Target Centermass

3/9/2006

Ports Deal Crumbles, Dubai Firm to Sell U.S. Assets

Filed under: — Gunner @ 11:09 pm

Well, so much for the United Arab Emirates ports story.

With President Bush unable to contain a Republican congressional rebellion, a company owned by the United Arab Emirates vowed Thursday to turn over its just-acquired operations at six major U.S. port terminals to an American entity.

The surprise move came after congressional leaders told Bush on Thursday morning that there was no way to stop lawmakers from blocking Dubai Ports World’s takeover of terminal operations at the ports.

Republican and Democratic lawmakers reacted cautiously to the company’s apparent surrender, saying they needed to learn more about the details before abandoning their attempts to block DP World.

DP World obtained the terminals as part of its acquisition of Peninsular and Oriental Steam Navigation Co., a British firm. That transaction, which the Bush administration approved in January, aroused a public furor that drove Congress into open conflict with the White House.

The announcement was an extraordinary retreat that signaled a shift in the power relationship between the White House and Congress. Bush has been unused to losing. But this time, the Republican-led House of Representatives, which has been a rubber stamp for the president for the past five years, was the first to revolt.

Republicans were furious when the president promised last month to veto any legislation that blocked the deal. Congress ignored Bush’s threat, and a 62-2 vote to block the deal by the House Appropriations Committee on Wednesday left no doubt that Congress would override a veto if the president dared to cast one.

After Thursday’s meeting of congressional leaders with Bush at the White House, DP World’s chief operating officer, H. Edward Bilkey, surprised lawmakers when he issued a statement promising that the company would divest itself of its U.S. terminals.

“Because of the strong relationship between the United Arab Emirates and the United States and to preserve this relationship, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, vice president and prime minister of the UAE and rule of Dubai, has decided to transfer fully the U.S. operations of P&O Ports North America Inc. to a United States entity,” Bilkey’s statement said.

Nevertheless, Senate Democrats pressed ahead with attempts to block DP World’s takeover, and House leaders weighed whether to proceed as well.

Critics of the original deal weren’t backing away from congressional action.

“I’m skeptical,” said Rep. Mark Foley, R-Fla. “I’d prefer (legislation) go through because it gives us a safeguard.”

Likewise, Rep. Jerry Lewis, R-Calif., the chairman of the House Appropriations Committee, said he didn’t intend to remove the ports provision from an emergency spending bill for hurricane relief and the war in Iraq.

Rep. Ileana Ros-Lehtinen, R-Fla., added: “Congressional plans are to move forward with the appropriations language next week which kills the transaction. Just to make sure.”

DP World would have taken over terminals in Miami, Philadelphia, New York, New Jersey, Baltimore and New Orleans as well as some stevedoring operations at 15 others.

[…]

The question that loomed late Thursday was who would buy the U.S. interests, and whether the firm would sell the assets in pieces.

Eller & Co., whose Miami subsidiary Continental Stevedoring & Terminals sued to block the sale, said it might attempt to buy the terminals. “We are certainly encouraged by what the statement said,” Eller attorney Michael Kreitzer said. “We think we are one of the companies (that could buy it). We have been in the business for 70 years. We could do it.”

Rep. Peter King, R-N.Y., an early opponent of the DP World deal and an influential one as the chairman of the House Homeland Security Committee, said Thursday’s announcement was encouraging. “I don’t think Dubai ports would have done this … if they didn’t think there was someone out there,” he said. “Hopefully they have more than one (bidder), otherwise they’re going to have to do a fire sale.”

Michael Hopkins, the vice president of Crowley Liner Services at Port Everglades in Florida, said he expected DP World to sell its interests to several firms rather than one large operator.

[…]

“To be honest, I have no idea,” said Steve Erb, who manages P&O ports operations in Miami. “I can just say that the five largest terminal operators in the world aren’t American.”

I had not blogged on this brouhaha yet, though I had certainly intended to do so (damn you, oncall pager). I’ll admit that I initially balked when I heard the news that an Arab company was being handed the security responsibilities for six American ports. And that right there is why this deal is dead — horridly bombastic, sensationalistic and inaccurate journalism. The deal did not involve control of security. The fact that these six terminals are already managed by a foreign company was not reported. Still, weeks later, a large portion of the stories continued such inaccuracies and omissions. Remember when former Vice President Al Gore yelled that the Bush administration played upon our fears? Well, that is most assuredly what the media did with this story, at the sad expense of the truth. Politicians from both sides chose to capitalize upon these fears. Hey, after all, it’s an election year, and the media have already made clear how they will play this tale.

Instead, the victim in this tale is an Arab ally, just the sort of friend we should be fostering. Protein Wisdom‘s Jeff Goldstein at expands greatly upon my concerns in this matter.

Is this a national security question? My sense is that while it has been hyped as such—and that the majority of congress persons and the American public caved to their fears—it never really was. And from a free market perspective—which, along with the promotion of liberal democracy, is part of the memetic message we are trying to sell abroad—this is a set back.

To win this war, we must insist that our way of life is worth defending. Congress has damaged our relationship with the Gulf states (and in the UAE, we have a very good working relationship), determined our economic policy, and show us to be unwilling to practice what we preach.

I only hope that the UAE understands the vicissitudes of our political system in advance of elections and is willing to accept that the timing for the deal—moreso than any idea of xenophobia—is ultimately responsible for outcome. Which is strange, feeling like I have to rely on the pragmatism of the UAE in order not to take a giant ideological step backward in the war on terror.

Similarly, we are going to be forced to rely on the pragmatism of the rank and file Muslim who, we must secretly hope, recognizes that we have security concerns that must be dealt with domestically—and so they are able to resist the spin our enemies are likely to put on this: that the US, as Al Gore already told them, is openly hostile to Muslims.

[…].

A positive outcome from all this might be that we take a closer look at securing points of entry (and resistance to the deal by Democrats could potentially redound on them when it comes to the Mexican border, if certain Republicans play their rhetorical cards right)—but I hope we manage to do so in a way that is consistent with the free market system we profess to promote.

Indeed, I hope every senator and representative that has played a part in attacking this business move by an ally will have the integrity to follow through with the rhetoric used to date — move immediately to stop foreign management of all points of entry. Otherwise, just come right out and say that you have essentially used racial profiling to shut down a business deal.

These same six terminals were previously controlled by a British-owned company; are you saying that our terrorist enemies could penetrate a U.A.E. company but could never have been an issue with the U.K.? Really, I have little complaints about profiling, but there are places where I think it should be utilized first before this instance. I fully expect everyone in Congress who helped kill this deal that doesn’t immediately move against any foreign port management to explain why they will racially profile an ally-owned company but will not racially profile airline passengers that match those who have previously and repeatedly killed our fellow citizens.

One response to “Ports Deal Crumbles, Dubai Firm to Sell U.S. Assets”

  1. elgato says:

    Well said. I hope the US Navy and Dubai are able to work past this and we don’t suffer retaliation in the area of our docking agreements there.

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