Fear Escalates on Foreign Control of Ports

WASHINGTON — A New Jersey congressman said Saturday he wants to require that security officials at U.S. ports be American citizens to prevent overseas companies operating shipping facilities here from hiring foreigners in such sensitive positions.

Republican Frank A. LoBiondo, chairman of the Coast Guard and Maritime Transportation Subcommittee, cited "significant" security concerns over a $6.8 billion sale that gives a company in the United Arab Emirates control over operations at six major American ports.

LoBiondo said he wants the new mandatory citizenship requirements approved by Congress and President Bush before state-owned Dubai Ports World completes its pending purchase of London-based Peninsular and Oriental Steam Navigation Co.

The British company, the world's fourth-largest ports company, runs major commercial operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The Bush administration earlier approved the deal, which has drawn escalating criticism by lawmakers who maintain the United Arab Emirates is not consistent in its support of U.S. terrorism-fighting efforts.

Caught by surprise over the breadth of concerns expressed in the United States, Dubai Ports World is cautiously organizing its response. The company quietly dispatched advisers to reassure port officials along the East Coast, and its chief operating officer _ internationally respected American shipping executive Edward "Ted" H. Bilkey _ was expected to travel to Washington soon for meetings on Capitol Hill and elsewhere.

Meanwhile, the Bush administration is defending its approval of the sale, and strongly resisting demands by Congress to reconsider.

State Department spokesman Sean McCormack described the United Arab Emirates on Friday as "a long-standing friend and ally" and said the United States and UAE had a good relationship.

Bush visited the port in Tampa, Fla., on Friday but did not mention the dispute. Bush said an important element of defeating terrorism was taking precautions domestically and working with local officials.

"We've got to protect ourselves by doing smart things in America," Bush said. "I appreciate working with the mayors on homeland security issues."

But one of those mayors, Martin O'Malley of Baltimore, criticized Bush's approval of the ports deal as an "outrageous, reckless and irresponsible decision" and urged the president to reconsider.

O'Malley, co-chairman of the U.S. Conference of Mayors' Task Force on Homeland Security, also is seeking the Democratic gubernatorial nomination in Maryland.

"I think that they did not take into account the vulnerability of America's ports," O'Malley said Saturday in a telephone interview. "I think Congress needs to have further hearings on these things."

He said only 5 percent of the shipments into the nation's ports are inspected, calling that a stark contrast to Hong Kong, which inspects 100 percent of shipments.

Dubai Ports World declined through a spokesman to respond to O'Malley's remarks.

In New York, families of some victims from the September 2001 terror attacks planned to criticize the deal Sunday during a press conference with Sen. Charles Schumer, a leading critic of the sale. Schumer, D-N.Y., said he is dubious any assurances can justify the UAE's involvement in American ports.

Schumer and others have cited the UAE's history as an operational and financial base for the hijackers who carried out the attacks against New York and Washington.

"A lot of families are incensed by this, because you're talking about the safety of the country," said William Doyle, whose son Joseph died at the World Trade Center. "We have a problem already in our ports because all of our containers aren't checked, but now they want to add this unknown? It's not right."

LoBiondo's legislative proposal would amend federal maritime laws to require facility security officers, which operate at terminals in every U.S. port, to be American citizens. LoBiondo said there now are no citizenship requirements, which he said permits foreign companies with a stake in U.S. terminal operations to employ security officers who are not Americans.

"We cannot be lax about our nation's security nor fail to recognize that our ports are realistic targets of terrorists," LoBiondo said.

I read here, on another thread, that the bidding only lasted 20 days and that American companies knew nothing about it? Is that true?

