The acquisition of P&O, which is responsible for port terminal operations in six major American cities, by Dubai Ports World is now being cast as a partisan political issue:
WASHINGTON – The Dubai firm that won Bush administration backing to run six U.S. ports has at least two ties to the White House.
One is Treasury Secretary John Snow, whose department heads the federal panel that signed off on the $6.8 billion sale of an English company to government-owned Dubai Ports World – giving it control of Manhattan’s cruise ship terminal and Newark’s container port.
Snow was chairman of the CSX rail firm that sold its own international port operations to DP World for $1.15 billion in 2004, the year after Snow left for President Bush’s cabinet.
The other connection is David Sanborn, who runs DP World’s European and Latin American operations and who was tapped by Bush last month to head the U.S. Maritime Administration.
The ties raised more concerns about the decision to give port control to a company owned by a nation linked to the Sept. 11 hijackers.
“The more you look at this deal, the more the deal is called into question,” said Sen. Charles Schumer, D-N.Y., who said the deal was rubber-stamped in advance – even before DP World formally agreed to buy London’s P&O port company.
Besides operations in New York and Jersey, Dubai would also run port facilities in Philadelphia, New Orleans, Baltimore and Miami.
The political fallout over the deal only grows.
“It’s particularly troubling that the United States would turn over its port security not only to a foreign company, but a state-owned one,” said western New York’s Rep. Tom Reynolds, chairman of the National Republican Campaign Committee. Reynolds is responsible for helping Republicans keep their majority in the House.
Snow’s Treasury Department runs the Committee on Foreign Investment in the U.S., which includes 11 other agencies.
“It always raises flags” when administration officials have ties to a firm, Rep. Vito Fossella, R-N.Y., said, but insisted that stopping the deal was more important.
Let’s go over this one more time:
- P&O is foreign-owned.
- P&O has been responsible for the port terminal operations in question for many years.
- DPW is a major player in the port terminal operations business.
- DPW offered the higher bid.
- P&O management has a fiduciary responsibility to the shareholders to accept the highest qualified bid.
- DPW is well-qualified.
- The only other bidder (the Port Authority of Singapore) is also state-owned.
- What’s being discussed here is solely a change in capital ownership.
- There are no known risks in the acquisition.
- Such risks as there are can be managed rather than legislated.
My previous posts on this subject are:
The acquisition of P&O by Dubai Ports World step by step
More on the Dubai Ports World acquisition of P&O
There are other sane voices posting on this subject:
The Strata-Sphere explains what “port terminal operations” means and why this is no big thing.
Wizbang Bomb Squad has detailed information and links about Dubai, DPW, and why this controversy is hyperventilating.
Dan Berczik at Bloggledygook believes that the controversy is xenophobia, pure and simple.
UPDATE: The Republican House leadership is lining up behind a move to delay the acquisition. Senate Majority Leader Bill Frist also supports the delay. If that doesn’t convince you that opposition to the acquisition is a mistake I don’t know what would.
ANOTHER UPDATE: Joe Gandelman of The Moderate Voice has a media round-up on the issue.
YET ANOTHER UPDATE: Tigerhawk calls it like he sees it:
In addition to knee-jerk irrationality, there is an ugly side to this debate, too. Regular readers know that I am far from politically correct, so I trust that they will not toss me overboard when I suggest that rank, irrational nativism is dangerous influencing the public discussion of this subject.
And we’re learning that irrationality and nativism is bi-partisan, too.
As TigerHawk says we are seeing ugly rank nativism. Prejudice. Irrationality.
We’re mindlessly kneejerking our way to hypocrisy^2 and the only thing a usually sane voice like Instapundit can manage is “I’m underwhelmed” and “I’m guessing the politics of this … will scuttle the deal.”
As for the politicians themselves, where was their concern for port security before this?
I’ve said almost identical things in almost the same words, John. One of the things I think is going on at this point in the discussion is political posturing. The Democrats are starting to smell blood and the Republicans are spooked by Bush’s low polls so both sides are trying to separate themselves from the Administration on this.
What bugs me is that nobody but nobody (other than the few including you I’ve linked over the last week) wants to consider the merits of the issue dispassionately.
well… how much of the uproar is due to racism and how much is due to genuine concern? There seems to be good points on both sides. I agree with much of what was stated above, however it seems to me there are valid concerns. The fact that the Dubai company is state owned is relevant. They recognize the Taliban govt in Afghanistan; i.e. their values are far removed from ours. While Homeland Security would still be in charge of security at the ports, it would seem that having such a country operating our ports would give al qaeda types not only the info. as to how the ports were operated (which would be valuable in planning a terrorist attack) they would also get a great deal of information as to what our security measures were.
