http://www.local6.com/news/7327461/detail.html

Company At Center Of Controversy May Move Into Tampa's Port

POSTED: 10:26 am EST February 22, 2006
UPDATED: 10:30 am EST February 22, 2006

TAMPA, Fla. -- Amid growing criticism of a deal to give a United Arab Emirates company a major presence in U.S. ports, Tampa port officials voted to move ahead with a deal that would see the company taking over cargo handling at the city's port.

Tampa Port Authority commissioners voted 6-1 Tuesday to continue contract discussions with a subsidiary of Peninsular and Oriental Steam Navigation Co., a London-based company that is being acquired by Dubai Ports World, a state-owned business in the United Arab Emirates, a U.S. ally.

P&O operates facilities at six major seaports on the East and Gulf coasts, and that has key congressional leaders worried about potential security lapses once Dubai Ports World takes over.

President Bush on Tuesday brushed aside objections by leaders in the Senate and House that the $6.8 billion sale could raise risks of terrorism at American ports. In a forceful defense of his administration's earlier approval of the deal, he pledged to veto any bill Congress might approve to block the agreement.

In Tampa, Ronda Storms, a Hillsborough County commissioner who serves on the port authority board, said that while the UAE is an ally, news organizations have reported that some of the Sept. 11 hijackers used the nation as an operational and financial base. She cast the lone vote against moving forward with the deal.

"What you're being asked to do is pay no attention to the man behind the curtain," she said. "We are being encouraged to ignore possible risks and questions raised by good and diligent people."

But Port of Tampa Director Richard Wainio and most port commissioners said they trusted the review of the deal by the Committee on Foreign Investment in the United States, which represents 12 federal agencies, including the Department of Homeland Security.



Copyright 2006 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Port Deal Pits Bush Against Party, Puts Two Key Goals at Odds
Feb. 22 (Bloomberg) -- The sale of six major U.S. ports to a Dubai company pits President George W. Bush against his Republican Party's leadership in Congress and puts in conflict two of his signature issues: national security and open markets.

Senate Majority Leader Bill Frist and House Speaker Dennis Hastert announced opposition yesterday to the $6.8 billion sale of London-based Peninsular & Oriental Steam Navigation Co. to DP World, Dubai's port company. Frist vowed to push through legislation blocking it unless the administration reconsiders. Bush said he'll veto any such measure; it would be the first of his presidency.

Frist and Hastert have been key allies throughout Bush's presidency, helping pass tax cuts, a Medicare prescription drug plan and authorization to invade Iraq. This rare intra-party battle creates a political opportunity for Democrats that was ``entirely preventable,'' Republican political consultant Rich Galen said.

The controversy is ``another example of the White House not having the capacity to see over the horizon when it comes to the public-affairs piece of what they are doing,'' Galen said. ``Too few senators and congressmen knew anything about this program, and so they are upset about not being informed.''

Lawmakers learned last week that a panel of Bush's senior economic and national security advisers approved the deal. The panel, known as the Committee on Foreign Investment in the United States, routinely examines the sale of U.S.-based assets for potential security risks.

DP World would gain control of most operations at ports in New York, New Jersey, Philadelphia, Miami, Baltimore and New Orleans through the acquisition of P&O.

March 2 Deadline

DP World plans to close the purchase by March 2, which would give lawmakers little time after they come back from a recess next week to block the deal.

Lawmakers said they'll prevail. ``If the president wants to veto this, go ahead -- we'll override the veto,'' Pennsylvania Republican Curt Weldon, a member of the House Homeland Security Committee, said in an interview yesterday.

Democrats such as Senators Hillary Clinton of New York and Robert Menendez of New Jersey have proposed legislation to bar the acquisition. Senate Minority Leader Harry Reid said Frist must let the Senate act as soon as it returns next week.

``It is already clear this deal should not go forward, and I hope he will permit the Senate to act expeditiously,'' Reid, a Nevada Democrat, said yesterday.

Political Stakes

Bush, whose party seeks to retain control of Congress in this year's elections, may suffer politically no matter how the controversy is resolved. If he prevails, he will do so over key lawmakers in his own party who say the deal may undermine the country's readiness to forestall terrorism.

``This is totally inappropriate in the 9/11 world for a company coming out of a country which has had such strong al- Qaeda influence,'' House Homeland Security Committee Chairman Peter King, a New York Republican, said yesterday.

If the deal fails, it could send the wrong signal to U.S. trading partners, even as Treasury officials travel the world trying to convince other nations to open up their capital markets.

