, with many Kuwaitis still bitter about Saddam's 1990 invasion and occupation of their country.

Jarallah did not identify any potential candidates but Kuwait's al-Wasat newspaper on Wednesday quoted diplomatic sources as saying that Kuwait would shortly name Ali al-Mumin, a retired military officer, as ambassador to Baghdad.

Jarallah said the new embassy would probably be located in the "Green Zone", a high security area where the U.S. embassy and Iraqi government offices are based. (Writing by Lin Noueihed; Editing by Mariam Karouny)

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