The state ownership would be relevant if we were to be even-handed about our concern with state-owned companies. Practically all large non-American companies are wholly or partly state-owned. All Chinese companies are state-owned. Where’s the concern about Chinese companies participating in very sensitive areas?
Genuine concern might be warranted if there were reason to believe 1) that DPW was planning to change something; and 2) that DPW was more inclined to hire potential terrorists than P&O. I see no reason whatever to believe this.
Consequently, I believe that we need to identify the risks and manage them rather than going off half-cocked the way politicians on both sides of the aisle seem to be doing right now.
An Emaratis Thoughts
Right you are, Dave.
Much of the opposition to this was indeed “kneejerk” and much of it now has reduced to demagoguery. The point here is one of ownership, not “control.” DPW has no desire to change much of the operations per se at these ports, they will be acguiring the ownership of the leases for them.
The other detail that gets lost in the noise is that the port of embarkation is much more important in the transfer of questionable cargo. Hence, Michael Chertoff’s point (miss by most and honestly, fumbled by him) that the US has had many dealing with DPW in Dubai (meaning, they are not about to let the bad stuff on in the first place).
Port security is very important, obviously. But once the goods have arrived, it’s really too late.
Let’s just say, for argument, that a certain ship bound for New York contains a nuke. The ship doesn’t have to belly up to the dock in order for havoc to ensue.
Just try on this for a minute. I was in the car much of the day today. Flipping around the dial, I ran across Rush Limbaugh (forgive me father for I have…). He was talking about this so I waited, expecting him to be screaming about this. He was. Except that he was making much the same argument we have been making. Go figure.
This discussion is out of control and ugly. I am not sure why it is happening, except I guess there is a lot of pent up, ugly feelings that need to get out.
Exactly right, AJ. There are a lot of pent-up, ugly feelings that are finding their way out. Would there have been the same reaction without the riots all over the Muslim world about the Danish cartoons? I don’t know but the reason I’m being rather uncharacteristically insistent that we modulate our tone on this issue is that I think things are getting out of hand.
Now hold on here…
I think you all are mischaracterizing the debate on this issue. People who are concerned about this are no more racist than you. And, in the public sphere at least, this discussion appears to be neither ugly nor out of control.
The most I’ve heard from politicians on both side of the aisles is that this issue raises red flags and we should take a second look at it. And yes, a virtually state-owned company from the UAE doing our port management raises more than a few red flags. Perhaps these fears will ultimately prove unfounded, but neither you nor I can know that. And given that some of 9/11 terrorists came into our country through the UAE, I think erring on the side of caution and “further review” is more than justified.
Also Dave, to your points on the transaction and the whole free market argument…well, that doesn’t hold water with me. And frankly, if we wouldn’t let China own Unocal, why let the UAE own the managment of our ports? Listen, I’m all for a global economy and I think the outsourcing argument, while politically sexy, is ultimately futile. However, I prefer the management of our security and energy to be in our hands, or that of our very closest allies…if we’re given a choice. Nothing xenophobic about that.
Also, I think your characterization of this as a “partisan” issue misuses that term. These concerns have nothing to do with ideology and everything to do with our elected officials keeping an eye out for our safety. And I’m glad that they’re at least saying, “Whoa, let’s check this out” instead of “No, you know best.”
Thanks for the time.
Actually, Dave, I don’t approve of the Chinese companies being given this assignment either. I see China as a long-term rival / enemy of this country.
And I’m well aware that “the Coast Guard will still be running security.” My concern is how much these companies will HAVE to be told about our security practices and technology, not to mention details about what we’re looking out for today. Or don’t you think that AQ won’t get a call from a Muslim working there, “Hey, they just put the word out to take a close look at dates from Dubai this month!”
Finally, of course, this ties back to my concerns over dealing with a religion that regards lying to infidels as an acceptable tactic. See taqqiya.
The Unocal deal and this deal really have few parallels, if any.
And for the I don’t know how many times now, this is not a security issue.
Also, please see my post re: embarkation point. That’s where the deal is made.
Justin, outsourcing is a red herring on this issue: there is no outsourcing whatever be discussed here. Foreign ownership per se is a red herring. These port facilities have been operated by foreign-owned companies for many years. Unless you have reason to believe that a British-owned company is intrinsically more secure than a UAE-owned one what are you left with? British companies employ lots of Muslims these days.
Security is a red herring, too: port security will continue to be handled by the U. S. Customs Service and the Coast Guard.
Even the ownership by a foreign government is a red herring: the other competitor in the bidding was the Port Authority of Singapore so whichever bidder prevailed, the capital ownership would have been by a company owned by a foreign government. I don’t believe I’ve heard anyone complain about the PAS participation. Where was the outrage six months ago?
