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.
"How far can the hatred of the left and the far right for President Bush go? How far?
The different sides call him different names, but their goal is the same..........to destroy the President........and they don't seem to care if the security of the country goes down with it."
It is a gneralised business analysis. If a US company already knew it could run these ports more efficiently than DP World, they would have made a bid for this part of the business because they could outbid the DP world and still make money.
That's how business transactions generally work. Each company makes a decision about how they can run the business.
We know that P&O was selling because their current management was unwilling or unable to spend the money nececssary to fix up the ports (things like improving the fences around the facilities).
But it is possible that some U.S. company can be "persuaded" to reconsider this deal, and that company can actually be able to handle the deal.
I think the same people will run the ports in any case.
It is certainly better for us that DP World is doing this voluntarily, rather than have a law. The law would have not been efficient, and would have had bad side effects.
So I will say I am cautiously considering whether the end result will be as good as it would have been with DP World. I will close by saying that in general, being part of a larger organization does seem to make for more efficiencies and better operations -- or else everything wouldn't tend to large companies.
LOL, none are so blind as those that refuse to see. Take the blinders off and stop listening to cool-aid drinking dido heads and you might learn something.
It matters enough to me that the TRUTH has flown out the window here at FR; I know that doesn't matter to you, being a newbie, even if you're a retread, no doubt.
And you're STILL too dumb to realize NOTHING has changed except some paperwork. The SAME people who unloaded the containers YESTERDAY will be unloading them tomorrow.
turn on Fox W is on.
Oh! I see now!!! It's so clear! We just need to convince cars not to live in China or India.
I have been gone from my PC for a week, and got home yesterday. I was totally dismayed at the attitude of some on FR.
I only hope the backlash is not as bad as has been predicted.
What I don't understand are those who say "Screw UAE. If they do this, they are not our friends." And have absolutely no clue that the UAE is saying "Screw the US. If they do this, they are not our friends."
Becki
You are correct. This is what is happening, and the party will now lose to the moderates.
You will not be able to win the elections and you will now lose what we so carefully and patiently achieved.
But you are so blind that you can't see the reality of what you and other conservatives have done.
You blew it all up...
it's all over except for the election results, and I guarantee you that you will not like any of the choices for president when the primary's have completed.
I also expect we will lose the House by 08.
Enjoy! You all deserve what you have created.
Signing the Patriot Act, something ELSE a lot of these "deal breakers" are against.
It's our Congress finally waking up-after agreeing to barter away their own powers, and doing nothing to prevent our economy from being subsumed by potential adversaries-and listening to its constituents.
That's what Congress is there for.
To represent us.
Not the corporate interests of Boeing, or Rayethon, or GE, or Archers Daniel-Midland, but us.
The American public that entrusted them with office, and expects them to fulfill their Constitutionally-obligated duty of oversight.
No harm, no foul. :)
I have consistantly said that no security would change. However, when we saw all the deals DP World had offered as part of the process, it became clear that they were offering significant improvements in physical security of the terminal facilities.
The coast guard had issued physical terminal access rules (like fences) and P&O was unable to meet those rules, which is one of the reasons they were selling. DP World promised to meet and exceed those rules, so they would have made the ports more secure.
But you are correct, it could well be that whatever happens now, those things will be fixed up. I shouldn't be so negative. I feel better about this being voluntary, and being done over time as they can find the right buyers.
yep
The enemy of your enemy is your friend.
Remember that statement of yours when Congress doesn't do anything about the borders, pal.
LOL - it was a joke. Guns don't kill people - people do. Kinda like that. People are so worked up about this and in the end, I would bet the UAE will find some kind of back door deal and it will happen eventually. And maybe we can build a few more mosques just to keep our "friends" happy.
You missed my artfully subtle joke about "limited liability"
heh!
No, I want us to follow the rule of law. The law allowed us to block the transfer of the U.S. companies that owned the leases ONLY IF there was a security impact.
There was no security impact, just an irrational fear. If the mob wanted to lynch black people, we don't just let them because the majority rules.
They'll be 100% justified IMHO.
I can't believe the ignorance on behalf of a good chunk of our Congressman. I usually don't believe in chocking things up to racism, but I really don't know what else it is. Other then the fact that they are arabs, there isn't anything different then the British companies that run some ports.
Did the principles of honor and integrity change on 9/11? Mine didn't.
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