Good for America [Pro-ports deal]

Just last week, the shareholders of P&O, that venerable relic of the British Empire, agreed to sell their company to a group called Dubai Ports World, for $6.8 billion. DP World won a bidding war with another company from a developing country, Temasek Holdings of Singapore.

Pacific & Oriental Steam Navigation was created in the 1830s and, by 1868, had the largest steamship fleet in the world. But the days of Kipling and Maugham (who, by the way, wrote a wonderful short story called "P&O") are over. Today, four-fifths of P&O's revenues come not from ships but from ports.

The irony is that, while the British understand that empire has given way to globalization, many Americans -- especially protectionist politicians like Sens. Charles Schumer (D-NY) and Lindsey Graham (R-SC) and xenophobic TV hosts like Lou Dobbs -- do not.

DP World is a firm based in Dubai, in the United Arab Emirates, next to Saudi Arabia and just across the Persian Gulf from Iran. It is a company that knows this business well, currently running what The Guardian, the British newspaper, calls "one of the most efficient port organizations in the world," including deepwater facilities in Turkey, Hong Kong, three ports in mainland China, Australia, Germany, the Dominician Republic, Venezuela and South Korea. "Its port operations are breathtakingly fast and efficient." Meanwhile, Dubai itself is building a freeport hub, "so vast that approaching a fifth of the world's cranes are now to be found at work there."

And Dubai -- I don't have to tell you -- is an Arab nation. Yes, two of the 9/11 hijackers were citizens of the UAE, but, then again, as Ivan Eland of the Independent Institute notes, Richard Reid, the attempted "shoe bomber," was a British citizen, and Jose Padilla, among others, is an American citizen (as was Timothy McVeigh). The UAE has been a staunch ally in the war on terror, training security forces in Iraq and helping to cut off the flow of money to al Qaeda.

Isn't this precisely what the United States preaches? Don't we want places like Dubai to fight terror and to grow, to invest, to buy, to trade, to adopt Western commercial practices, to expose themselves to the rest of the world and thus become tolerant and moderate?

Instead, congressional leaders are trying to kill the deal, which is set to go into effect next week. Why? "Outsourcing the operations of our largest ports to a country with a dubious record on terrorism is a homeland security and commerce accident waiting to happen," says Schumer.

This is rank racist nonsense. Schumer knows very well that responsibility for port security in the United States lies not with DP World or any other operator, but instead with the U.S. Coast Guard and U.S. Customs. "Nothing changes with respect to security under the contract," said Defense Secretary Donald Rumsfeld. "The Coast Guard is in charge of security, not the corporation."

Using Schumeresque logic, the U.S. should ban flights into the U.S. by airlines from Arab countries, and we should certainly bar any cargo from being loaded in Arab ports and bound for the U.S. ("If you are worried about a bomb in a box going off in New York, you need to worry about who loads the container overseas rather than the terminal operator who unloads it in the U.S.," says someone who actually knows something about port security, Theodore Price of Optimization Alternatives, a Texas company that provides terminal-operating software.) In fact, one would suppose that Dubai, with billions at stake, would be more careful -- not less -- about assisting in anti-terror activities at U.S. ports if it is actually operating them.

This is not to make light of national security. It is the top consideration in such a transfer, which is why the sale underwent scrutiny by experts on the Committee on Foreign Investment in the U.S., as mandated by Congress. The DP World deal passed its CFIUS investigation. Now, we have folks like Chuck Schumer second-guessing the security experts. No thanks.

President Bush, to his great credit, says he will veto any legislation that would hold up the transfer of P&O's U.S. businesses to DP World.

You can fault this administration for many of its actions, but in one area its success is immense and undeniable: George W. Bush has kept America safe. It is now close to four and a half years since 9/11 and, still, no attacks on U.S. soil. "If there was any chance this transaction would jeopardize the security of the United States," Bush said Monday, "it would not go forward." Whom do you trust on security, Schumer or Bush?

But, of course, this is far from just a security matter. In the same way it prevented the sale of Unocal to CNOOC, a Chinese company, last year, this protectionist Congress can't seem to imagine that non-Europeans -- people not like us, not like Kipling or Maugham -- would be owning companies that maintain facilities at our ports.

Globalization, according to Dobbs, Schumer & Co., is a one-way street. We can buy you (that is, your businesses, your oil, your toys, your electronics), but you can't buy us. National security in this case is a very bright red herring.

The world has changed since Rudyard Kipling took P&O steamers back and forth to colonial India. It has changed vastly for the better -- and not just for Indians. For example, if the deal goes through, DP Ports will become the third-largest port operator in the world. Numbers one and two are based in Hong Kong and Singapore and number-five in Beijing.

