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Arab Port Deal Grows In Controversy

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Update 1 – 4.55 pm Pacific

A $6.8 billion Adminstration-backed deal that would allow a United Arab Emirates company to manage major
US ports — New York-New Jersey (Port Newark Container Terminal – NJ as well as the New York City Passenger Ship Terminal), Philadelphia (multiple facilities), Baltimore (multiple facilities), Miami (Port of Miami Terminal Operating Co.) and New Orleans (multiple facilities) — is drawing increasing bi-partisan cricitism (from lawmakers and bloggers) as well as a lawsuit challenging the sale.

Dubai-headquartered DP World is seeking to purchase UK-based Peninsular and Oriental Steam Navigation Company, the number four port management company in the world; the new firm would be number three, behind Hong Kong’s Hutchison Whampoa Ltd and Singapore’s PSA International.

Moreover, information from P&O suggests far more ports that those five ares are affected: 23 facilities – from Maine to Texas – appear to be under P&O ownership or management.
On 13 February, shareholders of P&O approved the sale to DP World and the firm expects court approval on 2 March; neither firm is commenting on the current hoopla in the US, which may be too little, too late, to stop the sale from going through.

US outcry came on the heels of that vote, when news reports last week revealed that the Treasury Department’s Committee on Foreign Investment, under Exon-Floria, approved the sale as having no impact on national security. The 12 people making this decision do not provide an independent assessment as all are Bush appointees: the Secretaries of State, the Treasury, Defense, Homeland Security, and Commerce; the United States Trade Representative; the Chairman of the Council of Economic Advisers; the Attorney General; the Director of the Office of Management and Budget; the Director of the Office of Science and Technology Policy; the Assistant to the President for National Security Affairs; and the Assistant to the President for Economic Policy. (pdf).

The review took place quietly in a 30-day window for decision-making; the committee declined its right to extend the review another 45 days. Sen. Richard Shelby (R-AL) has also called for further scrutiny.

Legal Challenge
In Miami, Continental Stevedoring & Terminals Inc. (a subsidiary of Eller & Company Inc.) is challenging the deal due to its forcing the firm to become an “involuntary partner” with the government of United Arab Emirates, which owns the Dubai-based firm. In addition, the lawsuit contends that the sale “may endanger the national security of the United States.”

AP reports that “The Port of Miami is among the nation’s busiest. It is a hub for the nation’s cruise ships, which carry more than 6 million passengers a year, and the seaport services more than 30 ocean carriers, which delivered more than 1 million cargo containers there last year.”

Republican Criticism
Sen. Lindsey O. Graham (R-SC), on Fox News Sunday: “It’s unbelievably tone deaf politically at this point in our history.”
Rep. Ileana Ros-Lehtinen, (R-FL) chair of a subcommittee on the Middle East, has called for a ”full investigation. ”

And Peter Gadiel, who heads 9/11 Families for a Secure America, “think[s] the President’s gone insane” because two of the 9/11 hijakcers were citizens of Dubai. (tip) Also, “many” of the hijackers traveled through UAE; “after the attacks, U.S.Treasury Department officials complained about a lack of cooperation by the UAE and other Arab countries trying to track Osama bin Laden’s bank accounts.”

The 9/11 Commission identified US ports as a weakness in the nation’s infrastructure. Sen. Chuck Schumer (D-NY) says that only 5 percent of the cargo that enters the US is inspected.

The Houston Conservative writes:

Stop the presses…I find myself agreeing with Boxer and Schumer? Yep believe it or not, I do not believe this is a good idea… it just doesn’t FEEL RIGHT to have mission critical facilities under the control of a foreign power, no matter how benevolent and benign we may believe them to be … This is stupid, it’s bad policy and it’s bad politics.

Rep. Peter King (R-NY) told the WaPo that US terms approving the sale “don’t address the underlying conditions, which is how are they going to guard against things like infiltration by al Qaeda or someone else, how are they going to guard against corruption?”

Homeland Security Secretary Michael Chertoff defended the security review on ABC’s Sunday political talk show.

The scale of these operations appears to be enormous.

Information from the P&O website suggests, for example, that “Philadelphia” is much larger than the city:
P&O Ports North America, Inc. is a 50% joint venture partner in Delaware River Stevedores (DRS), which provides stevedoring and terminal services in Philadelphia, PA, Camden, NJ, and Wilmington, DE.

Another link on the P&O website has a list of P&O involvement in far more ports than the six areas mentioned in mainstream media.

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  • Good reporting – although I think it’s unwarranted brouhaha – globalization mandates openness in business, money has no color, really

  • Bliffle

    I think this illustrates the folly of the ‘deregulation’ movement in the Bush admin. It would hardly matter who owned these ports if the ports were properly regulated by the feds, but the religion of deregulation avers that only good will proceed from a smaller government which takes a handsoff approach to business. This is the logical consequence of that policy.

  • Aaman has it exactly right. These multinational corporations are loyal to themselves not to a particular nation they’ve chosen to base themselves in. DP World is basically owned by the government of Dubai and Dubai is a very pro American country which is basically completely under the control of the ruling family. The primary concern should not be any risk of terrorism, but whether they will do a good job at a good price.


  • Perhaps this will raise awareness of the growing power of the corporation as nation-state. Doubtful.

    And Dave, it’s not “bascially owned” by the government. It is owned by the government.

    It’s interesting that everyone keeps saying UAE is “friendly” and yet the post-9/11 rhetoric from the Administration was contrary to that. Hijackes passing thru UAE; two hijackers being citizens of UAE; blocking help on ObL $.

    Also – someone else pointed to the State Dept travel advisory for UAE as suggesting less than optimal relationship.

    On a philosophical (and sarcastic) note – why does our government support *monarchies* when our divine mission is obviously to spread our version of ‘democracy’ to the world?

  • I actually said that Dubai is friendly, not the UAE. Each of the states in the UAE has a great deal of autonomy and not all are as pro-US as Dubai is.

    One other thing you fail to note is that at this time there are NO American companies providing stevedore services at ANY US port. We’ve got the Chinese, various European companies and the Japanese providing these services, all hiring local personnel here in the US. Adding Dubai to the mix won’t exactly change things much.


  • Hi, Dave – sorry about cojoining Dubai with UAE.

    Re your comment about US firms managing ports — ummm — it appears major west coast ports are locally managed. I checked Seattle, Portland, San Francisco and LA yesterday — the ports authority do not appear to contract out the management.


  • Nancy

    The amusing (or outrageous) thing (depending on one’s POV) has been Chertoff standing there telling everyone basically “trust me”. As one of the pols on the hill pointed out yesterday, Chertoff & Homeland Security don’t exactly have a sterling record or rep for evaluation or performance, to date! Come to think of it, neither does his boss.