BAGHDAD, Iraq (CNN) -- Iraq's Sunni Arab vice president vetoed the country's newly passed election law Wednesday, a move that threw the nation's electoral process and political system into "crisis" mode.
The veto, by Vice President Tariq al-Hashimi, threatens to ground major logistical preparations for the elections and could delay the polls, a state of affairs that Iraqi and U.S. officials have been persistently trying to avoid.
But Iraqi and international officials still remain hopeful that differences can be resolved and that the national elections will be held in late January as planned.
Gen. Ray Odierno, the top U.S. commander in Iraq, said it's his "very nascent understanding" that the veto resulted from one article over compensatory seats, those given to parties that failed to win parliamentary seats in electoral districts but got enough nationwide to deserve a seat.
"So we'll have to work our way through that to see what the overall impact is. Our hope, obviously, is that it will not delay the timing of the elections," he said at a press conference.
Philip Frayne, spokesman for the U.S. Embassy in Baghdad, said, "we're disappointed" but "it's our hope that this dispute can be resolved quickly so that Iraq's elections can go forward in January."
Al-Hashimi said the law is unfair to Iraqis who were forced to flee violence in their homeland. He refused to sign it without an amendment that would increase the number of seats allocated to refugees, many of whom are Sunnis, and small political parties that could not get enough votes on a national level. Those numbers would increase from 5 percent to 15 percent.
The majority of Iraqis are Shiite. To protect the rights of minority groups, the constitution stipulates that every 100,000 Iraqis should have one representative in the country's parliament. However, al-Hashimi said that refugee numbers are not included in how seats have been calculated.
"We have no law for elections, and no date for elections," said a frustrated Faraj al-Haidari, who heads Iraq's Independent High Electoral Commission.
The law has been bounced back to parliament. Prime Minister Nuri al-Maliki urged lawmakers to reconvene swiftly, and he called for election officials to continue working toward the late January target for national polls.
"The rejections represent a dangerous threat to the political process and the democracy," al-Maliki said in a statement, emphasizing that the decision is not based on constitutional law and goes against the nation's interests.
The election commission's Judge Saad al-Riwai said the panel was meeting with legal experts to resolve what he called a crisis situation.
A prolonged debate would certainly threaten the viability of a January election, seen as a barometer in Iraq's march toward stability and a requisite for the United States to withdraw troops by next summer. U.S. military officials have said they will begin to draw down combat forces about 60 days after the polling. Odierno says he will have some flexibility on withdrawal dates.
"In terms of difficult decisions about troops, again, that's a long way off," Odierno said. "I think we are set up and we're flexible enough from between now and the first of May, frankly.
"And so I feel very confident that I don't have to make any decisions until late spring and that would then be based on if we believe that there is some sort of instability that would be created that would significantly change the path that Iraq is on. And if that happened, then we would have to go back and get further guidance from Washington, but I don't see that happening right now."
The election law was finally passed on November 8 -- after months of political wrangling -- and it had to be unanimously approved by the country's three-member presidency council -- made up of Kurdish President Jalal Talabani, Shiite Vice President Adel Abdul Mehdi and al-Hashimi.
A veto is rare because the passage of a law usually means that it has the blessing of all the political blocs.
The Kurds could also present a setback with threats to boycott the vote unless the seat allocations are assessed in provinces with heavy Kurdish populations.
The tussle over the election law reflects the persistent political jockeying among Iraq's three main ethnic groups for power in the upcoming parliament, which will increase in size from 275 to 323 because of population growth.
CNN's Yousif Bassil, Jomana Karadsheh, and Mohammed Jamjoom contributed to this report.