Posted on 02/20/2006 3:14:17 PM PST by Stellar Dendrite
The federal bureaucracy has made a strategic mistake that threatens to cost the President dearly. The question is not whether the ill-advised decision taken last week by the secretive Committee on Foreign Investment in the United States (known by its acronym, CFIUS, pronounced syphius) will be undone. Rather, the question is: By whom -- and at what political cost to Mr. Bush?
In the latest of a series of approvals of questionable foreign takeovers of American interests, CFIUS has given the green light to a company owned by the United Arab Emirates (UAE) to acquire contracts to manage port facilities in New York, Newark, Philadelphia, Baltimore, Miami and New Orleans. The company, Dubai Ports World, would do so by purchasing a British concern, Peninsula and Oriental Steam Navigation Company (P and O).
Experts have long identified Americas sea ports as weak links in the chain of our homeland security. With their proximity to major U.S. population centers, expensive infrastructure vital to the regional and, in many cases, national economy and their throughput of large quantities of poorly monitored cargo, they are prime targets for terror.
As a result, a case can be made that it is a mistake to have foreign entities responsible for any aspect of such ports, including the management of their docks, stevedore operations and terminals. After all, that duty affords abundant opportunities to insinuate personnel and/or shipping containers that can pose a threat to this country. Even though the company in question may not be directly responsible for port security, at least some of their employees have to be read in on the relevant plans, potentially compromising the latter irreparably.
At least the previous foreign contractors were from Britain, a country that was on our side before September 11, 2001. The same cannot be said of the United Arab Emirates, whose territory was used for most of the planning and financing of the 9/11 attacks. While the UAEs government is currently depicted as a friend and ally in the so-called war on terror, its country remains awash with Islamofascist recruiters and adherents people all too willing to exploit any new opportunity to do us harm.
Since a column raising an alarm about CFIUS decision appeared in this space last week, three new factors have come to light that compound the strategic folly of the UAE deal:
O First, in addition to the six affected ports mentioned above, two others would also have part of their operations managed by DP World on behalf of none other than the U.S. Army. Under a newly extended contract, the owner of P and O will manage the movement of heavy armor, helicopters and other military materiel through the Texas seaports of Beaumont and Corpus Christie. How much would our enemies like to be able to sabotage such shipments?
O Second, while advocates of the stealthy CFIUS decision-making process point to the involvement of the Defense Department in its DP World decision, it is unclear at what level this bizarre proposition was reviewed in the Pentagon. Many top jobs remain unfilled by presidential appointees. Past experience suggests the job may have fallen to lower-level career bureaucrats who give priority to maintaining good relations with their foreign clients, like the UAE.
O Then, there is the matter of financing the DP World takeover of Peninsula and Oriental. The UAE evidently intends to raise nearly all of the $6.8 billion price for P and O on international capital markets. It must be asked: Who will the foreign investors be, and might they have malign intentions towards the U.S.? If American sources of capital are being sought, will the possible danger this transaction may create for this country be properly disclosed? For that matter, will the underwriters, Barclays and Deutchebank, reveal to prospective funders the real risk that the deal will ultimately fall through?
In fact, that seems virtually certain now that talk radio, the blogosphere and the public have become aware of and white hot about this transaction. Members of Congress on both sides of the aisle and of Capitol Hill have made known their determination to prevent the transfer of control of U.S. ports to the UAE. In particular, Democrats like Hillary Clinton and Charles Schumer have been quick to seize on this issue as an opportunity to burnish their national security credentials at the expense of President Bush and his party.
So, the question recurs: How long will it take before Mr. Bush cuts his losses? This could be accomplished in one of three ways: He could reverse the decision himself (perhaps by directing CFIUS to reconsider its initial recommendation). He could encourage and sign into law legislation barring foreign ownership or management of U.S. port facilities (akin to the rules governing other critical infrastructure). Or he could quietly encourage the UAE to do as Communist China did last year with respect to the Unocal purchase withdraw the offer itself, sparing the country in question (and its friends here) the embarrassment of having its behavior carefully scrutinized and its offer spurned in a high-profile way.
Call it a Harriet Meirs moment. Politics being the art of the possible, it is time to recognize that the Dubai Ports World deal is neither strategically sensible nor politically doable. It is time to pull the plug, and to reform the secretive interagency CFIUS process that allowed this fiasco in the first place.
Thank you for the link. I see from what you quoted that the President does have the power to disapprove the sale. Let's hope he uses it.
The connection between CSX, John Snow, Dubai Ports and now this transaction is interesting.
Thank you for the link.
