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.
Rush is talking about this now...
Well....there is at least one thing very WRONG in that article..
The Senators are NOT willing to wait until the 45 day review is up....they are wanting to deal with this today..most of them.
Dorgan stood up on the Senate floor this morning and said that he doesn't need 45 days...he didn't need 45 MINUTES...to say NO WAY.
We never should have let it reach the point where their assistance and commerce was dependent on them operating our ports. Let them bleat, but keep our ports out of their hands.
John Boehner and his merry band of backstabbing weasels had better not feign surprise about this.
When you kick allies in the teeth, they're going to respond in kind.
Yup. The people calling this "blackmail" aren't being fair either. Duh...if the situation was reversed we wouldn't be rushing to make deals with them in the future either.
Wonder what the Congressional delegation from Washington State is thinking right about now?..........
They also will be screwing our economy up, and making it look like it was Bush's fault. They have tons of money already.
True "friends" stick with/by you whether they get what they want or not. Sure this deal fell through and with good reason as far as I am concerned. But the good old USA has and is doing a ton for the UAE, but I guess that does not count if your ultimate goal is a subserviant dhimmi sp? USA. Ny tagline says all I need to know about Islam.
What a surprise as I posted a letter to the head of CBS news on this very subject and actually received a response that was more than a cursory acknowledgment. Turn about is fair play as Dubai (UAE) have options and we have cretins for elected leaders. Boeing and General Electric will certainly be thrilled with these prospects as they are among the top five exporting American corporations and we need not worry about our balance of trade. This should be met with great elation in Toulouse and chagrin in Everett, WA and Cincinnati. A pox upon all of their houses.
Good! Maybe it'll wake up all these Smoot Harley idiots.
"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."
And what....continue their happy uberwealthy way of life without protection?
What do they plan on doing? Giving AlQuada their loots as bribes.
Lots of noise here for a country on the edge.
I'm with you. This is an election year fiasco that will have reprecussions for decades.
This isn't balackmail. (I shouldn't even have to explain why it isn't)
Instead of servicing Navy ships in the UAE, maybe they can have the work done in Guam. Hey, what's a month of travel downtime... it's not like we're fighting a war or anything. This ex-Navy guy is pissed at the port-blockers.
Our biggest trade deficit ever in January. You think the USA is bullet proof?
That is a good thing.
Maybe this will add a little reality to the hysterics that are going on over the port deal. I wonder how the reps from Washington will react to the news about Boeing. The other major Arab countries like Saudi Arabia can also cancel commerical and military air sales. There are consequences to demonizing the UAE and other friendly Arab states. They don't have to buy American products. We have stiff competition from Europe and China.
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