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.
"The world is getting to be much, much smaller, and businesses, communications and corporate structures are changing to accommodate the changes that are occurring."
No doubt. But a smaller world doesn't mean leaving your children with a babysitter with someone that hasn't had their references checked. Both Rove and the President admitted not knowing about the deal. Rove went as far as saying they could have done a better job "in this case". So please don't preach the supposed existence of this being a part of the "grand plan of American globalization". It was not handled correctly, but I am willing to give the President a pass so that he can re-look at it. He seems to be now trying to make a point. Not going over very well indicative of a 62-2 vote.
That reminds me of that website that was put up immediately after the 2004 election, with liberals tripping over themselves trying to apologize to the world for not electing Kerry.
www.wearesorryfornotlettingyourunourports.com anyone?
Not Me!
"The administration could not go public with anything that would help removed public concerns without causing problems for the UAE."
Bush's spokesman said Bush didn't know about it. Please, this is getting tiresome.
posting etiquette rule
"My philosophy is when you have to start name-calling, you have lost the debate."
Amen. I guess you could say, when the name-calling starts, the debate is lost. I'm waiting for the fur to quit flying so I can make some sense out of some of this.
Well said.
I'm done with this for now, but have made plenty of mental notes as to who does not need to be in congress any longer.
I will act accordingly, and I also publicly apologize to the UAE for the stupidity of our U.S. lawmakers.
"I will also attach this apology to my resume that I am sending to the DP World sumthin' ruther', in hopes of smoothing over world peace, amen."
A quick perusal of anti-Arab comments even on this forum would prove you wrong.
It is not 'using the race-card' if racism actually is a part of people's decision making process............and it most decidedly is for some.
Jesse Jackson, et al, 'use the race card' because they call things racism that are not. Noting the racism of some who are opposed to dealing with Arabs in any way because of their race, or worse, calling for their deaths, is not.
Right out of the socialist playbook I might add as well....
Touche!
You asked -- "The American interest will have a UAE interest? So the UAE will be selling to itself? That makes no sense."
That was just a guess on my part, as to whether the UAE had any interests in the other company. It's sort of like some laws in other countries in which the majority interest holder has to be a native of that country. So, the foreign interest holder simply constructs a deal with a "local" and makes the deal go through that way.
So, behind it all, it might very well turn out that the money is really UAE money with the "American interest" being majority interest holder in the company.
But, that's all speculation on my part. I'm just thinking that if you wanted a deal to "hold together" (like it was originally constructed), you might put it together that way in which it was the same deal (financially) but structured differently legally.
That may be what is going on here.
Regards,
Star Traveler
This will eventually blow over and we will be on to something else.
A little country with something like 5 to 15% of the world's oil - and no army to speak of - is going to blow us off?
If they try it, they'll be Southern "Iran" next month. And the Royal Family? They'll be "Iranians" and not powerful ones, at that...
At least DPW behaved like adults............which is more than I can say for the people in my party in Congress.
You should really quit with the personal attacks. You are only proving yourself to be something less than you could be.
I apologize for the snotty post. With my blood pressure elevated, I need to remember that not everyone I disagree with is slinging barbs at me.
Prize: Dumbest post in the thread.
"This move had national security in mind when it was conceived."
Well then Francis, have Pres. Bush come right out and say it! Come out and say, "Oh by the way, Dubai is giving us access to their ports for ensuring regional security." We all know what that means, so don't parse words. But tell us a little about the horse trading, not the specifics and maybe we can stomach it. Hopefully not another OE/Turkey fiasco.
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