I've looked at ALL the nominations with more care, ever since the Miers nomination. The President has made a few clunkers, and those have a pattern or appearing to be cronies or payback favors. I figure Sanborn could be a "follow the money" nomination - the usual insider ball.
I do believe MARAD is involved in the Military movement aspect...DP World got it's players into position well in advance of it's moves!
MARAD is indeed involved in the military and merchant marine aspect - with merchant marine comprising US flag vessels that can be pressed into military cargo duty as needs require.
Gaffney's thoughts are well founded - but Sanborn isn't the direct "insider who now gets to oversee his former employer as the new commercial port operator" that I jumped to conclusion he was. That is, except for the two military ports Gaffney notes in his first numbered point.
Without knowing the nature of the contracts, I wouldn't jump to the conclusion that they fatally compromise security. They DO create cash flow to UAE.
See http://www.freerepublic.com/focus/f-news/1581759/posts?page=82#82 for a parallel to the merchant marine.
Thanks for the ping to this article - I probably would have skipped past it otherwise.
Be careful with your wishes they may come true.
Add to that if I not mistaken, the very same DPWorld owns container steamships. These steamships holding the very same containers will be crusing through the very same harbors and docking at the very same port terminals.
No one will say a word about the dangers of that...even here at FR.
They can call us whatever they want as long as the UAE isn't running our ports.
Your context is misleading. Your point is off.
DPWorld can do all the port security it wants. DPWorld does not do DHS/US security.
By itself, I'd be in agreement with you, and willing to just say it "Smells Funny".
Given the whole of the way this fiasco has played out...it looks to me like a BIG TIME game of Corporate Chess, and DP World has players in a LOT of areas...some key!
I'm not willing to give this one a pass...I suggest we "follow the $$$"! I find it too "convenient" that Snow oversees the Council approving it...now we find it's not just the 6 East Coast Ports, but 2 Texas Military Ports that Sandborn has jurisdiction over! These Ports were not in the discussion...until now.
Too many coincidences...
Stellar, look at Cboldt's post 304. Seems I was right connecting Gaffney's article and Sandborn at Maritime, and there MAY be more to this.
The investigation continues...I'm curious as to who takes it in the shorts over this...my best guess is Snow!
Have you read the proposed contract language?
APPENDIX 1There are any number of ways this deal can go sour. Your concept of the ports being stripped of equipment is just plain ROTFL funny. Even when you are on the correct conclusion side of an issue, your arguments incline the reader dismiss you out of hand.
CONDITIONS TO THE OFFER1 Conditions of the Scheme
The Offer will be conditional upon the Scheme becoming unconditional and becoming effective by not later than 29 November 2006 or such later date (if any) as (subject to the Code) the Offeror and P&O may agree and (if required) the Court may allow. The Scheme will be conditional upon: ...
2 Conditions of the Offer
P&O and the Offeror have agreed that the Offer is conditional upon the following matters, and, accordingly, the office copy of the Court Order will not be delivered for registration to the Registrar of Companies in England and Wales unless such Conditions (as amended if appropriate) have been satisfied or waived:
2.1 the Offeror having made all necessary filings ("EFA Filings") pursuant to the Exon-Florio Amendment, Section 721 of Title VII of the Defence Production Act of 1950, as amended, 50 U.S.C. App. Section 2170 (the "EFA") and:
2.1.1 the Committee on Foreign Investment in the United States ("CFIUS") having advised the Offeror in writing of its determination pursuant to Section 800.502 of the United States Department of the Treasury's regulations implementing the EFA (31 C.F.R. Part 800) (the "Regulations") not to investigate the acquisition by the Offeror of P&O's United States operations (the "U.S. Acquisition"); or
2.1.2 if CFIUS determines to investigate the U.S. Acquisition pursuant to Section 800.503 of the Regulations, the President of the United States having not announced a decision to take action against the U.S. Acquisition by no later than midnight on the fifteenth (15th) calendar day after the completion or termination of the investigation by CFIUS or, if the fifteenth (15th) calendar day is not a business day, no later than the next business day following the fifteenth (15th) calendar day, pursuant to Section 800.504 of the Regulations; or
2.1.3 ninety (90) calendar days have elapsed since the Offeror submitted an EFA filing which CFIUS has accepted as complete;
2.2 all required filings having been made under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and the rules and regulations thereunder and all or any applicable waiting periods with respect thereto having expired, lapsed or been terminated as appropriate, in each case in respect of the Offer;
2.3 one of the following occurring:
2.3.1 the Offeror receiving written notice issued by or on behalf of the Treasurer of the Australian Government ("Treasurer") stating that there are no objections under the Australian Government's foreign investment policy to the Acquisition; [more snipped] ...
