White House Defends Port Sale to Arab Co.

The Bush administration on Thursday rebuffed criticism about potential security risks of a $6.8 billion sale that gives a company in the United Arab Emirates control over significant operations at six major American ports.

The sale to state-owned Dubai Ports World was "rigorously reviewed" by a U.S. committee that considers security threats when foreign companies seek to buy or invest in American industry, National Security Council spokesman Frederick Jones said.

The Committee on Foreign Investment in the United States, run by the Treasury Department, reviewed an assessment from U.S. intelligence agencies. The committee's 12 members agreed unanimously the sale did not present any problems, the department said.

"We wanted to look at this one quite closely because it relates to ports," Stewart Baker, an assistant secretary in the Homeland Security Department, told The Associated Press. "It is important to focus on this partner as opposed to just what part of the world they come from. We came to the conclusion that the transaction should not be halted."

The unusual defense of the secretive committee, which reviews hundreds of such deals each year, came in response to criticism about the purchase of London-based Peninsular and Oriental Steam Navigation Co.

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

Four senators and three House members asked the administration Thursday to reconsider its approval. The lawmakers contended the UAE is not consistent in its support of U.S. terrorism-fighting efforts.

"The potential threat to our country is not imagined, it is real," Rep. Mark Foley, R-Fla., said in a House speech.

The Homeland Security Department said it was legally impossible under the committee's rules to reconsider its approval without evidence DP World gave false information or withheld vital details from U.S. officials. The 30-day window for the committee to voice objections has ended.

"We intend to maintain and, where appropriate, enhance current security arrangements," the company said in a statement. "It is very much business as usual for the P&O terminals" in the United States.

In Dubai, the UAE's foreign minister described his country as an important U.S. ally but declined to respond directly to the concerns expressed in Washington.

"We have worked very closely with the United States on a number of issues relating to the combat of terrorism, prior to and post Sept. 11," Sheik Abdullah Bin Zayed al-Nahyan told The Associated Press.

U.S. lawmakers said the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist, Abdul Qadeer Khan. They also said the UAE was one of only three countries to recognize the now-toppled Taliban as Afghanistan's legitimate government.

The State Department describes the UAE as a vital partner in the fight against terrorism. Dubai's own ports have participated since last year in U.S. efforts to detect illegal shipments of nuclear materials.

"At a time when America is leading the world in the war on terrorism and spending billions of dollars to secure our homeland, we cannot cede control of strategic assets to foreign nations with spotty records on terrorism," Fossella said.

Critics also have cited the UAE's history as an operational and financial base for the hijackers who carried out the attacks of Sept. 11, 2001.

"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," said Sen. Charles Schumer, D-N.Y. "The administration needs to take another look at this deal."

Separately, the Port Authority of New York and New Jersey said Thursday it will conduct its own review of the deal and urged the government to defend its decision.

In a letter to the Treasury Department, Port Authority chairman Anthony Coscia said the independent review by his agency was necessary "to protect its interests."

The lawmakers pressing the White House to reconsider included Sens. Schumer, Tom Coburn, R-Okla., Frank Lautenberg, D-N.J., and Chris Dodd, D-Conn., and Reps. Foley, Fossella and Chris Shays, R-Conn.

Tony's apparent contention, as stated by you, is that Dubai Ports World (DP World) "will in no way be responsible for security matters."

This particular piece of spin -- that DP World will have no responsibility for security -- is remarkable hogwash. As stated in an article from the Houston Chronicle:

DP World said it had received all regulatory approvals. "We intend to maintain and, where appropriate, enhance current security arrangements," the company said.

I have no reason to doubt the accuracy of this quote from DP World. Furthermore, operations cannot be segregated from security, and to imagine that the two can be miraculously segregated is to lapse whole hog into fantasy.

In addition, you asked for some background on the transaction.

Dubai Ports World (DP World), a Dubai state-owned company, is purchasing P&O Group for $6.8 billion.