``We want to be very careful about sending any signal that we aren't open to investment,'' Treasury spokesman Tony Fratto said yesterday.

Cnooc Ltd., China's third-largest oil producer, in August withdrew an offer to buy U.S. oil producer Unocal Corp. for $18.5 billion, citing political opposition from U.S. lawmakers.

`A Hypocrite'

If congressional opposition kills the DP World deal, the U.S. ``looks like a hypocrite,'' said Gary Hufbauer, a researcher at the Institute for International Economics in Washington who was the Treasury's deputy assistant secretary for international trade from 1977 to 1979.

``The innuendo is that this Dubai company is a front for al- Qaeda, without any evidence,'' Hufbauer said in an interview. ``It suggests that a foreign company that wants to take over anything that's mildly delicate could be subject to this type of innuendo campaign.''

Foreign ownership of port operations isn't unusual. At least five overseas-based companies already have operations on U.S. soil. One is the world's biggest cargo carrier, Maersk Line, based in Copenhagen. It is part of A.P. Moeller Maersk A/S. In addition, Nippon Yusen Kaisha, Japan's biggest shipping company, owns 20 U.S. cargo terminals.

The terminal operators use cranes to lift cargo on and off ships that sail the world laden with consumer goods such as clothing from Asia or beer from Europe. Trucks take the cargo to or from the docks.

Worldwide Operations

DP World has operations in Australia, China, Hong Kong, Romania, Germany, Dominican Republic, Venezuela, Djibouti, India and Saudi Arabia, White House spokesman Scott McClellan said.

U.S. officials stressed that the terminal operators aren't in charge of port security.

``Nothing changes with respect to security under the contract,'' Defense Secretary Donald Rumsfeld told a Pentagon news conference yesterday. ``The Coast Guard is in charge of security, not the corporation.''

Commander Jeff Carter, a Coast Guard spokesman, said the port operators must submit security plans for approval by the Guard, which also conducts inspections to make sure the firms follow through.

Jarrod Agen, a Homeland Security Department spokesman, said Customs and Border Protection agents would continue to examine some containers that flow through ports, and Immigration and Customs Enforcement agents would keep tracking tips on illegal aliens and counterfeit goods.

Extra Scrutiny

Hastert, of Illinois, and Frist, of Tennessee, said an acquisition involving a state-owned company requires extra scrutiny.

``We must not allow the possibility of compromising our national security due to lack of review or oversight by the federal government,'' Hastert wrote in a letter to Bush yesterday.

Two of the Sept. 11 hijackers were from the United Arab Emirates, and the plotters used the country to help funnel money to the operation.

In defense of the administration's decision, Bush focused on the past relationship DP World has had with the U.S. government.

``The transaction ought to go forward,'' he told reporters on Air Force One yesterday. ``I view it as the right policy. I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a Great British company.''

Reviewed in November

The companies informed Treasury in November about the pending sale, and the foreign investment committee began an informal review immediately.

The committee is made up of 12 departments and agencies including Defense, Homeland Security, the White House National Security Council, Treasury and the Commerce Department. The Energy and Transportation departments were invited to join this review.

Treasury spokesman Fratto said DP World addressed the security concerns raised by the committee. He declined to say what specific actions the company took to gain approval.

The process is secretive. The committee doesn't announce when it's conducting a review or publicize its findings. The committee's review of the purchase of International Business Machines Corp.'s personal-computer business by China's Lenovo Group Ltd. was only disclosed by the companies earlier this year.

Weldon said the process leaves him ``shocked for a couple of reasons.''

``I'm shocked by the total lack of transparency and arrogance of the White House not to consult with Congress,'' he said.



To contact the reporter on this story:
Nicholas Johnston in Washington at njohnston3@bloomberg.net

http://online.wsj.com/article/SB1140540593...od=video_center

Bush, Congress Head
For Clash Over Ports Deal

President Promises a Veto,
As Republican Leaders Move
To Block Dubai Acquisition
By GREG HITT, DENNIS K. BERMAN and DANIEL MACHALABA
Staff Reporters of THE WALL STREET JOURNAL
February 22, 2006; Page A1

In a politically charged collision of economic and national-security interests, President Bush squared off against Congressional leaders and governors from both parties over the transfer of six U.S. shipping ports to the management of a Middle Eastern company.


The escalating controversy over the $6.8 billion sale of Peninsular & Oriental Steam Navigation Co., of London, to Dubai Ports World underscores political tensions between two Republican commitments: national security and free trade in an increasingly global economy. Though the deal already has been approved by the U.S. government and by shareholders -- and is set to close next month -- an increasing number of critics are questioning the wisdom of entrusting port security to an Arab-owned entity.

