President George W. Bush plans to veto a defense policy bill, citing one of the provisions would jeopardize Iraq's reconstruction efforts, the White House said on Friday.

Bush intends to veto the National Defense Authorization Act for Fiscal Year 2008 because one provision 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, White House spokesman Scoot Stanzel said in a statement.

The legislation the White House objects, 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," Stanzel said.

The new Iraqi government, during the crucial period of reconstruction, "cannot afford to have its funds entangled in such lawsuits in the United States," he added.

Stanzel also said the White House is consulting with the leadership of the Congress on the need to modify the bill in a manner "that protects Iraqi funds in the United States."

House and Senate Democrats voiced their complaints against Bush 's surprising statement, saying he did not raise any concern on the provision when the Congress sent the bill to him for his signature.

"The administration should have raised its objections earlier, when this issue could have been addressed without a veto," House of Representatives Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a joint statement.

"The American people will have every right to be disappointed if the president vetoes this legislation."

According to the congressional Democrats, the provision was included in the bill to allow the victims of deceased Iraqi former President Saddam Hussein to seek compensation in court.

However, the Iraqi government has raised its concerns that the provision would encourage former U.S. prisoners of war from the Gulf War to ask for compensation from the Iraqi government's reported 25 billion U.S. dollars in assets in U.S. banks.

The bill authorizes 696 billion dollars in military spending, including 189 billion dollars for the wars in Iraq and Afghanistan, for the 2008 budget year.

(Xinhua News Agency December 29, 2007)