Bush to veto defense authorization bill.

The White House announced today that President Bush intends to veto a major defense authorization bill, “citing concerns over language that it claims could endanger Iraqi assets held in U.S. banks“:

The President intends to veto H.R. 1585, the National Defense Authorization Act for Fiscal Year 2008 (“NDAA”). One provision in the bill – section 1083 – would significantly amend current law (the Foreign Sovereign Immunities Act) in ways that would imperil Iraqi assets held in the United States, including reconstruction and central bank funds. If enacted, Section 1083 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.

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. Once in place, the restrictions on Iraq’s funds that could result from the bill could take months to lift, and thus Section 1083 cannot become law even for a short period of time.

The bill also contains a 3.5 percent military pay raise. Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) have condemned Bush’s threat, saying Bush “should have raised its objections earlier” and is “bowing to the demands of the Iraqi government.” More on the legislation HERE.