Posted on 03/09/2006 9:02:17 AM PST by prairiebreeze
Dubai is threatening retaliation against American strategic and commercial interests if Washington blocks its $6.8 billion takeover of operations at several U.S. ports.
As the House Appropriations Committee yesterday marked up legislation to kill Dubai Ports World’s acquisition of Britain’s Peninsular and Oriental Steam Navigation (P&O), the emirate let it be known that it is preparing to hit back hard if necessary.
A source close to the deal said members of Dubai’s royal family are furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal.
“They’re saying, ‘All we’ve done for you guys, all our purchases, we’ll stop it, we’ll just yank it,’” the source said.
Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the United Arab Emirates (UAE), the source added.
It is not clear how much of Dubai’s behind-the-scenes anger would be followed up by action, but Boeing has been made aware of the threat and is already reportedly lobbying to save the ports deal.
The Emirates Group airline will decide later this year whether it will buy Boeing’s new 787 Dreamliner or its competitor, Airbus A350. The airline last fall placed an order worth $9.7 billion for 42 Boeing 777 aircraft, making Dubai Boeing’s largest 777 customer.
Dubai in mid-February also established the Dubai Aerospace Enterprise, a $15 billion investment to create a company that will lease planes, develop airports and make aircraft parts to tap into growing demand for air travel in the Middle East and Asia.
The family-ruled sheikhdom may buy as many as 50 wide-body aircraft from Boeing and Airbus during the next four years, according to Aerospace Enterprise officials.
The UAE military also bought Boeing’s Apache helicopters. Meanwhile, Boeing has been in talks with the emirates to try to sell its AWACS planes.
An industry official with knowledge of Boeing’s contracts with Dubai said that the company has been involved in the emirate and that it would take a lot “to knock” those relationships.
“Nothing about the [ports] controversy diminishes our commitment to the region,” said John Dern, Boeing’s corporate spokesman. He added that at this point the company has no indication that there is or will be an impact on the company.
Any repercussion to Boeing could put House Speaker Dennis Hastert (R-Ill.) in a delicate position. Boeing’s decision to move its headquarters to Chicago has been seen as calculated to facilitate a close relationship with Hastert. He is against the ports deal, and his office did not return calls by press time.
Several businesses have expressed concern that the controversy over the $6.8 billion ports deal could damage trade with the UAE. Dubai is one of the seven emirates. The United States and the UAE are meeting next week for a fourth round of talks to sign a free-trade agreement. The American Business Group of Abu Dhabi, which has no affiliation with the U.S. government, said that Arabs may hesitate to invest into the United States, according to a report by Reuters.
A Republican trade lobbyist said that because the ports deal is a national-security issue blocking it would not be in violation of World Trade Agreement rules.
“In terms of them retaliating legally against the U.S. … I don’t think there are many options there,” the lobbyist said.
But when it comes to the emirates’ cooperation in the war on terrorism and in intelligence gathering, there is concern that some help may be pulled.
“If we reject the company in terms of doing the [ports] work, they are going to lose a lot of face. In the Arab culture, losing face is a big deal,” a former government official said. “We risk losing that help. It is not an empty threat.”
Dubai is a critical logistics hub for the U.S. Navy and a popular relaxation destination for troops fighting in the Middle East. On many occasions since the ports story erupted, the Pentagon has stressed the importance of the U.S-UAE relationship.
Last year, the U.S. Navy docked 590 supply vessels in Dubai, plus 56 warships, Gordon England, deputy secretary of defense, said in a Senate hearing last month. About 77,000 military personnel went on leave in the UAE last year, he added.
During the hearing, he warned about the implications of a negative decision on the ports deal: “So obviously it would have some effect on us, and I’d not care to quantify that, because I don’t have the facts to quantify it. It would certainly have an effect on us.”
Although owned by the Dubai government, the company at the heart of this controversy, Dubai Ports World, is trying to distance itself from any kinds of threats, said a lobbyist closely tracking the deal.
Another lobbyist monitoring the controversy said K Street still believes there will be a compromise that allows the Dubai deal to go through while meeting congressional security concerns, even though a bill aimed at that result, put forward by House Homeland Security Committee Chairman Peter King (R-N.Y.), was widely repudiated amongst lawmakers Tuesday.
Senate leaders have indicated that they would wait to take action until the new 45-day Committee on Foreign Investment in the United States (CFIUS) review is completed.
Meanwhile, in London, DP World cleared the last hurdle for its take over of P&O. The Court of Appeal in London refused Miami-based Eller & Co., which opposed the deal, permission to appeal against clearances for the legal and financial measures necessary to implement the takeover.
P&O said it expects to file the requisite court orders, making the takeover terms binding on DP World, according to the Financial Times.
Elana Schor contributed to this report.
What military installations might those be?
Please explain what it gained for us or for the people of Iran when Jimmy Carter pulled away our support of the Shah?
I agree. How can anyone in America stick up for a muslim country that issues such as threat. The deal's over. Now screw 'em indeed, all the way into the sand.
You think we could have kept the Shah in power ? You wanted to send American troops to the streets of Teheran ?
You keep mixing apples and oranges, on purpose because you keep doing it.
You will get NO argument from me saying Islam is great. It's telling that you keep skirting the question I asked about an important ally at a critical time. According to you, the WOT should/could be won with no cooperation from nations in that region. Given that, I guess you think the Iraqi troops we are training are doing nothing to fight terror either.
Let me make it simpler: What would YOU do to win the WOT?
Duncan Hunter continues to make this charge without citing any sources.
Coolio. We'll still disagree on the rest I'm sure, but thank you for that. :^)
If Duncan Hunter is so certain of his suspicions then why does he, as Chairman of the House Armed Services Committee, allow the United States to have key military basing and at any given time tens of thousands of U.S. service members on leave in the United Arab Emirates?
According to Duncan Hunter tonight on Hardball this transaction was dead in the water from the get go.
I agree with you.
He's going to nationalize all our infrastructure; worrisome.
Hunter is going to get some big time backlash, IMO.
Thinking you can reengineer the political culture of the Muslim world is just to be sucked into its internal ethnic civil wars (which is what those Shiite Iraqi soldiers are fighting) and played for a chump every time by the rival factions. None of whom are any 'ally' of yours.
Reagan realized that in Lebanon. The Israelis after a while realized that in Lebanon.
We can't 'win' the WOT without essentially, rewritting the Muslim faith. And that is not something we can do. We can after several generations of decimation impose a peace of exhaustion upon them. But they must themselves accept fear and despair as the condition of their lives.
Precisely. A week later and still no backup.
Duncan stated tonight that documents were turned over to GWB (who was unaware) of whatever info the documents contained.
Peach we're wasting our time and energy because some are incapable of understanding what was at risk here. Even now I'm reading where some are saying they're glad the SALE didn't go through.
I will be in Jerry Lewis's local office area on Tuesday and I'm making a point of going by his office and letting them know what a dirty trick he played adding the military defense bill to this.
Excellent question.
Well, I will stand with Hunter and take some of the lashes right along with him.
Just another simple minded man.
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