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 think American middleman and Dubai will have some leasehold interest still, but it's just breaking and I don't have a handle on it yet.
Here is the banner on FNC: Dubai ports says it will sell US piece of deal to another investor.
But the House just said screw the 45 days, we're going to preempt the deal now
Exactly so. And just WHO WAS IT that reneged and proved themselves untrustworthy.
The United States Congress, that's who.
LOL.....my son doesn't need to go there! hehehe
Excuse me??????
"We are now the laughing stock of the world. We have insulted our best strategic ally in the area and it will be very costly...."
John Kerry, is that you?
The ports were always and have always been under American control.
For the 900,000 th time, all we are talking about is six goat stinkin container terminals that are leased from us, not owned either. It never involved the transfer of security, just the goat steenkin loading operations.
So we insulted a entire country over a lousy lease.
now we will pay the price for that action, and our ports will actually be less secure because cooperation on the other shipping end will be affected. As well as military assets and ops in the area.
"So you're blaming the backward mentality of Arabs on Christians now? Oh, that is logical."
What are you reading?
LOL!!!!
Then let's give the deal to Halliburton. I am totally in support of that option.
Why didn't they bid on this? They don't have the kind of cash/oversight necessary to work this kind of deal.
No matter what the Prez does, he can't sell it to those that aren't interested in buying. He doesn'y need to sell it to the People (at least he shouldn't have had to except for the idiot political opportunists) and the Dims and rebellious Repubs are mor einterested in making political points instaed of acting with reason. They are overgrown, egotistical children, plain and simple and they will not accept an adult discourse. They are betraying our country as sure as any traitor, and all for political capital, which is probably going to end up biting the Repubs (big gory chunks) in the butt. Dubai can do us more harm by turning its back on us than what its operation of those ports could ever do. Now, since it is getting stabbed in the back by us, and is planning on stopping any cooperation and complimentary financial dealing, the same idiots that did the dastardly deed will be on the boob-tube decrying Dubai for never being our friend and use its reaction as "proof" that they did the right thing (even though they caused it). I'm disgusted.
That's just what I've been doing over the lack of immigration law enforcement.
Name calling doesn't give anymore credence to your argument and yes good business practice among partners do take past performance in account.
Bingo, we have a winner!
It's just that simple, scorps & dune bunnies don't evolve significantly in one or two generations, no matter how much or where you kiss them Mr. Bush.
"Oww, buurnnn!
I wish they got all this hot and bothered over our porous southern border......
"I can guarantee you that if the shoe were reversed, our country would do EXACTLY what the UAE is doing."
I don't know about that. Have we really been that tough on France and Germany? Have we been tough on Vicente Fox's mass exodus across our borders?
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