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Washington Post - March 9, 2006
Dubai port company to divest
itself of American holdings
By Jonathan Weisman and Daniela Deane
The United Arab Emirates company that was attempting to take over management operations at six U.S. ports announced today that it will divest itself of all American interests.
The announcement appears to head off a major confrontation that was brewing between Congress and the Bush administration over the controversial deal.
Sen. John Warner (R-Va.) announced on the Senate floor shortly before 2 p.m. that Dubai Ports World would "transfer fully the operations of U.S. ports to a U.S. entity." Warner, who had been trying to broker a compromise on the issue, said DP World would divest itself of U.S. interests "in an orderly fashion" so as not to suffer "economic loss."
It was not immediately clear how the divesture would be handled or what U.S. company would take over the operation.
Warner's announcement came just hours after Republican leaders from the House and Senate met with President Bush to tell him Congress appeared ready to block the deal.
The GOP leaders gave Bush their assessment of where the deal stood at a private meeting at the White House, according to Amy Call, a spokeswoman for Sen. Bill Frist (R-Tenn.) Although the gathering was a regularly scheduled meeting, according to Call, it was significant because it came only one day after lawmakers took their first formal steps toward killing Dubai Ports World's acquisition of a British-owned company.
The administration had repeatedly said it would veto any attempts to crush the deal, arguing that port security is in the hands of U.S. agencies and would not be put in jeopardy by the takeover. Americans have reacted viscerally to the deal, lawmakers say, driving Congress towards a confrontation with the White House.
"We want to protect the American people," said House Speaker Sen. J. Dennis Hastert (R-Ill). "We've been doing it the last four and a half years. We fought a war in Iraq, fought a war in Afghanistan, stood up to the Homeland Security Department. We will continue to do that. We will maybe have our differences, but we think we're going to continue to" oppose the Dubal deal," he said Thursday morning.
The House Appropriations Committee Wednesday added a measure to block the deal to a must-pass war-funding bill. The vote on the bill was 62-2. A full House vote on the bill is expected to pass overwhelmingly next week.
A knowledgeable Senate aide said the GOP leaders told Bush Thursday that they may be able to stave off a vote today in the Senate to kill the ports deal, but they won't be able to hold it back forever.
Senate Democrats continued to demand a vote on the issue, while Senate Republicans have been hoping they could prevent a vote until the end of a 45-day review of the deal.
The ports deal has sparked an unusual, election-year Republican mutiny against the Bush administration over an issue the president has tried to make his own -- the war on terrorism.
The confrontation over the Dubai-owned company's acquisition of management operations at six major ports, including Baltimore, New Orleans and New York, has more than any other issue in recent years been driven by constituents anxious about terrorism, the war in Iraq and illegal immigration and foreign encroachment, lawmakers say.
Add to that the president's rock-bottom approval ratings and there may have been little the White House could do to beat back the issue………
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/09/AR2006030901144.html
Baltimore Sun - March 10, 2006
Dubai firm to shed stake in U.S. ports
Backlash led to decision
By Gwyneth K. Shaw and Julie Hirschfeld Davis
WASHINGTON -- Bowing to extreme public and political pressure, a United Arab Emirates company said yesterday that it would give up its management stake in U.S. seaports, including Baltimore's, rather than continue to fight what increasingly appeared to be a lost battle.
For more than three weeks, the pending sale of British-owned Peninsular & Oriental Steam Navigation Co. to state-owned Dubai Ports World has generated controversy, splitting many congressional Republicans - especially in the House of Representatives - from President Bush, who had said repeatedly that he supported the deal.
Republican leaders told Bush at a White House meeting yesterday morning that the backlash was too extreme to overcome. Within hours, Virginia Sen. John W. Warner was on the Senate floor, announcing that DP World had decided to shed the U.S. holdings.
Warner, a Republican who helped run interference between the company, the White House and his colleagues, said the prime minister of the United Arab Emirates, Sheik Muhammad bin Rashid al Maktoum, had told the company that giving up the U.S. portion of the deal was the best course for the interests of both countries.
H. Edward Bilkey, the chief operating officer of DP World, said in a statement that "because of the strong relationship" between the United States and the United Arab Emirates, the company had decided to "transfer fully" the American operations involved in the sale to a U.S. entity. The decision, Bilkey said, is based on the assumption that the company "will not suffer economic loss" in transferring those holdings.
The company's move, however, left open a number of questions, such as who might buy the U.S. interests and what, if any, relationship would exist between DP World and an American company that takes over the holdings.
P&O runs major port operations in Baltimore, New York, New Jersey, Philadelphia, Miami and New Orleans, and has smaller stakes in seaports from Portland, Maine, to Corpus Christi, Texas. The American assets make up about 10 percent of the $6.8 billion sale, which includes operations all over the world.
The White House - which drew blistering criticism because an administration panel decided that the sale had no potential national security implications - greeted the news with relief, saying that the divestiture provides "a way forward" and clears the way for Bush to move on to "other important priorities."…..
Yesterday's move was DP World's third attempt to put an end to a situation that caught nearly everyone by surprise. While the company's purchase of P&O was initially reported last fall, it drew almost no attention until news in mid-February that the Bush administration committee, known as CFIUS, had approved it.
Within a week, members of Congress from both parties were rushing to express concerns, questioning whether the United Arab Emirates - a U.S. ally that was among the handful of nations to recognize the Taliban as a legitimate government - was a safe bet as an operator of American ports. The top two Republicans in Congress, House Speaker Dennis Hastert and Senate Majority Leader Bill Frist, were among those openly skeptical of the deal.
