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.
It was a British company before the Dubaians stepped in, so, no, there probably isn't a US company that could step in, and there never was a US company involved with these ports to begin with.
Rush suggested Wal Mart.
Amen.
Temasek may unleash bidding war for P&O
By Kokila Jacob, Staff Reporter
Dubai: Dubai Ports World, the emirate's international port operations arm, refused comment on Sunday on speculation that Singapore's Temasek Holdings may be launching a rival bid for P&O's ports and ferries group.
Last Tuesday, DP World outbid rivals for Britain's oldest and world's fourth largest shipping group Peninsular & Oriental Steam Navigation Co in an all-cash $5.69 billion (£3.3 billion). It will make DP World the third-largest port operator of the world after Hutchison Whampoa and Temasek's Port of Singapore Authority.
Rest of the story....http://www.gulfnews.com/business/Investment/10002711.html
Embarrassed and ashamed is more accurate. This is a global deal for DPW...only the US has reacted this way.
Bush is determined because this deal was good for American foreign interests. Some of you people don't have a clue. America is the lone ranger in the Middle East. Without friends like the UAE we can lose our power and leadership in the area along with friendly relations with countries we trade with.
Yes, a clever allegory, but also stupid. Why didn't the scorpion just jump on his back and kill him on the shore?
It's clear that the author was actually making a point about assisted suicide.
We've "been told" all sorts of things. Very little of it gets to the nuts and bolts of what is going on, and virtually NONE of it gets to business options going forward. In fact, none of the discussion got to the point of showing the relationship between US-owned interests and P&O.
Perhaps a company here will now try to come up to "speed". Or size.
Perhaps DPW will create a wholly US-owned subsidiary.
Yeah, the changes in arguments are breath taking. Makes you wonder.....
Sotp that. UAE is evil, and no amount of data from people with first-hand information will change that.
you have it quite backwards. Internalization has created massive wealth and lessened hostility. Isolationism causes hostilities to rise. Check back on the 1930's for confirmation.
you have it quite backwards. Internalization has created massive wealth and lessened hostility. Isolationism causes hostilities to rise. Check back on the 1930's for confirmation.
Isn't that ridiculous? For sure there will be federal inducements for an American business. There go taxes and size of government.
We're not lonely already? Take a walk over the United Nations building if you want to see "lonely".
All I'm saying is, don't let dollar-signs cloud what's happened here. A democratic process has taken place, for better or for worse. You want our system to bend to serve the interests of the United Arab Emirates? You're entitled to voice your opinion at the ballot box. But the democratic process should never be subservient to a foreign interest. What's next? Saudi Arabia will cut off our oil if we start drilling in ANWR?
Peter Pace and Tommy Franks both enthusiastically endorsed the deal and referred to UAE as a good ally in a very strategic place, one where we need to be.
Makes sense to me?
We told them we don't want to do business with them (regardless of the reason), so why is everyone shocked that they're asking themselves if they should do business with us? It's not a threat, it's negotiation? All they're doing is reminding us that this a two way street.
This will be the MOTHER OF ALL BOYCOTTS -- Baghdad Bob
Let's do simple calculations: World's largest and wealthiest economy versus UAE. Ummmm, I think this will destroy the US, for sure.
The point is that the scorpion really intended to cross the river, but his nature beat out good intentions.
This is rich. Come out against creating American companies creating American jobs. Subsidised by American money, instead of UAE money. The appeasers lost this round. Just like the Harriet Miers debacle.
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