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[House Document 110-88]
[From the U.S. Government Publishing Office]

                                     

110th Congress, 2d Session - - - - - - - - - - - - - House Document 110-88

 
                     88--VETO MESSAGE ON H.R. 1585

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

     NOTIFICATION OF THE VETO OF H.R. 1585, THE ``NATIONAL DEFENSE 
                AUTHORIZATION ACT FOR FISCAL YEAR 2008''

  January 16, 2008.--Message and accompanying papers referred to the 
         Committee on Armed Services and ordered to be printed
                       Memorandum of Disapproval

    I am withholding my approval of H.R. 1585, the ``National 
Defense Authorization Act for Fiscal Year 2008,'' because it 
would imperil billions of dollars of Iraqi assets at a crucial 
juncture in that nation's reconstruction efforts and because it 
would undermine the foreign policy and commercial interests of 
the United States.
    The economic security and successful reconstruction of Iraq 
have been top priorities of the United States. Section 1083 of 
H.R. 1585 threatens those key objectives. Immediately upon 
enactment, section 1083 would risk the freezing of substantial 
Iraqi assets in the United States--including those of the 
Development Fund for Iraq (DFI), the Central Bank of Iraq 
(CBI), and commercial entities in the United States in which 
Iraq has an interest. Section 1083 also would expose Iraq to 
new liability of at least several billion dollars by undoing 
judgments favorable to Iraq, by foreclosing available defenses 
on which Iraq is relying in pending litigation, and by creating 
a new Federal cause of action backed by the prospect of 
punitive damages to support claims that may previously have 
been foreclosed. This new liability, in turn, will only 
increase the potential for immediate entanglement of Iraqi 
assets in the United States. The aggregate financial impact of 
these provisions on Iraq would be devastating.
    While my Administration objected to an earlier version of 
this provision in previous communications about the bill, its 
full impact on Iraq and on our relationship with Iraq has 
become apparent only in recent days. Members of my 
Administration are working with Members of Congress to fix this 
flawed provision as soon as possible after the Congress 
returns.
    Section 1083 would establish unprecedented legal burdens on 
the allocation of Iraq's funds to where they are most needed. 
Since the fall of Saddam Hussein, I have issued Executive 
Orders to shield from entanglement in lawsuits the assets of 
the DFI and the CBI. I have taken these steps both to uphold 
international legal obligations of the United States and to 
remove obstacles to the orderly reconstruction of Iraq. Section 
1083 potentially would place these crucial protections of 
Iraq's core assets in immediate peril, by including a provision 
that might be misconstrued to supersede the protections I have 
put in place and to permit the judicial attachment of these 
funds. Iraq must not have its crucial reconstruction funds on 
judicial hold while lawyers argue and courts decide such legal 
assertions.
    Moreover, section 1083 would permit plaintiffs to obtain 
liens on certain Iraqi property simply by filing a notice of 
pending action. Liens under section 1083 would be automatic 
upon filing a notice of a pending claim in a judicial district 
where Iraq's property is located, and they would reach property 
up to the amount of the judgment plaintiffs choose to demand in 
their complaints. Such pre-judgment liens, entered before 
claims are tested and cases are heard, are extraordinary and 
have never previously been available in suits in U.S. courts 
against foreign sovereigns. If permitted to become law, even 
for a short time, section 1083's attachment and lien provisions 
would impose grave--indeed, intolerable--consequences on Iraq.
    Section 1083 also includes provisions that would expose 
Iraq to increased liability in lawsuits. Contrary to 
international legal norms and for the first time in U.S. 
history, a foreign sovereign would be liable for punitive 
damages under section 1083. Section 1083 removes defenses 
common for defendants in the United States--including res 
judicata, collateral estoppel, and statutes of limitation--upon 
which the Iraqi government has relied. And section 1083 would 
attempt to revive a $959 million judgment against the new 
democratic Government of Iraq based on the misdeeds of the 
Saddam Hussein regime.
    Exposing Iraq to such significant financial burdens would 
weaken the close partnership between the United States and Iraq 
during this critical period in Iraq's history. If Iraq's assets 
are frozen, even temporarily, that could reduce confidence in 
the Iraqi dinar and undermine the success of Iraq's monetary 
policy. By potentially forcing a close U.S. ally to withdraw 
significant funds from the U.S. financial system, section 1083 
would cast doubt on whether the United States remains a safe 
place to invest and to hold financial assets. Iraqi entities 
would be deterred from engaging in commercial partnerships with 
U.S. businesses for fear of entangling assets in lawsuits. 
Section 1083 would be viewed with alarm by the international 
community and would invite reciprocal action against United 
States assets abroad.
    The adjournment of the Congress has prevented my return of 
H.R. 1585 within the meaning of Article I, section 7, clause 2 
of the Constitution. Accordingly, my withholding of approval 
from the bill precludes its becoming law. The Pocket Veto Case, 
279 U.S. 655 (1929). In addition to withholding my signature 
and thereby invoking my constitutional power to ``pocket veto'' 
bills during an adjournment of the Congress, I am also sending 
H.R. 1585 to the Clerk of the House of Representatives, along 
with this memorandum setting forth my objections, to avoid 
unnecessary litigation about the non-enactment of the bill that 
results from my withholding approval and to leave no doubt that 
the bill is being vetoed.
    This legislation contains important authorities for the 
Department of Defense, including authority to provide certain 
additional pay and bonuses to servicemembers. Although I 
continue to have serious objections to other provisions of this 
bill, including section 1079 relating to intelligence matters, 
I urge the Congress to address the flaw in section 1083 as 
quickly as possible so I may sign into law the National Defense 
Authorization Act for Fiscal Year 2008, as modified. I also 
urge the Congress to ensure that any provisions affecting 
servicemember pay and bonuses, as well as provisions extending 
expiring authorities, are retroactive to January 1, 2008.

                                                    George W. Bush.
    The White House, December 28, 2007.

                                  
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