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.
I can't type. "they're", "their", "there"...
What did Rush say?
the neocons should have learned by now there is no such thing as a real muslim ally.
The ignorance on display has gotten worse over the last year or so, imo. I don't even recommend this web site anymore.
Plus, they are just saying they won't buy american stuff. Isn't the opposition to the ports based on the assertion that we shouldn't let foreign countries by our stuff, like ports and things? The opponents should be HAPPY that UAE will stop "investing in america", because "investing" is another word for "buying parts of our companies and real estate".
How right you are. It's as if these critics imagine that no "Arabs" work at any port, airport, train station, etc. Do they imagine that DPW doesn't already know the procedures used in any major world port? This is a trustworthy company and our Congress is about to make a huge mistake, a mistake that will in the long run make us less secure.
Maybe Americans aren't as stupid as you think. Maybe they have decided for themselves that they don't like this deal. Maybe some of us don't like how the UAE treats Israel and Jews in general. Maybe you are wrong and others are right.
I'm sure Hillary's First Lady could smooth things over with the UAE.
Could it be that they need us?
The clowns you named are NOT in office.
I repeat - it is not just Democrats who oppose this deal.
Slight correction, The US government is telling a foreign country to stuff it. It is the country of UAE that was taking over terminal operations at dozen or so ports in question.
I have wondered why a country is allowed to complete against private enterprise? Seems kinda strange to me.
Have you said that to other people that have requested that certain people not post to them?
Which at this point, I seriously doubt.
Listening to people who think they are experts in the dynamics of Middle Eastern politics-and who think they know what the Arab "street" believes-and inevitably steer us into even bigger debacles than the ones we thought were so perplexing.
Backing the Muslim Brotherhood over Nasserist and pan-Arabist demagogues, because we felt at one point that the former posed a less potent threat.
Indirectly or directly bankrolling Islamist terror gangs like Hizb-e-Islami and the "services" office, which was in fact the progenitor of Al Qaeda, during the Afgan-Soviet war-instead of Ahmed Shah Masood and the Northern Alliance-because we thought they would be more successful in ousting the Soviets.
Believing that we could reason with the "good mullahs"-such as Ayatollah Khatami and Ayatollah Rafsanjani-while outwardly castigating the "bad mullahs," such as Ayatollah Khomeini and his successor, Ayatollah Khameini.
Deposing Mossedegh and reinstalling the Shah, even though it precipitated the Iranian revolution, which would result in a government a million times worse than Mossadegh.
The only consistent part of our foreign policy with regard to the Muslim world is our continued inability to realize how little we do know, and our unbroken track record of betting on the wrong horse.
Logical fallacy: guilt by association.
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