Bush: Port Deal Collapse Sends Bad Message

President Bush said Friday he was troubled by the political storm that forced the reversal of a deal allowing a company in Dubai to take over take over operations of six American ports, saying it sent a bad message to U.S. allies in the Middle East.

Bush said the United States needs moderate allies in the Arab world, like the United Arab Emirates, to win the global war on terrorism.

The president said he had been satisfied that security would be sound at the ports if the Dubai deal had taken effect. "Nevertheless, Congress was still very much opposed to it," Bush said. He made his remarks to a conference of the National Newspaper Association, which represents owners, publishers and editors of community newspapers.

"I'm concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East," the president said. "In order to win the war on terror we have got to strengthen our friendships and relationships with moderate Arab countries in the Middle East."

"UAE is a committed ally in the war on terror," Bush added. "They are a key partner for our military in a critical region, and outside of our own country, Dubai services more of our military, military ships, than any country in the world.

"They're sharing intelligence so we can hunt down the terrorists," Bush added. "They helped us shut down a world wide proliferation network run by A.Q. Khan" — the Pakistani scientist who sold nuclear technology to Iran, North Korea and Libya, he said.

"UAE is a valued and strategic partner," he said. "I'm committed to strengthening our relationship with the UAE."

After a storm of protest in the Republican-controlled Congress, DP World announced Thursday that it would transfer six U.S. port operations to a U.S. entity. The moved spared Bush from a veto showdown with GOP lawmakers. Yet the larger issue highlighted by the DP world controversy — U.S. port security — shows no signs of going away.

"The problem of the political moment has passed, but the problem of adequate port security still looms large," Sen. Lindsey Graham (news, bio, voting record), R-S.C., said.

Republicans and Democrats alike welcomed DP World's decision to give up its aspirations to manage significant operations at the six ports, but they warned that the move doesn't negate the urgent need for broad legislation aimed at protecting America's ports.

"I'm sure that the decision by DP World was a difficult decision to hand over port operations that they had purchased from another company," Bush said.

"There are gaping holes in cargo and port security that need to be plugged," Sen. Patty Murray (news, bio, voting record), D-Wash., said.

The Bush administration also announced Friday that free trade talks with the United Arab Emirates were being postponed.

The talks, which were supposed to begin Monday, were postponed because both sides need more time to prepare, according to an announcement from the office of U.S. Trade Representative Rob Portman (news, bio, voting record). USTR spokeswoman Neena Moorjani refused to say whether the postponement was related to the controversy over the port operations.

Legislation on the issue has piled up in both the House and the Senate in the weeks since the flap over DP World erupted and divided Bush from the Republican-led Congress.

Before the United Arab Emirates-based company's announcement, the House and Senate appeared all but certain to block DP World's U.S. plan despite Bush's veto threats — a message that GOP congressional leaders delivered personally to the White House.

Facing a disapproving public in an election year, a House committee overwhelmingly voted against the plan Wednesday. And House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., warned the president in a private meeting Thursday that the Senate inevitably would follow suit.

Within hours, Sen. John Warner (news, bio, voting record), R-Va., one of the few members of Congress to back the administration's position on the issue, went to the Senate floor to read a statement from the company.

"DP World will transfer fully the U.S. operations ... to a United States entity," H. Edward Bilkey, the company's top executive, said in the statement. It was unclear which American business might get the port operations.

"It does provide a way forward and resolve the matter," said Scott McClellan, the White House press secretary "We have a strong relationship with the UAE and a good partnership in the global war on terrorism, and I think their decision reflects the importance of our broader relationship."

The company's decision gives the president an out. He now doesn't have to back down from his staunch support of the company or further divide his party on a terrorism-related issue with a veto.

It was unclear how the company would manage its planned divestiture, and Bilkey's statement said its announcement was "based on an understanding that DP World will not suffer economic loss."

Even critics of the deal expressed cautious optimism that DP World's move would quell the controversy surrounding that company's plan to take over some U.S. terminal leases held by the London-based company it was purchasing.

"The devil is in the details," Senate Minority Leader Harry Reid, D-Nev., said, echoing sentiments expressed by other lawmakers.

DP World on Thursday finalized its $6.8 billion purchase of Peninsular & Oriental Steam Navigation Co., the British company that through a U.S. subsidiary runs important port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. It also plays a lesser role in dockside activities at 16 other American ports.

