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.
Yes you can. But I, as the seller, have the right to decide whose money I want.
This is about the right to say 'no'. If we can't say no to this, when it's 'no big deal'- without international blackmail-what CAN we say no to? Can we ever refuse to sell more important things?
I'm just sick and tired of being afraid of world opinion and the threats of every sandpile 'kingdom' out there. Could these desert countries feed themselves?
At least you are honest about your racism.
The will of the people was to elect George Bush to be Commander in Chief, Chief Executive officer. In a democratic republic representatives are elected to execute the duties of their respective offices. Sometimes the people need to accept that their will has been done. On election day. That's a democratic republic.
We are trying to rewrite the Islamic world and foster changes that will benefit us.
Your bigoted response and the reaction to this port terminal deal will take the tools we need to accomplish our task away from the table.
This is the dumbest thing we have done in a long time.
The Chinese "control" if that's how you choose to phrase it...many many more than the Americans do.
Schumer and Clinton totally won this battle with the willing and complicit weakass Republicans.
I think something will change. The next time Iran or North Korea comes up $1 Mil or two short on the price of a new nuclear reactor, there will be oodles of investment capital in the UAE just waiting to jump into the partnership. That much will definitely be a change as a result of this entire fiasco.
Who has more to lose - the US or countries in the ME?
What a dishonest comment.
And what "race" would that be?
It's nuts, isn't it? But the people who want to just bomb and kill Arabs are delighted.
I've been trying to point out, that illegal immigration is the story behind this port story. The outrage is grass roots and it is because Bush does nothing about the borders. The UAE is just caught in the cross fire between the globalist elites and grass roots conservatives, the Rats are just piling on because it's fun and easy.
Is THAT what democracy is all about? Or supposed to be?
As I see it, what has happened in the Congress is not about democracy. It's about emotional reactions, and not based on the facts of the situation.
Yeah, I'm sure Iran's desire to destroy Israel was based on whether or not we made this port deal. I don't know if you've heard, but we have this gigantic base in Baghdad and nuclear subs that don't have to be parked in Dubai to hit Tehran.
Amen.
And why are so many people HAPPY about it?
Yeah right. Where is the UAE gonna go to sell their oil? Botswana?
Where is the UAE gonna get protection and weaponry against Iran and Syria? China?
Fine. They will be the losers, and they know it.
All for a lousy $8 billion clams.
It is the USA which has the upper hand in this world, both financially, morally and in 57 other ways.
So now instead of being our "ally", the UAE will pay for Iran and North Korea to finish their nuclear weapons? Is that what you are saying?
In this case it was subservient to the pandering interests of self-serving pols.
OK, here we go jumping the gun without the information.
I will say this is preliminary, I'll get a hold of the facts before making final judgment.
But it seems clear that this "deal" was brokered, possibly by John Warner (I know he was working on this), BEFORE the house action.
If I understand correctly, it is simply that DP World will sell off the U.S. subsidiaries that own the leases to the terminals. They were a small part of the total deal, and DP World is making a business decision so they can move on. Business doesn't usually fight governments, there isn't money in it.
They will make a little money by selling the companies, and the terminals will probably suffer while the new owner comes up to speed, and nothing will change at the terminals for security (we will lose all the security gains we would have gotten when DP World ran the ports).
And we have left a bitter taste in the mouth of one of our allies, for NO REASON. We could have just asked for the extra 45 days, and worked this deal behind the scenes, and ended up at the same place.
This is just like Harriet Miers. She was never going to make it, because she wasn't qualified. But because the opponents ran off like headless chickens, we got a black eye over the issue and we hurt people needlessly.
Just the same, we could have pushed the ports deal behind the scenes, but people wanted to make public attacks instead, and now we've done REAL HARM to the war on terror.
And the opponents will run around talking about how they SAVED us again.
I'm delighted.
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