    [Public Papers of the Presidents of the United States: George W. Bush (2007, Book II)]
    [December 28, 2007]
    [Pages 1592-1594]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Memorandum to the House of Representatives Returning Without Approval
    the ``National Defense Authorization Act for Fiscal Year 2008''
    December 28, 2007

        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.

    [[Page 1593]]

    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

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    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.

    Note: An original was not available for verification of the content of
    this memorandum.