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.
Agreed.
Can you give us a brief summary? I can't get streaming of any kind in the office.
We are a representative republic, and not a steenkin European style Democracy.
I'm afraid we have lost our way and if we do not reestablish what has worked so well for 200+ years, we will not survive what is to come.
Governance via poll is very dangerous and likely fatal.
This country is officially in serious trouble.
Walmart....LOL!
You forget it's a two-way street. We don't have a right to operate airbases or naval bases in Dubai, either, do we? Why don't you just run the white flag up in Iraq this afternoon and get it over with?
Saudi Arabia funded the Pakistani nuclear program - purchased from north korea, who got it from china.
nothing changes. its just the level of sh*t we are willing to accept from that part of the world, because we need their oil.
Go ahead and be ashamed and self loathing. There happens to be a global jihad declared against the US. If we had not reacted prudently, it would have shown weakness.
How have things been going so far?
My point is that the endemic problems plaguing the Islamic world are THEIR problems.
They need to solve them.
I have no problem supporting besieged liberal dissidents or intelligentsia in Syria and Egypt-and boosting our efforts to depose the Iranian regime from within, through a popular uprising if necessary-but I don't think we should be under any illusions that the Arab or Muslim world will ever be some replica of the United States or Europe.
The people who think that are clinging to illusions.
Put it this way - they may be "b*stards", but they're OUR "b*stards".
Don't criticize realpolitik because UAE is in a snit. And never ... go against the family. ;-)
Oh for crying out loud! You actually think the UAE is a part of the Saudi Goverment.
Learn a little about the subject you're mangling, okay?
China and India are in the market. Course, there's not many people there.
"So you just follow blindly!!"
What do you mean by following blindly? I'm not following my political party. In fact it's just the opposite. I'm truly ashamed of the bigotry in the Republican party, and will have a harm time voting for Republicans in a general election.
I feel much of the opposite to the UAE company was manufactured for political votes which is sick. Rep. Jerry Lewis (R) will lose his seat in the next election. He is a coward for trying to attach his garbage to military spending.
Could well be. Do you know where they might find a good lawyer to set up a chapter S for them? :^D
They bought an entire company, P&O, of which the american assets were but a small part.
They weren't really buying the terminal rights in the U.S., they wanted major port control in other countries, and to gain more port-to-port control (you can make a lot more money if you own both ends of a shipment).
Now they will get almost all the ports they wanted, and will probably make a little money selling the U.S. subsidiaries.
I bet the people who work for the U.S. companies aren't happy -- the new owner won't be as deep-pocketed and won't spend the money that DP World would have.
I wonder if DP World is also divesting terminals it ALREADY CONTROLS in the U.S. The announcement was JUST about the assets from the P&O purchase.
Maybe congress will try to pass a law forcing all the other countries to do this same thing.
Some because they hate Bush and think it will take him down.
Some because they just hate Arabs, even the ones who are pro-U.S.
For most, it is a combination of both.
But a government that sells out its sovereignty and doesn't enforce its borders is even more deadly.
I am pretty sure I'm right, the merits of the deal have little to do with it, it has become a symbol of a far larger battle, Globalists vrs Americans. I happen to be on the side of the Americans. Too bad about UAE, caught in the cross fire.
I agree.
Our Republican Congress is now officially a poll-driven, fact-devoid, hysteria based body. Not to mention the fact that their word (the 45 day wait period) means absolutely nothing.
I am now officially ashamed of the Republican party.
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