OK, so here's the short version:
Heinrich VI. who presided over the assembly of nobles in Erfurt had his belief in god's favor shaken to its core by all the lords he invited literally drowning in shit inside a church. He then became Emperor after his predecessor Friedrich I. had drowned in a river while on a crusade, shortly before reaching Jerusalem - another proof that god wasn't on the Holy Roman Empire's side.
His lack of faith, on which his own power as god-appointed Emperor was founded, was noticed by everyone around him. So the lords denied his attempt to instate a hereditary monarchy and removed themselves from his court, putting them in a position where they could deny or demand payment for following his commands.
Driven by a deep longing to prove he was still in god's grace, and to regain absolute power, he believed that his role on earth was to reunite the Eastern and Western church and become the prophecized "Emperor of Peace" who would bring about the end times. To this end, he started campaigning and preparing for another Crusade that would not only reconquer Jerusalem, but also the Byzantine Empire.
His death from Malaria while besieging Messina as staging ground for his crusade put an end to those plans for now, but not to the ideas behind the crusade he had popularized.
When the fourth crusade was launched just 5 years later, the most experienced crusading knights would have been veterans of his misguided campaign, and when it became clear that they couldn't pay for the passage to the Holy Land, they would have been the ones to propose to conquer the Byzantine Empire instead as another valid target, just as their former Emperor had proposed. As we all know, the following sack of Constantinople destroyed the will of the church and the Christian states to unite and put any real effort into another crusade from that point on.
The next German Emperor didn't even participate in the Fifth crusade and delayed participation in the Sixth for so long he got excommunicated. From then on, any further crusades were called by individual kings, not the pope in the name of all Christendom.
The Muslim rule over the middle east was secure for the coming centuries, the Byzantine Empire never recovered, and the Ottoman Empire rose into the power vacuum and eventually conquered it.

Which leads us to Baghdad. The center of Islamic culture during its heyday and for centuries after, a shining beacon of civilization more developed than the attacking Crusader states. You have to understand what such a history does to the self-image of the inhabitants. And at the crossroads between Europe, Africa and Asia, it was easy to see the region as the center of the world. Due to the aforementioned rise of the Ottoman Empire and its incorporation of today's Iraq, the land became part of one of the greatest Empires in history.
Until after a period of declining importance and influence, the British conquered the Ottoman Empire as well as Baghdad and drew their own borders in the sand, the US-lead league of nations sanctioned the new borders imposed on the people, and called the cobbled-together country "Iraq", an entity with no regard for its history or former glory, and under western rule for the first time in a millennium.
It's a logical conclusion that Iraq would eventually unite with their neighbors and throw off the British rule, but also that without historic precedent (due to being part of a Muslim empire for so long), they wouldn't have the experience to establish a stable democracy. One coup d'etat followed another, which always pushes the most ruthless leaders to power. And that was the Baath party. They promised freedom and a new, pan-Arabic union that would end western rule, which the pan-Islamic unions of the past had failed at.
But also within the party, the most ruthless used the chaos to rise to power, and Saddam Hussein solidified his position by first killing those Baathists that didn't support him, then thousands of his own citizens, and then starting a war, which threatened US influence in the region enough to eventually topple him - in a war that created so much anger and suffering that one man, Muntadhar al-Zaidi, saw no other way to vent his anger than to throw his shoes at the leader of the western world.