Yesterday, Senate Republican Leader Bill Frist joined Democratic Leader Harry Reid in pushing for a delay and further study. Absent action by the White House, Sen. Frist said he would pursue legislation "to ensure that the deal is placed on hold." His call was echoed by House Speaker Dennis Hastert of Illinois.

President Bush vehemently defended the transaction, summoning reporters accompanying him on Air Force One to insist it posed no security threat and to say that if legislation cleared Congress to block the deal, "I'll deal with it, with a veto." Mr. Bush, who hasn't vetoed any legislation during his presidency, said the U.S. would be sending "mixed signals" by acting when a British company faced no such objections, and he challenged lawmakers to "step up and explain why a Middle Eastern company is held to a different standard."

MORE ON PORTS


• Framing the Issue: Safe Harbors?

• Vote: Should the U.S. let the deal go through?

Back at the White House later, he added, "If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward. But I also want to repeat something again, and that is: This is a company that has played by the rules, that has been cooperative with the United States, a country that's an ally in the war on terror, and it would send a terrible signal to friends and allies not to let this transaction go through."

With the president's popularity flagging, the White House faces a real risk that opposition from the House and Senate leadership, fanned by the administration's Democratic adversaries, could lead to Congressional legislation blocking the deal. "[The administration's] credibility on national security is not the ace that they thought it was," said Rep. Rahm Emanuel of Illinois, head of the Democrats' House campaign committee.

More broadly, a successful move to block the deal could send a chilling signal about some foreign investment in the U.S. at time when such investment has been critical in sustaining growth. The uproar follows a similar outcry last year at the unsuccessful effort by a Chinese state-controlled oil firm, Cnooc Ltd., to buy U.S. oil company Unocal Corp.

At the least, the uproar could lead to a change in the way such deals are reviewed. With the administration already having signed off, some in Congress are calling for overhauling and toughening the government's 31-year-old system for reviewing foreign investments with national-security implications -- including creating an expanded role for Congress. Under federal law, there is little the administration can do at this point to derail the sale.

WALL STREET JOURNAL VIDEO



WSJ's John Harwood on the clash between Bush and Congress over the ports deal and whether to expect some type of compromise. Plus, WSJ editorial board member Stephen Moore and Bilzin Sumberg attorney Michael Kreitzer debate the deal.
• New Jersey Governor John Corzine details a planned federal lawsuit to block the handover of the Port of Newark to Dubai Ports World.

The deal followed the normal approval process for foreign transactions with national-security implications. The acquisition was run through the Treasury Department, which typically convenes experts from across the government for what is called the Committee on Foreign Investment in the U.S., or CFIUS. Wrapped in secrecy, the panel makes recommendations to the president, who has final say.

"I think we're at a time where we can get some good CFIUS reform," said attorney Patrick Mulloy, a critic of the current approval process who sits on a government-appointed U.S.-China trade commission. The P&O example reveals that the Treasury Department "doesn't want to use its authority," Mr. Mulloy said. "Foreigners finance our budget deficits and trade deficits, and Treasury doesn't want to do anything that will interfere with the investment flows."

Among its global holdings, P&O controls ports in New York, Philadelphia, Baltimore, Miami, New Orleans and Newark, N.J. Its U.S. affiliate directly employs 430 workers, while another 6,000 or so workers are hired daily on a contract basis through the longshore union.


For its part, Dubai Ports World is backed by the government in Dubai, one of the seven emirates that comprise the oil-rich United Arab Emirates, a small, conservative Muslim state on the Persian Gulf. The company's chief operating officer, Ted Bilkey, said it has worked within U.S. law and "actually approached the U.S. government for approval of our security arrangement weeks prior to the formal review."

In a statement, Mr. Bilkey said: "We will continue to work with the U.S. government on maintaining the highest standards of security at U.S. ports, and will fully cooperate in putting into place whatever is necessary to protect the terminals." People close to the matter said the company isn't considering stripping out the U.S. ports because it sees no such need.

Yesterday, members of the Senate Homeland Security and Governmental Affairs Committee -- including Republican Chairwoman Susan Collins of Maine -- sent a letter to Homeland Security Secretary Michael Chertoff and Treasury Secretary John Snow expressing "serious concerns" about the review of the sale and demanding the committee be briefed on the process.

