Iraq thanks Bush for vetoing defense bill

U.S. President George W. Bush returns from a holiday visit in Texas to the White House in Washington, January 1, 2008.

BAGHDAD (Reuters) - Iraq thanked U.S. President George W. Bush on Thursday for vetoing a defense bill that would have let companies and people win compensation from the new Iraqi government for actions by ousted leader Saddam Hussein.

Bush announced his decision to veto the bill last week, after concluding that the provision allowing lawsuits against Iraq would pose a "grave financial risk" to the country.

"The Iraqi government has expressed its gratitude and appreciation for the efforts of President George Bush in using his veto against the congressional bill which would have cancelled the immunity of Iraq," the Iraqi government said in a statement.

It said that exposure to the lawsuits would have made it difficult for Iraq to finance its budget, pay for food imports or rebuild its security forces with its own funds.

Iraqi officials had complained to the White House about the provision, and eventually persuaded Bush to veto the entire bill, which, among other things, authorized a pay rise for U.S. soldiers.

After Bush announced his veto, Democrats complained that the administration should have raised its objections sooner.

The White House said it had become more acutely aware of the problem after Iraqi officials raised their concerns, and now hopes to quickly pass a new version of the bill without the measure allowing the lawsuits against Iraq.

(Reporting by Peter Graff)