Iraq ? Iraqi government leaders on Wednesday rejected a law that required nationwide elections by the fall, dealing a serious blow to a measure that the U.S. considers a key benchmark of political reconciliation in Iraq.

Parliament passed the legislation two weeks ago. The veto by Iraq’s presidency council was an unexpected setback. Lawmakers will now have to reconsider the measure, which they only agreed to as part of a three-law package reached after weeks of political wrangling so divisive that some called for the dissolution of parliament. The other two laws – the 2008 budget and an amnesty that could apply to thousands of detainees in Iraqi prisons – were approved by the presidency council.

“This is a huge disappointment,” said the Shiite deputy speaker of parliament, Khalid al-Attiyah, through an aide. “The political blocs all agreed on this law before. Now we will have to try to start all the deals and agreements from the beginning.”