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.
But Rush told us Dubai changed after 9/11... Once a snake, always a snake.
Yup. I told my husband last night I couldn't imagine a worse thing happening to us in the WOT than this. Aside from a direct hit from a nuclear attack, that is. And now the UAE's help with watching Iran is in question.
In that they agreed to an American middle-company to buffer the UAE contract with the public or the deal is toast completely??
I have followed the deal, pros and cons, and am still against it. They can threaten us all they want. They would sooner or later anyway in one way or another. That's one reason I was not comfortable with the deal but not the only one.
As things stood, they gained as much as we did. If they want to play hardball, let them. We need to extricate ourselves from having to deal with them if at all possible.
LOL
Myopic ignorance must be blissful!
I'll just have to take your word for it.
Just one big happy family...ain't life grand!
I think there some who believe that. They think these threats of retaliation will change minds of those who oppose this "dead deal".
NO! It's the DPW that's saying that, NOT the UAE.
The news is DPW will divest itself of interest in US ports.
Hardball. Just crossing the wires: Dubai Ports says it will sell the US components ports portion to another investor. An American company. Can you say Halliburton. Sure, I knew you could.
Maybe because our veto of their business deal would torpedo a vital strategic partnership in our war on terror, ya think?
Rush discussing this now....
Halliburton? "ram this right down Chuck Shumer's throat"
But The Friends of Dubai told us there weren't any American companies that could handle the job?
What changed in the past few weeks?
I hope we weren't being lied to...
I'm thinking this is what Rush meant to say because I don't see any news anywhere else that Dubai Ports will selloff their American investments.
The war on terror had a "win hearts and minds " component. We can not kill 1.5 Billion Muslims as much as some here would love to.
If we back-stab our ME allies on this..Israel is toast.
I think they won't in the end do that. But I understand them saying so. The house subcommittee just passed a measure saying that UAE, among all the world, was singularly unqualified to be a partner with us in any way.
So why shouldn't they take the hint and cut off all their partnerships?
In the senate, Schumer is getting support for a measure that says that NO country which ever recognized the Taliban can ever again own ANYTHING U.S.. Of course he doesn't mean U.S. airplanes, but why shouldn't UAE take him at his word and promise to stop buying ANY american products or services?
I still believe that cooler heads will prevail (we might have to dunk some republican heads into the toilet to cool them off) and DP World will set up their U.S. subsidiaries as semi-autonymous entities to handle the terminal leases.
Or the DP World might just promise to sell of the U.S. companies.
I think the democrats are SCARED TO DEATH of that, and that is why they are pushing to cut off debate and end this now. I think the republicans are stupidly going along, maybe in the hopes that nobody will fault them and the president will save them by vetoing the bill and then they can compromise.
The UAE thought they had a deal, when by U.S. law the U.S. told them the deal was acceptable. But when pressed, the UAE gave us another 45 days, with the idea that we would all sit back and look it over carefully before taking action.
But the House just said screw the 45 days, we're going to preempt the deal now.
Yea...We should still be fighting Japan
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