The plan was disclosed last month, setting off a political firestorm in the United States even though the company's U.S. operations were only a small part of the global transaction.

Republicans were furious that they learned of it from news reports instead of from the Bush administration. They cited concerns over a company run by a foreign government overseeing operations at U.S. ports already deemed vulnerable to terrorist attacks.

Democrats also pledged to halt the takeover and clamored for a vote in the Senate. They sought political advantage from the issue by trying to narrow a polling gap with the GOP on issues of national security.

Senate Republicans initially tried to fend off a vote, and the administration agreed to a 45-day review of the transaction. That strategy collapsed Wednesday with the 62-2 vote in the House Appropriations Committee to thwart the sale.

At the end of the day DPW will ultimately be in control of these terminals.

Ownership and profit-wise, yes.

Operational control, no. There will be autonomous U.S. structure, subject to U.S. law and enforcement. Records are kept on U.S. soil, and U.S. officers will be accessible to legal process. These last two conditions had been mysteriously and hastily waived in the run-up to disaster by the Globalists pushing for this deal.

This represents a reasonable set of conditions. One that finesses the situation nicely. Gives us more assurance, (and perhaps the reality) of security, and they are allowed to save face.

Unfortunately, the President seems to be sulking, which is precisely the wrong thing to be doing here politically. He needs to take credit for 'solving' the problem, and thanking the conservatives who steadfastly researched the problems with the deal, and turned up some miscues in the CFIUS process, which Congress should investigate and make recommendations to reform. He should then crow about the UAE proving its assurances were substantive, not mere form, and that we have a real ally who is flexible as promised, just wants to help us, do business with us, and doesn't want to impair our security...and went the extra mile here to ensure that.

The President must not be seen to be sulking. Unless he wants his respect and esteem to plummet still lower. That will only cement the idea that he 'lost' to the Rats...when that isn't what happened. Instead of a 'loss', astute political management can treat this as an opportunity. But the President has to be willing to change for the better to execute this recovery plan.

Success, the real success, does not depend upon the position you hold but upon how you carry yourself in that position.
--Theodore Roosevelt: Cambridge Address, England May 26, 1910

The ports deal paradox: Give the UAE a break!

BY MATEIN KHALID

10 March 2006

IT IS surely a paradox that the United States, the champion of free markets and the globalist ethos, snubs a takeover deal linked to the UAE, its staunchest ally in the Middle East and a state whose very social DNA suffuses its openness to foreign business, people and, above all, ideas.

If any city defines globalisation in the bigoted, paranoid post-9/11 world, where even religion and culture are existential weapons of war in the latest East-West schism, it is Dubai. Dubai is home to DP World and 160 nationalities, it is the Arabian Monaco, Geneva and Hong Kong (pre-97 to be sure) , a symbol of laissez faire capitalism steeped in its historical affection for Britain and America, an emirate unlike any other on earth. Yet, it is the same Dubai and the UAE that is now being slammed by wolf packs of powerful Arab bashers and assorted Islamophobes all piously wrapped up in the Stars and Stripes, howling Armageddon in the American media and Congress.

The media circus in Washington and New York has nothing to do with US national security and derives from the political preening and posturing needed to get prime TV coverage for elections, Nielsen ratings and Presidential nominations. Democracy and freedom for the Middle East are platitudes I have heard every American President mouth since Richard Nixon in my life. Yet these same champions of Jeffersonian bombast all willingly financed Israel's Biblical retribution against the Palestinians, surely one of history's greatest crimes of ethnic cleansing funded by Uncle Sam’s tax dollars and high-tech military hardware. Cluster bombs, napalm, battle tanks, F-16 warplanes, Hellfire missiles, Patriot batteries. All made in America and deployed by Israel to shed Arab blood. So much for freedom. Democracy? Funnily enough, a non-issue ever since America took over Britannia's imperial white man burden in East of Suez in the late 1940s and midwived Israel’s birth in the process. Just look at a roll call of America's friendly dictators in the Islamic world, the ultimate geopolitical poodles of the White House.