P&O Ports is the P&O Group company responsible for port development, investment, operating and stevedoring activities. It operates approximately 31 container, general cargo, and passenger terminals in New York, New Jersey, Philadelphia, Baltimore, Miami, New Orleans, and Vancouver, and owns half of Norfolk's CP&O Ports Virginia, the largest stevedoring service in Hampton Roads.

A little history of a part of P&O's US operations gives you a flavor of what is being transfered to DP World:

International Terminal Operating Company, Inc. (ITO) was founded in 1921 by Captain Franz Jarka. Originally called The Jarka Corporation, the company specialized in handling freight and passengers in the Port of New York. Soon, The Jarka Corporation expanded its services to encompass the ports of Boston, Philadelphia, Baltimore, and Hampton Roads, Virginia. In 1962, ITO was acquired by Ogden Corporation. In 1983, the company merged with John W. McGrath Corporation, which included Atlantic and Gulf Stevedores, Inc. and integrated their North Atlantic and Gulf Coast operations. Ogden and McGrath continued to share ownership of ITO.
ITO opened its first public container handling facility in 1967, and it was among the first to utilize computers in its terminal operations. The company used the latest technology to coordinate all its port activities, including receiving and delivery functions, cargo documentation, and terminal security. ITO worked with many of the largest container, break-bulk, and specialized cargo carriers in the world and became one of the largest stevedores and marine terminal operators in the United States. In 1999 the United Kingdom-based Peninsular and Oriental Steam Navigation Co. (P&O) acquired ITO. The company then became part of P&O Ports, one of P&O's many subsidiaries. P&O Port's operations spanned 17 countries around the globe. In all, P&O Ports ran 24 container terminals in 84 ports.

And now, of course, DP World is the proud owner of the former P&O Ports, complete with its former ITO operations and acquired operations in New Jersey, Miami, New Orleans, and Vancouver.

And as noted in Forbes (during the bidding war for acquisition of P&O):

DP World made the first formal approach for P&O in November, when it offered 3.3 billion pounds ($5.9 billion) for the 165-year-old company.
A deal would make the combined company the third-largest ports operator in terms of capacity, lifting DP World up from its current rank as No. 7.

The concerns, of course, are: (1) Dubai state ownership of DP World; (2) that Dubai has a rather ignoble and disturbingly direct history of ties to terrorist funding and transit; (3) that DP World's ownership rights over existing North American terminal infrastructure and operations comes complete with extant leasehold, stevedoring, wharfage, and seaway rights; and (4) that the 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.

This transaction stinks for purposes of US homeland security, and it stinks even more that it was given so little scrutiny.

Snow is Chairman of a committee called CFIUS, which is comprised of the following members which authorized the Dubai purchase at the ports: This is not about typing a bunch of unrelated info, but possibly very intertwined info. Sometimes my mind just cant wrap around conspiracy theories, so I won't. The decision does not seem thorough, here is the committe, chaired by Snow:

Assistant to the president for Economic Policy: Allan Hubbard (Bush's college buddy)

Secreatry State: Condi

Secretary Defense: Rumsfeld

Homeland Security: Chertoff

Secretary Commerce: Carlos Gutierrez, Appointed 2/7/05 by Bush

Attorney General: Alberto Gonzales appointed 2/3/05 by Bush

Director of Office of Management & Budget: Joshua Bolton (Director Bush/Cheney presidential campaign)

US Trade Rep/WTO Rep: Robert Jones (Republican/Ohio), app 4/23/05

Director of Science & Technology: John Marburger, appted 10/01/Bush

National Security advisor, Stephen Hadley, appointed 2005 Bush

Chairman of Council of Economic Advisors: Katherine Baicker & Mattehw Slaughter/appointed by Bush.

I hope they are all doing their jobs. Don't get me wrong -I am a Bush supporter, this is not about Bush, but about why on earth are they considering such a ridiculous deal

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