Dubai Ports World controversy

The Dubai Ports World controversy began in February 2006 and rose to prominence as a national security debate in the United States. At issue was the sale of port management businesses in six major US seaports to a company owned by an Arab state, and whether such a sale would compromise port security.

The controversy pertained to management contracts of six major United States ports. The purchaser was Dubai Ports World (DPW), a state-owned company in the United Arab Emirates (UAE). The contracts had already been foreign-owned, by Peninsular and Oriental Steam Navigation Company (P&O), a British firm taken over by DPW (completed in March 2006). Though the sale was approved by the executive branch of the United States Government, various United States political figures argued that the takeover would compromise American port security.

US President George W. Bush argued vigorously for the approval of the deal, claiming that the delay sends the wrong message to American allies. Legislation was introduced to the United States Congress to delay the sale.

Background

Main article: Dubai Ports World

Dubai Ports World is a company owned by the government of Dubai in the United Arab Emirates, via a holding company. This holding company is under the direct control of Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum. Maktoum is currently the Prime Minister of the United Arab Emirates.

Chronology

In February 2006, the stockholders of the Peninsular and Oriental Steam Navigation Company (P&O), a British firm, agreed to a sale of that company to DPW over a bid by PSA International of Singapore. As part of the sale, DPW would assume the leases of P&O to manage major U.S. port facilities in New York, New Jersey, Philadelphia, Baltimore, New Orleans, and Miami, as well as operations in 16 other ports.

After P&O stockholders approved the deal, the arrangement was reviewed by the Committee on Foreign Investment in the United States headed by the U.S. Treasury Department. The transfer of leases was approved.

But soon after, both Democratic and Republican members of Congress started to question the approval. Republican leaders Dennis Hastert and Bill Frist, who usually work closely with the office of the President, publicly questioned the deal. Frist said "If the administration cannot delay the process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review." [1]

On February 22, 2006, President Bush threatened to veto any legislation passed by Congress to block the deal, a veto that would be his first. In a statement to reporters, Bush claimed, "It would send a terrible signal to friends and allies not to let this transaction go through." [2]

The controversy has created a public and unusually high-profile dispute within the Republican Party, and between the Republican-controlled Congress and the Republican-controlled White House.

On February 23, 2006, DPW volunteered to postpone its takeover of significant operations at the ports to give the White House more time to convince lawmakers that the deal poses no increased risks from terrorism.

On February 24, 2006, it was reported[3] that there are 22 USA ports in the deal, not just the six major ports mentioned in initial news stories and reports. According to the website of P&O Ports, the port-operations subsidiary of P&O, DPW would take over stevedore services at 12 East Coast ports including Portland, Maine; Boston, Massachusetts; Davisville, Rhode Island; New York City; Newark, New Jersey; Philadelphia, Pennsylvania; Camden, New Jersey; Wilmington, Delaware; Baltimore, Maryland; and Virginia locations at Newport News, Norfolk, and Portsmouth.

Additionally, DPW will take over P&O stevedoring operations at nine ports along the Gulf of Mexico including the Texas ports of Beaumont, Port Arthur, Galveston, Houston, Freeport, and Corpus Christi, plus the Louisiana ports of Lake Charles and New Orleans.

On March 8, 2006 the House Panel voted 62–2 to block the deal, and senator Charles Schumer added amendments to a senate bill to block the deal, causing an uproar in the senate.[4]

On March 9, 2006, Dubai Ports World released a statement saying they would turn over operation of U.S. ports to a U.S. "Entity".[5] Later that same day, American Enterprise Institute scholar Norm Ornstein reported on PBS's "News Hour" that DP World was considering selling its U.S. operations to Halliburton.[6]

General opinion and comment

According to Bill Gertz, author of Breakdown: How America's Intelligence Failures Led to September 11:

"Intelligence and security officials opposed to the deal with Dubai Ports World said ports are vulnerable to the entry of terrorists or illicit weapons because of the large number of containers that enter U.S. territory, regardless of who manages them." [7]

Frank Gaffney, president of the Center for Security Policy wrote:

At the very least, the company will have to be read-in on these ports' security plans as it will have some role in their implementation. [8]

Susan Collins, Republican Senator from Maine (and Homeland Security Committee chairman) wrote:

"[A] careful review of the 'assurances letter' reveals that DP World is not, in fact, bound to provide the U.S. government with the information it would need to close the intelligence gaps the Coast Guard identified...The language is weak... Indeed, the assurances appear to amount to little more than a restatement of what the FBI or other law enforcement agenc[ies] could gather anyway in the course of an investigation." [9]

After the company announced its decision to transfer the US port operations to a US entity, the BBC quoted Daniel T. Griswold, director of the Cato Institute's Centre for Trade Policy Studies, as saying that the affair would "send a chilling signal": "It is just assuming that if a company is from the Middle East it is de facto disqualified from investing in the United States, and I think that is a terrible message to send." [10]

Opposition to the deal

The objections to approving the sale center on who controls US ports in an age of terrorism. Though some opposed to the sale have argued that no foreign company should be permitted to own such strategic assets, few have offered similar objections to the P&O's ownership, which is in fact a British corporation. Rather, it is claims regarding a supposed relationship of the UAE (a political ally of the United States) to terrorism and DPW's state-ownership that generates discomfort across party lines.