DPW appears to be a substantial well-thought-of company and singling it out seem singularly imprudent.
But most of all it’s very apparent to me that, as I’ve written, whatever risks there are should be managed rather than legislated.
So everything is a red herring in this argument? Well, then I guess we’re done talking…heh.
Listen, I think you’re dismissing the other side much too quickly. The points I’ve outlined above are valid concerns, regardless of whatever you or Daniel may call them. Xenophobic? Please…we’re talking about Muslim nations who have helped shield Al Qaeda or their assests even AFTER 9/11, not ALL nations or our closest allies.
And again, characterizing this as a partisan issue is provably false, even if the only thing you read is the paragraph you blockquoted. That is, unless you consider the Bush administration a completely different political ideology from both conservatism and liberalism. And actually, some may argue that case. 🙂
I see the problem with the other side as being that they have precisely dismissed this without having the facts in hand. Most critics didn’t even know (and curiously do not mention) that the ports have been under foraign management for quite a long time.
I don’t believe that Dave has a partisan bone in his body, and haven’t seen (maybe I missed it) where he has cloaked this in partisanship.
This isn’t a partisan issue, as we have seen. Now, the Dems may think that they have an issue, but just wait.
Good to see rational argument, although unsurprising to see the handwaving xenophobia dressed up as “concerns”
As to security procedures, DPW already engages in collaboration with American authorities overseas, pre-clearance of cargo. Leakage on security procedues? Well perhaps the xenophobes should shut down cooperation with the dirty Ay-rabs overseas, why not shut down trade entirely? Just to be safe.
One should also pay attention that PRC owned firms do much of the container business on the US West Coast, for about a decade now, including ownership of facilities (or leaseholding to be more precise). Of course they have the same “values” as Americans.
Values are not business, if I did business only with people of my values, I’d be doing nothing a lot.
When it comes right down to it, here’s the answer “we’re talking about Muslim nations who have helped shield Al Qaeda or their assests even AFTER 9/11, not ALL nations or our closest allies.”
A nice thank you to the moderates as represented by Dubai, the sweeping “Muslims are al-Qaeda” for all that nothing connects UAE government nor officials
Well, this is one critic who hasn’t discounted foreign management of the ports. I don’t have a problem with the Brits owning the means by which we manage our ports. I do have a problem with the UAE owning the means And again, by definition, this is NOT xenophobia.
And frankly, I truly don’t think it’s the “foreignness” of the ownership that bothers me. It’s the UAE’s recent ties with Al Qaeda that bothers. Do note this in future comments if you want to respond.
As far as the “Muslims are al-Qaeda” comment, well, I’m calling for our country to help out the people of Palestine in a recent post. So make of that what you may. Hardly a non-Muslim sentiment.
I would never say that Dave has anything but the best intentions with his posts. I really enjoy his blog and it’s one of my favs even though I comment here rarely. Please commenters, don’t misunderstand strong disagreement with accusation.
In short, you have my respect Dave.
What UAE recent ties with al Qaeda?
Interesting deal, I wonder how long it has been on the back burner? The Treasury Secretary, who was chairman of CSX rail firm sold his interest to DPO in 2004, He also runs the committee: you guessed it… on Foreign Investments, and 11 other agencies.?( Who is financing this deal? I wonder where DBO got the money from?) Who signed off on the loans? I wonder who is getting rich. While the US government is allowing Foreign States to run our ports….For thoses who are put in government offices, for the people and by the people. Will you please stand up for the people who elected you……..Maybe our elected official, congressmen, senators,and others .. will now stand up and say enough in enough…. Headache for the White House, I don’t think so. It is more serious than that, maybe a Heart Ache in the Heart Land if DBO is allowed to oversee our ports. Thank God for lease agreements!
A great deal of the reaction was knee jerk. The part I get upset about it is the arrogance of the Whitehouse. Was Bush’s reaction “Let me explain why this is good. Let me explain all that went into this decision.” NO. His reaction was: “Your government has looked into it. If you try to pass a law against it. I will veto it.”
To me this is typical of the absolutism in this administration. “We are right. If you disagree with us, we will slap you down.” Democracy is supposed to be about supporting your arguments. This administration, in my opinion, is about shredding the enemy. “The liberal press is out to get me.” “The activist courts are out to get me.” “The democrats are out to get me.”
I do wonder who is getting rich off this deal.
I do wonder if it is a good idea for a foreign government to have control a level of control over our ports is good.
For the record, there is a difference between a British company and a Arab country owning an interest in our ports. We do not treat all of our allies alike. Anyone who claims we should treat all of our allies alike should reflect on arms deals that the US makes.
It is interesting when the Coast Guard raised objections they were disregarded.