Developing nations are selling things to developed nations. That's very, very good. The U.S., for example, buys such things with dollars, and the developing nations then use those dollars for investment in U.S. assets. Lately, those assets have mainly been Treasury bonds -- thus allowing the U.S. government to maintain its profligate ways at little cost in higher interest rates (rates that determine what you pay for your mortgage). But now, developing nations are making equity investments and direct purchases. In my view, that's even better.

The reason is that the United States has been a great place to invest -- not just for its commercial market but for its relatively unfettered investment environment. With CNOOC and now with DP World, the virtuous circle may be interrupted. As a Wall Street Journal news story put it, "A successful move to block the deal could send a chilling signal about some foreign investment in the U.S. at a time when such investment has been critical in sustaining growth."

That is the real danger here. We shouldn't flatter ourselves. We aren't the center of the world. P&O operates 29 ports, only six of which are in the U.S. The real growth terminals are in Asia. PSA International, owned by Temsaek, runs the world's largest hub, and it's not in New York or Los Angeles. It's in Singapore.

Absolutely, keep our ports safe. Trust no one to do that -- not the Brits, not the Singaporeans, not the Arabs -- but our own law enforcement and military. Their job is to keep the lanes of commerce and communication and travel open, and, so far, they have done a spectacular job. That's the way the system works now, and it won't change when P&O hands over operations to DP World.

The United States benefits mightily from a globalized world. Our ties through trade, in fact, have made us more safe as our trading partners become more prosperous, open and democratic. But our politicians and pundits should know that we can't pick and choose. If we decide to deny firms from developing nations -- Arab, Asian or otherwise -- from investing in the United States, those firms will go elsewhere. And we will pay the price -- in higher interest rates, higher inflation, lower stock prices, less participation in a world growing more and more exuberant, creative and exciting.

Good article but the author seems to protesting too much over the "racist" reaction to this deal. What is racist about concerns over a UAE govt. that has consistently supported Wahabbism in the past and has no problems organizing telethons for Hamas suicide bombers (to this day)?

According to the Democrats, we should close Gitmo, close Abu Ghraib, cut back on airport security to avoid offending Arabs, but we should spit in the face of the Arab country that has helped us the most in the WOT.

Political pandering is all the Democrats (and some cowardly Republicans) know.

I'm absolutely repulsed that Fox News and the GOP congressman have acted so incredibly stupid and naive when talking about this transfer. (as well as people on this forum who just don't have all the facts about the deal).

Very low point for GOP. Thank god we have GWB.

What is racist about concerns over a UAE govt. that has consistently supported Wahabbism in the past and has no problems organizing telethons for Hamas suicide bombers (to this day)?

I'd like to see some proof of that latter accusation.

And, there is no doubt that racism is playing a part in this episode, especially among the ignorant American public.

"I'm absolutely repulsed that Fox News and the GOP congressman have acted so incredibly stupid and naive when talking about this transfer. (as well as people on this forum who just don't have all the facts about the deal).

Very low point for GOP. Thank god we have GWB."

I agree.

Although the Whithouse seems to be inept at PR and they are always trying to catch up with the spin, it seems GWB is standing over the fish bowl and puposely tossing things in while the little fishies go nuts. ;)

Good grief, wake up and smell the poo. Al-Qaeda has infiltrated the United States. You are holding UAE to a standard WE can't even be held to!

Letting any ports be controlled by foreign entities is a mistake, irrespective of the origin.

You mean like P&O? The company who is now in "control"? The foreign company that is now in "control"?

Good article but the author seems to protesting too much over the "racist" reaction to this deal.

I, too, have had enough of that "racist" angle. It is nonsense. What we do have, and what I feel, viscerally, is an abject ennui about islam and muslims. That is a religion, not a race. I hate that religion, almost as much as "it" hates me. They are destructive, suicidally so, they are devious (told by their koran to use every strategem vs. the infidel), and they are hate-driven. How many of them are there who would love to do us in and actively participate to the death? By most estimates, around 100,000,000. How many does it take to get lucky and be successful in a major catastrophe? Just one. Therein lies the problem.

Again.. more "Running the port" and "Controlling our ports" absolute nonsense.

Get your facts right next time and maybe we can have a discussion. They aren't "running the ports" nor "Controlling" them.

Yep, most of congress is like the blind wise man who feeling the tail of a elephant proclaimed the animal is shaped like a stick. They would convince others of their proclamation and belief. They would have one accept the elephant as a stick as a fact.

Since General Franks took Fox and Friends to the woodshed yesterday, they have changed their tune on this deal BIGTIME!

LLS

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