(probably) My Last Word on the Ports Deal

Dubai Ports World is delaying its actual takeover of port operations in six American ports, presumably to give matters a chance to simmer down:

WASHINGTON, Feb. 23 — The Dubai company at the center of a political furor over its plans to take over some terminal operations at six American ports said Thursday night that it planned to close the deal next week, but that it would “not exercise control” over its new operations in the United States while the Bush administration tried to calm opposition in Congress.

The statement may provide a little time and political breathing room for President Bush, who has appeared stunned at the opposition from Republicans and Democrats alike over the deal involving one of the country’s few close Arab allies. But it was not clear how long the company was willing to suspend control over its new American properties, or whether its offer would assuage the members of Congress, governors and mayors who have vowed to block the deal.

In a statement, the company, Dubai Ports World, said that its $6.85 billion purchase of the Peninsular & Oriental Steam Navigation Company of Britain spanned 30 terminals in 18 countries.

“The reaction in the United States has occurred in no other country in the world,” said Ted Bilkey, the chief operating officer for Dubai Ports, which is controlled by the government of the United Arab Emirates. “We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties. Security is everyone’s business.”

Some have suggested that the breathing space would give Congressmen who’ve spoken out against the deal the opportunity to back down from their positions gracefully. My concern is that it will give opponents of what is substantively the correct thing to do an opportunity to organize their opposition.

I stumbled across a comment on another blog in my travels last evening that sums up the argument in favor of the transaction:

• DP World, a UAE-based commercial entity, is purchasing the U.S. subsidiary of the London-based P&O Steam Navigation Company. The corporation in question is a US corporation; this is an ownership change. It will remain a US corporation.

• DP World will not operate port security or Customs, nor will it own any ports. No foreign labor will be imported to do the work of this US corporation, presently staffed by American workers.

• There is a proven, formal process conducted by the Committee on Foreign Investment in the United States (CFIUS), officials carefully reviewed the national security issues raised by the transaction and its effect on our national security.

• In all, twelve Federal agencies and the government’s counterterrorism experts closely and carefully reviewed the transaction to make certain it posed no threat to national security.

• The announcement of DP World’s bid for P&O was made in November 2005, and the news was widely reported in the press and international financial trade publications. The formal CFIUS process was set into motion in December, and the Federal government conducted a thorough review to ensure that port security would in no way be compromised by the deal.

• The Department of Homeland Security (DHS) is always in charge of the nation’s port security, not the private company that operates facilities within the ports.

• Nothing will change with this transaction. DHS, along with the U.S. Coast Guard, U.S. Customs and Border Protection, and other Federal agencies, sets the standards for port security and ensures that all port facility owners and operators comply with these standards.

• The Transaction Is Not About Port Security Or Even Port Ownership, But Only About Operations In Port. DP World will not manage port security, nor will it own any ports.

• The US subsidiary now owned by DP World would take on the functions now performed under its prior owner, the British firm P&O – basically the off- and on-loading of cargo.

• Employees will still have to be U.S. citizens or legal permanent residents.

• No private company currently manages any U.S. port. Rather, private companies such as P&O and DP World simply manage and operate individual terminals within ports.

• The United Arab Emirates (UAE) has been a solid partner in the War on Terror. The UAE has been extremely cooperative on counter-terrorism and counter-proliferation and has provided considerable support to U.S. forces in the Gulf and to the governments and people of Iraq and Afghanistan.

• The UAE is an established partner in protecting America’s ports. Dubai was the first Middle Eastern entity to join the Container Security Initiative (CSI) – a multinational program to protect global trade from terrorism.

• Dubai was also the first Middle Eastern entity to join the Department of Energy’s Megaports Initiative, a program aimed at stopping illicit shipments of nuclear and other radioactive material.

Port Security Begins Abroad. U.S. Customs and Border Protection (CBP) created the CSI to enable CBP to inspect 100% of high-risk containers at foreign seaports before they are loaded onboard vessels destined for the United States. Dubai was the first Middle Eastern entity to join CSI. Cooperation with Dubai has been outstanding and a model for other operations.

Add to this that DPW already manages port terminal operations in the U. S. through its acquisition of the port terminal operations of CSX back in 2004. It has been through extensive security vetting not just here but internationally: DPW manages port terminal operations in many countries all over the world including Germany and Hong Kong.

Regardless of how this deal actually turns out, the harm to our foreign policy has already been done. Take a look at this round-up of reaction in the Arab media to the controversy here over the deal. It’s not possible to have a credible foreign policy that oscillates between realism and Wilsonian altruism. They undercut each other.

In our country foreign policy is hammered out in public debate. Historically that’s been a strength here but now it’s also a handicap: it limits our options. In the 19th century the word of the debate might not have reached foreign shores at all. 75 years ago it could be months or even years before news of the debate reached the ears of people in our countries. Nowadays it happens in the flick of an eyelash and, in a very real sense, people overseas are a part of our debate.

Some circumspection would appear to be called for in such an environment but that’s very, very difficult for us. It’s a handicap we’ll have to learn to work with.

UPDATE: Joe Gandelman of The Moderate Voice has a media round-up and analysis of recent developments in the matter.

ANOTHER UPDATE:  Harsh words fo Congressional opponents of the deal from David Ignatius of The Washington Post:

The real absurdity here is that Congress doesn’t seem to realize that an Arab-owned company’s management of America’s ports is just a taste of what is coming. Greater foreign ownership of U.S. assets is an inevitable consequence of the reckless tax-cutting, deficit-ballooning fiscal policies that Congress and the White House have pursued. By encouraging the United States to consume more than it produces, these fiscal policies have sucked in imports so fast that the nation is nearing a trillion-dollar annual trade deficit. Those are IOUs on America’s future, issued by a spendthrift Congress.

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