It is only rational that the White House and the NSC debate the security implications of the DP World deal. Yet the UAE has done its best to reassure American fears, a policy response, which is both pragmatic and laudable. Besides, DP World will not handle port security in Philly or the Big Easy, the US Customs and Coast Guard will. All-American longshoremen and stevedores will move containers and forklifts. The White House has vetted and approved this deal. So why the xenophobic flap, reminiscent of the orchestrated ‘Yellow Peril’ public hysteria against Red China in the 1950s and the anti-Japanese bigotry during Dai-Nippon’s ill-fated Stateside property buying spree in the 1980s — Protectionists, Mafiosi, Teamster unionists, local political machine bosses in the East Coast, neocon hawks allied to the Israeli lobby on Capitol Hill have suddenly emerged from the woodwork to rail against Dubai's P and O deal. The ballast of reason, the imperative to present evidence before accusation, is shed overboard amid a storm of anti-Dubai hysteria unleashed in the media. If Dubai, of all places, can be so maligned by America's Islamophobes, what hope is there for any other state in the Islamic sovereign constellation to pass the new post-9/11 Yankee sniff test of moderation? As the Shah, Sadat, and the Lebanese Christians found out the hard way, the only worst thing than being America's enemy in the Middle East is to be America's friend. This is the surreal nightmare of post-9/11 international relations. Josef Goebbels was so right. A lie repeated often enough eventually becomes the truth.

The UAE has constantly bailed American chestnuts out of the fire in the ‘war on terror’. It broke diplomatic relations with the Taleban immediately after 9/11. Its central bank spearheaded the global campaign against money-laundering and anti-terrorist finance in Gulf banking. Its armed forces are among the most reliable buyers of American high-tech weapons. Its airbases host fuelling and surveillance flights of the USAF. Its deep-water ports and dry docks, big enough for aircraft carriers, are mission critical to the US security calculus in the GCC. Its foreign aid budget dwarfs any other state on earth. It has assisted America in Iraqi security training, in peacekeeping missions from Bosnia to Lebanon. Its petrodollar billions are largely invested on Wall Street.

Ironically, the US should subcontract its own airport security to Dubai. After all, more US naval ships call on Jebel Ali than any other port in the world and DXB is one of the safest, fastest growing and hippest airports on the planet. Not exactly shabby mafia-infested joints like JFK or La Guardia as I remember them.

The DP World bombshell is bound to send shock waves through the nervous system of the Arab moneyed elite. Has America, where the best and brightest of the Gulf's investors and bankers once learnt the money game, now turned its back to Arab investment? Is Arab money irrevocably tainted on Wall Street? Is there more political risk for Arabs owning shares or property in the US than in a Third World banana republic? Was the historic Gulf superrich elite's love affair with America a cruel mirage that is now lost forever? Will we witness the dawn of the petro-yuan and the petro-rupee as Gulf investments follow the ghost of Ibn Batuta to the eastern kingdoms beyond the monsoon winds?

We need to heal the wounds of civilisation inflicted by the 9/11 terrorists, not inflame them. A superpower cannot afford the luxury of racist poison spread by political troglodytes with a partisan axe to grind.

Hilariously, if America's anti-Bush national security vigilantes are anti-foreign interest in US ports, they ignored the nationality of Britain's P and O and Hong Kong's Hutchinson Whampoa. Hilary Clinton as the new flag waving Joan of Arc of US port security? Oh please! Whose spousal regime allowed Chinese spies to buy US national security secrets for the right price?

Double paradox. Whose husband earns $100,000 a pop giving speeches to graduating coeds in the UAE? But the triple paradox takes the cake. China, an emerging superpower, whose military challenges American supremacy on the Pacific Basin, is allowed to operate ports on the West Coast and Miami. But Dubai, an emirate which has never gone to war with anyone, is pilloried. Who is kidding whom?

This anti-Dubai venom is about race, religion and prejudice, not ports, security and politics. After all, China's PLA openly sells arms to North Korea, Iran, Saddam's Iraq, Cuba. Its nuclear missiles threaten LA and San Francisco, ports Chinese firms happens to manage as well. Yet it was all hunky dory in Washington when the Chinese came shopping for port deals in California during the Clinton era. The UAE sells arms to nobody, sells only the oil and gas that is the lifeblood of the Western industrial colossus. If America torpedoes the DP World deal, it will be worse than a crime. It will be a blunder of historic dimensions. It will strip bare our illusion that an Arab, a Muslim, can ever be a friend of America again. That illusion is priceless but, ultimately, valuable to America, not the UAE.

Matein Khalid is a Dubai based investment banker

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