2.4 the Offeror having received written notice from the Australian Competition and Consumer Commission ("ACCC") that the ACCC does not propose to intervene in completion of any transaction contemplated by the Offer;
2.5 one of the following occurring in relation to the Acquisition:
2.5.1 the German Federal Cartel Office (the "Bundeskartellamt") notifying the Offeror that the conditions for a prohibition under Section 36 paragraph 1 of the German Act Against Restrictions of Competition ("GWB") are not satisfied; or [more snipped] ...
2.6.1 the UK Competent Authority indicating in terms reasonably satisfactory to the Offeror that it has decided not to refer the Acquisition or any part of it to the Competition Commission; ...
2.7.1 the bodies of the Spanish Public Administration as defined by Law 16/1989, of 17 July, for the Defence of Competition, including (with their respective powers) the Service for the Defence of Competition, the Tribunal for the Defence of Competition and the Council of Ministers having expressly or tacitly approved the Acquisition under Article 15 bis (2) of the Spanish Competition Act ("Ley de Defensa de la Competencia, Law No. 16/1989, of 17 July 1989"); ...
2.8 the receipt of evidence in form and substance reasonably satisfactory to the Offeror, that in relation to the Offer and the acquisition of control of P&O by the Offeror or any member of the Offeror Group, all necessary filings have been made and all applicable waiting and other time periods have expired, lapsed or been terminated and any approvals reasonably deemed necessary or desirable by the Offeror in the context of the Offer as a whole have been obtained, provided that this condition does not relate to any filing, applicable waiting or other time periods and/or approvals directly or indirectly related to, or connected with, the legislation, practice and/or authorities or other bodies referred to in Conditions 2.1 to 2.7 (inclusive); ...
Save our ports.
http://webnewsroom.blogspot.com/2006/02/re-portgate.html
I wouldn't say that - just that some of the things he has done is head-scratching and mind-boggling.
I like Bush as a person, but I really like the Texas Bush, the one who shouted into the megaphone at Ground Zero, instead of the Poppy Bush, who at times looks befuddled and confused just like his old man.
Well gee, so much for this deal being "secret" since you got that off the internet, but what the hey some will still parrot chuckie schumer.
That is the point Dane is incapable of grasping. More is at stake here than money.
That is the point Dane is incapable of grasping. More is at stake here than money
I grasp that, what you do not grasp is that a nuclear bomb could also be brought over from north of the border, cuba, or venuzuela, etc.etc. no matter who has port container facilities.
I can't believe you are still projectile vomiting this lie
Well gee if you ran a business where expensive goods were in your hands, wouldn't you try to expand your security to prevent theft, you know common sense, a concept that you that you can't grasp. That's what that article was basically about and like I said before DHS, Customs, Coast guard are still in charge and oversee the security, but what the hey that does not matter.
UAE actually allows US Custom inspectors to inspect containers going to the US from their sovreign territory. I could see take's reaction if some foreigners were allowed to do the same here in the US(it's an invasion), but the damage has been done, the UAE is the same as the regressive saudi's to some, which is the big lie being pushed.
BTW, take what's your solution? Twitching your nose and voila a big American shipping company appears out of nowhere?
Isn't letting total emotion guide your thinking great.
Also known as Rockefeller Republicans. I remember my uncle telling me when I was a kid you can't trust them with your life more than you can throw a dime and how right he was.
What we're seeing is the first signs of the Bush fatigue factor beginning to set in with people. It happens in every second term. Happened to Eisenhower, Reagan and Slick. Usually starts sometime in the last two years. Seems to starting a bit early with Bush43. With Democrats carrying on their personal vendetta against Bush&Company, ongoing piss-poor relations with the media and a general sense with many conservatives that, what you see is what you get --- no policy changes in the Bush agenda ahead --- all this hasn't helped matters and is adding to a growing sense of weariness and exhaustion. Bush and Cheney don't help matters with their general dislike of the fourth estate, so the President can't expect any relief from the liberal media in his final 34 months in office. Even some Republican insiders are getting weary. I only hope the WOT and the conflict in Iraq doesn't seriously suffer from these early stages of the Bush fatigue factor.
"its amazing. its like the political operation never tunes into Rush or talk radio, or reads a blogs or FR, to see what people - their supporters - are talking about."
It all goes back to the joke of a White House Communications operation. David Gregory routinely beats McClellan about the head, but, it only drew attention last week.
I can understand the disdain the White House has for the rotary dial media ,but, someone in the White House should get a tv, a radio and an internet connection. And make use of them.
It might help them avoid some of these self inflicted blunders.
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