I don't know about public knowledge, but the regulators have had a good deal of heads-up.

a bipartisan group of seven House and Senate members demanded that an interagency task force on foreign investments, which approved the transaction, examine it more closely. ...
Although the administration brushed off worry about that deal, congressional opposition to the Chinese takeover of Unocal Corp., the international oil firm, helped transfer ownership of Unocal to another U.S. oil giant. That controversy also inspired plans by powerful members of Congress to tighten the 1988 law that created CFIUS.
Talk of major changes in the law has subsided, but the Dubai Ports World deal could reignite the effort. If the administration is perceived as not vetting the deal carefully enough, congressional skeptics of foreign investment may feel obliged to take matters into their own hands, said Todd Malan, executive director of the Organization for International Investment, which represents the U.S. subsidiaries of many foreign companies. Mr. Malan was especially concerned because CFIUS did not conduct a 45-day investigation on top of the initial 30-day review that it usually gives to foreign purchases of U.S. businesses. ...
"We have a relationship with this company because they have been a participant in some of our cargo and port security measures," Mr. Baker said. "Remember, our interest in port security extends well beyond the United States. If we discover weapons of mass destruction inside a U.S. port, we've already lost. So we do a lot of screening abroad, and our general experience with this company has been positive."
The extra 45-day investigation wasn't necessary, Mr. Baker said, because the company approached CFIUS in late November ...
http://www.post-gazette.com/pg/06050/657283.stm

I am primarily concerned about how the bidding was conducted. This is far from a done deal here, but it is my understanding that American companies did not bid because they were not informed of the bidding.

THURSDAY, JANUARY 26, 2006
By Heather Timmons The New York Times
LONDON Dubai showed just how serious it is about diversifying its economy on Thursday as it offered £3.8 billion for the British port operator Peninsular & Oriental Steam Navigation, topping an offer from its Singapore rival PSA International. ...
In choosing between PSA and DP World, P&O is weighing a Singaporean state-controlled entity against a Dubai state-controlled entity, both of which are trying to gain market share.
http://www.iht.com/articles/2006/01/26/business/psa.php
Thursday January 26, 11:13 PM
Speculation about a counterbid for P&O has been growing since Dubai announced its 443p offer at the end of November and reached fever pitch when PSA, wholly owned by Temasek Holdings , began buying shares in P&O. ...
A bid battle would be the second major contest between PSA and Dubai Ports in recent years. Dubai won the first in 2004 when it paid $1.15 billion for the global port assets of U.S. firm CSX Corp (NYSE: CSX - news) . . PSA reportedly bid $1 billion (562 million pounds).
http://uk.biz.yahoo.com/26012006/325/dubai-ports-trumps-psa-bid-p-amp-o.html January 27, 2006
By Michael Smith and Dayan Candappa
P&O's board said it had recommended the £4.70 (R50.70) a share cash offer by PSA, throwing out a previously agreed bid by Dubai Ports World.
The PSA offer is expected to spark a bidding war between companies from the city states of Dubai and Singapore. Sources said Dubai Ports was planning a counterstrike.
http://www.busrep.co.za/index.php?fSectionId=565&fArticleId=3084853
Johan
First Class Passenger
Member # 4458
posted 10-31-2005 05:18 AM
This morning I heard on the radio, that Dubai State Ports have formulated a take-over bid on P&O (I guess this should be the P&O Ports part, the other parts beings already sold of) with a value of 3 billion EUR.
Does anybody know more ?
Cruise Talk: P&O Take-over by Dubai State Ports?

sorry, but only between 5-15% of the shipments are checked. They are a door-to-door shipment company. Alot can happen from door to door. A rogue employee working with terrorists would have access in our ports legally, and can work from the inside. As I watch TV and the violent hatred that Muslums have for Americans, my choice is to not give them any place in a vulnerable area. They have not proven to be consistent.

Also, The CFIUS Committee information is confidential. The members (at this time are the Bush Administration appointed persons) receive the requests and do not advise congress. They feel if congress got involved then it would hold up the process, plus there is confidential information concerning the clients that the parties do not want to share. Congress probably wasn't not informed. This story was probably picked up by someone in the financial sector who read about the buy out.

P&O, possibly to be DPW would be in charge of hiring their security personnel.

Check out the following and tell me if you feel any safer:

www.fas.org/sgp/crs/homesec/RL31733.pdf
(CRS Report for congress on Port & Maritime Security) some interesting scenarios we all fear in this one.

