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.
BS, cooperation is a 2 way street and they deserve better from us. They put out a hand in mutual cooperation and we put a turd in it.
Senate is on C-SPAN2, but the news of DPW divestiture of US-based interests is spreading all over the place.
Now there's the UAE we all knew existed under that sweet, innocent, Jew-hating exterior.
Reminds me of a story...
The Scorpion and the Frog
A scorpion and a frog meet on the bank of a stream and the scorpion asks the frog to carry him across on its back. The frog asks, "How do I know you won't sting me?" The scorpion says, "Because if I do, I will die too."
The frog is satisfied, and they set out, but in midstream, the scorpion stings the frog. The frog feels the onset of paralysis and starts to sink, knowing they both will drown, but has just enough time to gasp "Why?"
Replies the scorpion: "Its my nature..."
Peach, as in American middle man or Dubai just out of the pix completely now??
"Friends" don't instigate the need to retaliate.
Our best strategic ally is Israel, not UAE.
One has to wonder why the UAE would take such drastic action if the White House was bending over backwards to reassure the UAE about an eventual approval of their deal. My guess is UAE is getting the cold shoulder now, and that's why they've erupted.
Sure you do. That's you're whole agenda.
I just hope all these IDIOT SENATORS are very proud of themselves....they just cost the United States of America a whole lot of money...
These same IDIOT SENATORS have caused problems with Canada, Mexico and everyone else with their 'screw you' attitude...
I hope all you people that voted for this idiot peter king and this bigger idiot shrumer are so proud of yourselves....
If I were you, I'd be running them out on a rail, out of washington and out of politics....and take that idiot witch clinton and her other half with them...
Rightly or wrongly there was an outcry from the American people about ownership/operation (semantics)of our seaports.
So.
The deal is being delayed/denied.
An Ally would understand that above all else the Goverment of America is (or should be anyway..) beholden to the concerns (justified or not imo) of their populace.
In a free society.
An Ally, who has many contracts and dealings with America, should not fly off the handle and succum to the same "knee jerk" reaction that America(ns) is being accused of.
For example.
I am country X and have 50 current "dealings" with America.
I go to make my 51st deal/purchase and the citizens and/or elected leaders have an issue that snubs the deal.
Yes, we are a counrty of laws. We are also a country that elects leadership to make those laws, and listen to the bosses (thats us) concerns.
Ok, I understand. America is in a war with Islam(ic radicles) and this particular deal makes them unsettled.
Lets hold off on this and maybe pursue other deals..
No wait!
Lets throw a fit!
Like I said, rightly or wrongly Americans are uneasy about this deal, and for the other country to get offended to the point of making these kind of retalliations shows me that they are more "knee jerk" than we ever could be.
Maybe we could shut down all the 7-11's and Cab companys as to be on par with their actions. [/sarc]
"Saving face" is more important than being a ally.
They are doing this out of spite.
DP World is a company. If we stop working with any company that is from a country or owned by a country that doesn't do exactly what we want, we will be very lonely.
Bravo, and ditto. Since when has being "stupidly obstinate" been a "conservative" virtue?
We nuked Japan to get them in line. Tell how why you believe the UAE has changed. Are they recognizing Israel yet?
Oh, I thought the government owned part of DPW.
Thanks for the ping.
Nope - that isn't what I think at all. But we probably will never know now what his real motivation was.
I was for the deal, I don't think this is a bad thing but this will leave an unsightly mark on our reputaion that will last for years.
I see you know nothing about foreign investment. It's imperative that we have foreign investment in this country to survive. Watch CNBC once in a while and educate yourself.
God will always protect Israel. They won't be toast.
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