Those who have expressed opposition to the deal include: The New York Times, Michael Savage, Lindsey Graham, The New Republic, The John Birch Society, Sean Hannity, Lou Dobbs, Laura Ingraham; Bill Frist and Hillary Clinton, prominent politicians from two different parties; Robert Menendez, John Gibson, Jon Corzine, and Peter King.

Several additional arguments have circulated among critics of the deal, including:

• Review and approval of the acquisition by CFIUS was not sufficiently transparent and thorough, and never reached the proper level within the administration;
• Personal ties between the Bush administration and DP World, such as the appointment of David C. Sanborn to the Transportation Department's Maritime Administration portray a conflict of interest;
• Joining the debate, the Anti-Defamation League has protested the deal, stating that "The UAE's boycott of Israel alone should torpedo this deal"[11]

The contracts under consideration are for the management of numerous American ports. Critics of the deal claim that this is tantamount to “outsourcing” security, given the vulnerability of ports for terror attacks or as an entry point for Al-Qaeda operatives. This outsourcing argument comes in several forms, including :

• “America would not be in control of her own security”
• “Arab states cannot be trusted with strategic American assets”
• “Foreign countries should not have managerial responsibilities over ports due to divided loyalties"

However, as pointed out in the quote by Bill Gertz, port security and port management do not mean or imply the same responsibilities. Union longshorement would still be required to do labor, and the ports would still be subject to federal and state regulation with respect to security. DPW would still be required to demonstrate that the ports they operate were in line with safety and security guidelines, just as P&O was.

Support for the deal

Editorial support for the deal comes from the Wall Street Journal, the Los Angeles Times, the Washington Post, The Economist, Tony Snow, Thomas Friedman, Rush Limbaugh, Jimmy Carter, John Warner and Bill O'Reilly.

The Bush administration and other supporters of the deal make the following arguments:

• The U.A.E. has proven itself a strategic partner by allowing the U.S. military access to its land, ports and airspace for basing and operations in Iraq and Afghanistan;
• The U.A.E. has allied with the U.S. in the Global War On Terror;
• Blocking the transfer of operating rights held by a British firm to an Arab firm appears discriminatory against Arabs; however, it should be noted that the British company is privately owned, and the other in question is owned and managed by the government of UAE;
• Security would remain a government responsibility as always, and performed by the Coast Guard and Customs.

Israel's largest shipping firm, Zim Integrated Shipping Services, came out in support of the deal.

"During our long association with DP World, we have not experienced a single security issue in these ports or in any of the terminals operated by DP World... We are proud to be associated with DP World and look forward to working with them into the future." Zim Integrated Shipping Services CEO, Idon Ofer, February 22 2006. [12]

The controversy comes shortly after the World Trade Organisation's "Doha Round" of global trade talks. Many member states had called for the USA to open up its ports to international competition, in the same way that the world's richer countries have pushed poorer countries into opening up their service sectors (e.g. water, telecoms, etc.). [13]

Many, including black and Arab commentators, have expressed concern that the controversy is being driven by racist hysteria, a view shared by most socialist commentators.

See also

• List of North American ports
• United States Coast Guard -- Port and Waterways Security
• Supply Chain Security

External links

• Security fears about infiltration by terrorists - Bill Gertz, Washington Times, February 22, 2006
• UAE terminal takeover extends to 21 ports - UPI 2/24/2006
• MediaMatters tracks spin and bull
• http://www.rasmussenreports.com/2006/February%20Dailies/Dubai%20Ports.htm
• Lou Dobbs told to Shut up
• Port controversy could widen racial chasm - Thomas L. Friedman, New York Times, February 25, 2006
• Political links about the controversy
• The United States–UAE Bilateral Relationship
• Jimmy Carter backs Dubai Ports World deal
• Peter King: Dubai Ports Company in 'al-Qaida Heartland'
• Tony Snow: It's time for cooler heads to prevail
• Limbaugh, O'Reilly favor deal, while Savage, Hannity oppose
• Even Sean Hannity Agrees UAE Port Deal Is A Bad Idea
• John Warner's support for deal
• John Gibson: U.S. Ports Should Be Off Limits to Foreign Companies
• Hillary Clinton 'unaware' of Bill's Dubai ties