An interagency Approach to US Port Security, (by an advisor to our security agencies)

http://www.ccc.nps.navy.mil/si/2005/Feb/henriksonfeb05.asp

U.S. - UAE sign first Container Security Initiative in the Middle East
15 December, 2004
On December 12, 2004, U.S. Customs and Border Protection Commissioner Robert J. Bonner and Sultan Bin Sulayem, Chief Executive Officer of the Ports, Customs and Free Zone Corporation signed a Declaration of Principles that governs the implementation of the Container Security Initiative at seaports in Dubai. The ceremony took place at the Burj al Arab and marks the first time CSI has reached an agreement with a country in the Middle East.
The Container Security Initiative was designed as a response to the threat terrorism poses to international shipping. The primary purpose of CSI is to protect global trade routes and containerized cargo that transit between CSI ports and the United States. Dubai ports are now the 6th largest seaport operation in the world and are the most strategic commercial shipping venture in the Gulf.
CSI uses intelligence and automated information to identify and target containers that pose a risk for terrorism. These containers are pre-screened at the port of departure before they arrive at U.S. ports. Host country Customs officials utilize non-intrusive technology to quickly examine the shipments without causing delays in the movement of cargo. Dubai serves as the 34th port to join the CSI program which continues to expand to additional ports in strategic locations.
Google cache: http://uae.usembassy.gov/uae/news.html
Port of Dubai to Implement the Container Security Initiative and Begin Targeting and Pre-Screening Cargo Destined for U.S.
(Saturday, March 26, 2005)
Washington, D.C. -- The 35th Container Security Initiative (CSI) port becomes operational today at the port of Dubai as announced by U.S. Customs and Border Protection (CBP) Commissioner Robert C. Bonner and Sultan Ahmed Bin Sulayem, Executive Chairman, Dubai Ports, Customs and Free Zone Corporation, United Arab Emirates (UAE). CSI is the only multinational program in place in the world today that is protecting global trade lanes from being exploited and disrupted by international terrorists.
U.S. Customs and Border Protection Press Release
The U.S. Consulate Dubai reported the following:
On May 11 [2005], the Dubai government and the U.S. government signed a Memorandum of Understanding to implement the Megaports Initiative at Dubai port. The Megaports Initiative is intended to identify and intercept illegal shipments of radioactive material. The sixth-largest port in the world by container traffic, Dubai is the first government in the Middle East to sign the Megaports Initiative.
The agreement will provide Dubai Customs with equipment and materials for the purpose of detecting and interdicting illicit trafficking in nuclear and other radioactive materials. Second, the agreement calls for training of Dubai Customs personnel in the detection of radioactive material and use of the equipment.
In December 2004, Dubai also became the first Middle Eastern government to sign the Container Security Initiative, aimed at protecting global trade lines from being exploited and disrupted by international terrorists.
This is a U.S. Government inter-agency Web site managed by the Bureau of Diplomatic Security, U.S. Department of State
http://www.ds-osac.org/Reports/report.cfm?contentID=29570&print
Dubai ports to install special equipment
Dubai Ports, Customs and Free Zone Corporation (PCFC) has entered into an agreement with the United States Department of Energy to install special equipment at Dubai Ports to detect and stop hidden shipments of nuclear and other radioactive materials.
The agreement also ensures specialised training for the staff of Dubai Customs and will result in regular exchange of information on radioactive materials between the two parties.
Sultan Ahmed bin Sulayem, executive chairman of the Ports, Customs and Free Zone Corporation, signed the major agreement with US Ambassador Michele J. Sison. The agreement is part of the US Department of Energy's National Nuclear Security Administration (NNSA) Megaports Initiative, a programme aimed at stopping illicit shipments of nuclear and other radioactive material. Dubai Customs joins efforts currently in place in the Netherlands, Greece, Spain, Sri Lanka, and Belgium. ...
This agreement is in line with the efforts of Dubai Customs to increase the level of safety with regard to the shipment of goods from the ports. The NNSA will also provide training to appropriate law enforcement officials. The specialised radiation detection technology deployed under this programme is based on technologies originally developed by department laboratories as part of overall US government efforts to guard against the proliferation of nuclear and other radioactive materials.
Gulf Industry Magazine - Online Edition
Al Hilal Publishing & Marketing Group

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