Bush to veto defense policy bill

11:25 AM CST on Friday, December 28, 2007, Crawford, Texas (AP) — President Bush plans to veto a sweeping defense policy bill on grounds that it would derail Iraq's efforts to rebuild its country, the White House said Friday.

Bush's action, which apparently caught congressional leaders off guard, centers on one provision in the legislation dealing with Iraqi assets. The legislation would permit plaintiffs' lawyers immediately to freeze Iraqi funds and would expose Iraq to "massive liability in lawsuits concerning the misdeeds of the Saddam Hussein regime," said White House spokesman Scott Stanzel.

"The new democratic government of Iraq, during this crucial period of reconstruction, cannot afford to have its funds entangled in such lawsuits in the United States," Stanzel said in a statement.

House and Senate Democrats said Friday that the first time they'd heard of any White House concerns with the legislation was after Congress sent the bill to Bush for his signature.

"The administration should have raised its objections earlier, when this issue could have been addressed without a veto," Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said in a joint statement. "The American people will have every right to be disappointed if the president vetoes this legislation, needlessly delaying implementation of the troops' pay raise, the Wounded Warriors Act and other critical measures."

The provision that is causing problems would have allowed the victims of the executed Iraqi dictator Saddam to seek compensation in court, Democrats said. The Iraqi government has warned that former U.S. prisoners of war from the first Gulf War might cite this legislation in an attempt to get money from the Iraqi government's reported $25 billion in assets now held in U.S. banks, they say.

Unless Bush vetoes the legislation, the Iraqis have threatened to withdraw all of their money from the U.S. financial system to protect it from the lawsuits, Democrats said.