With the issue smoldering, Bush threatened to veto any effort by Congress to stall or block the deal. Many lawmakers said his threat only added to the controversy, which was driven by cable news, talk radio and a flood of calls from constituents.
After prodding from the White House, DP World first offered a brief delay in closing the deal and then agreed to submit to a second review by CFIUS. Frist of Tennessee backed off slightly. But while Hastert remained largely silent in public, he did not step in to keep King or Rep. Duncan Hunter of California, the Republican chairman of the powerful House Armed Services Committee, from protesting the sale.
And earlier this week, when House Appropriations Committee Chairman Jerry Lewis, a California Republican, moved to include language to block the deal in the $91 billion supplemental spending bill, Hastert and other House leaders agreed to it. Lewis' committee voted 62-2 on Wednesday to add that provision to the must-pass spending measure that would fund the wars in Iraq and Afghanistan, yet another signal that time was running out to salvage the ports deal.
In the end, Republicans couldn't stomach the idea of being outmaneuvered by Democrats in an election year on one of their signature issues: national security…….
Muslim groups’ reaction
The end of the deal may have cooled a firestorm on Capitol Hill, but it left Arab-Americans and Muslim advocacy groups alarmed at what they called the triumph of intolerance.
"If it's a victory, it's a victory for bigotry and Islamophobia," said Ibrahim Hooper of the Council on American-Islamic Relations.
The debacle has been a wake-up call for the Bush administration on how difficult it is to counter public stereotypes in the wake of the Sept. 11 attacks, said Shibley Telhami, a Middle East specialist at the University of Maryland, College Park.
"There's a mood in the country that has been allowed to take hold over the past four years to be very suspicious of Arabs and Muslims broadly, even as the government was continuing to say, 'Look, terrorism is limited to a few, and we know that most Arabs and Muslims are not [terrorists],"' Telhami said. "That hasn't taken hold on the public psyche."
The Dubai Ports chapter will cause pro-American governments in the Arab world - not just the United Arab Emirates, but Qatar, Bahrain and others - to rethink their relationships with the United States, Telhami added.
"They were in some ways stunned to see that people don't perceive them positively," he said. "Many of them are going to take a deep breath and think about this a little bit."
http://www.baltimoresun.com/news/nationworld/bal-te.ports10mar10,0,6710220.story?coll=bal-pe-asection
March 13, 2006
UAE, Saudi bankers blast US trade double standards
Dubai March 13, 2006 – Amid speculations of impacts on future Arab investment decisions in the US, the top bankers in the United Arab Emirates and Saudi Arabia blasted American double-standards in handling a deal allowing a Dubai-owned company to run six US ports.
"It is against the principles of international trade ... which the US was instrumental in making," Sultan Nasser al-Suweidi, the governor of the UAE central bank said. "They (Americans) are contravening their own principles in this respect," he maintained.
The comments were the first from a senior UAE official since state-owned Dubai Ports announced on Thursday, March 9, that it would transfer operation of six US ports to a US entity.
A 6.8-billion-dollar deal reached on February 13, allows Dubai Ports World to operate major ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
A number of US lawmakers, responding to an outcry by right-wing media outlets and talk radio shows, had fiercely opposed the deal on security grounds.
This also drew criticism from Hamad Saud al-Sayyari, the governor of the Saudi Arabian Monetary Authority. "I don't think it's helpful. Many people are disappointed that it is being politicized," he told Reuters on the sidelines of a central bankers meeting at the Bank for International Settlements in the Swiss city of Basel.
"It is protectionism or discrimination? It is OK for US companies to buy everywhere but it is not okay for other companies to buy the US?"
Washington has proposed a Middle East Free Trade Area (MEFTA), which would link 22 Arab nations, Israel and the United States by 2013.
The governor of the UAE central bank anticipated future repercussions. "The American side that opposed the deal mixed economic and investment matters with issues of security and politics and this is the wrong approach and it will hurt free trade and international investment."
He said the controversy could negatively affect investment opportunities in the US as well as business ties between Washington and Dubai. "Investors are going to re-think and look at future investments in the US from a new perspective."
Though he made no specific reference to Arab investment, Suweidi's remarks underscored growing concern of a backlash among Gulf Arab investors.
US President George W. Bush, who backed the DPW deal, said the collapse of the deal could send a wrong message to the US allies. "I'm concerned about a broader message this issue could send to our friends and allies in the world, particularly in the Middle East," he said.
Governments in the world's biggest oil exporting region are diversifying away from US assets, as record oil prices drive up cash available for foreign investment by about $180 billion a year -- about 16 percent of the external funding needed to cover the US current account deficit.
Suweidi said ties between the UAE and the US should also be reassessed after the recent furor. "Trade and investment relations with the United States must now be viewed from a new perspective," he said.
Without making a link to the ports affair, Suweidi said the central bank was looking to convert up to 10 percent of its foreign exchange reserves from dollars into euros -- double the target the bank had previously set.
"Yes it's an increase. The euro will become more attractive definitely and once it becomes more attractive the decision will be to shift but in a reasonable way," Suweidi said.
UAE central bank foreign reserves -- estimated at $23 billion in December -- are held virtually entirely in dollars. (IslamOnline.net & News Agencies)
http://www.islamonline.net/English/News/2006-03/13/article05.shtml
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