Also questioning the deal were two Republican governors, George Pataki of New York and Robert Ehrlich of Maryland, and New Jersey's Democratic Gov. Jon Corzine, all of whom have affected ports in their states. Joining Mr. Frist were Republican leaders Jon Kyl of Arizona and Rick Santorum of Pennsylvania, both facing tough Senate re-election races this fall.

Dubai Ports World executives plan to visit Washington this week to brief congressional leaders and staffers and administration officials on the deal. Girding for a battle, the company is tapping well-connected consulting firms for help: Downey-McGrath Group, founded by former congressmen from both parties, and Alston & Bird LLC, whose advisers include former Senate Democratic Leader Thomas Daschle of South Dakota.

In the background is Albright Group, a firm founded by former Secretary of State Madeleine Albright. The Albright Group doesn't lobby but has provided strategic advice to Dubai Ports World, specifically on expanding the company's presence in China.

Some maritime executives said the weakest links in port security aren't likely to be in domestic ports. "If you are worried about a bomb in the box going off in New York, you need to worry about who loads the container overseas rather than the terminal operator who unloads it in the U.S.," said Theodore Prince, senior vice president of Optimization Alternatives Ltd., a Texas provider of terminal-operating software.


Indeed, terminal operators represent just one of many links in a typical international supply chain. Typically, cargo is loaded into a container by a manufacturer or consolidation center overseas. It is then trucked to a foreign port, put on a ship and brought to the U.S.

On the U.S. side of the transaction, a container is taken off a vessel at a terminal and moved by truck or train to a cargo receiver. While terminal operators play a role in security, including the fencing and access by employees, dockworkers and truck drivers, they don't normally touch the cargo inside the box. Security is provided by law enforcement such as the Coast Guard and Customs and Border Protection.

Most U.S. container ports consist of multiple terminals, each of which is leased to a separate operator, such as P&O. Such terminal operators are responsible for developing and operating the terminal and may subcontract to a stevedoring company that supplies the labor to load and unload the ships. Stevedores usually hire unionized dockworkers who are U.S. citizens.

http://www.miami.com/mld/miamiherald/news/...miherald_nation
Posted on Tue, Feb. 21, 2006
U.S. SECURITYCarter backs Bush's stand on seaport-operations deal

Former President Jimmy Carter downplayed criticism of White House support of an Arab-owned company's purchase of a major seaport-operations firm.BY LESLEY CLARKlclark@MiamiHerald.comWASHINGTON - President Bush is taking a battering from fellow Republicans, even the governors of New York and Maryland, over the administration's support for a decision that gives an Arab company control of some commercial operations at six major seaports -- including Miami-Dade's.
But he got a boost Monday from an unlikely source, frequent critic and former president Jimmy Carter, who downplayed fears that the deal poses a risk.
''The overall threat to the United States and security, I don't think it exists,'' Carter said on CNN's The Situation Room. ``I'm sure the president's done a good job with his subordinates to make sure this is not a threat.''
The show of support from the Democrat, who has not hesitated to criticize Bush, underscores the odd political lines that have emerged since news broke last week that the United States gave the thumbs-up to the $6.8 billion sale of the British firm P&O Ports to a company owned by the United Arab Emirates.
Both Democrats and Republicans have called on the president to scrap the deal. On Monday Republican Govs. George Pataki of New York and Robert Ehrlich of Maryland questioned the decision. And congressional outrage persisted even as the White House signaled it's unlikely to block it.
Political analysts suggested that challenging the president gives Republican lawmakers a chance to deflect Democratic criticism.
''This is a homeland security, national security issue and I think Republicans think they own this issue and they don't want to give Democrats an opening,'' said Stuart Rothenberg, editor of The Rothenberg Political Report, a Washington newsletter.
REPUBLICANS WORRIED
Republicans said they're simply worried no one was paying enough attention to security concerns.
''After Sept. 11 we can't blindly follow the president in a way that seems to create a homeland security concern,'' said Rep. Mark Foley, a Palm Beach County Republican. Foley said he's working on legislation to give Congress the authority to approve or reject all applications made through the Committee on Foreign Investments in the United States, the top-secret group that OK'd the transaction.
Port security officials have dismissed the congressional concerns, but Republicans suggest an administration that is usually politically attuned has sorely misread public reaction.
''I don't know if they were tone deaf, but they certainly didn't have a pulse on what people were thinking in terms of security,'' said Rep. Ileana Ros-Lehtinen, a Miami Republican. She and Foley plan news conferences today in Miami. ``We haven't forgotten Sept. 11. I know the president hasn't either, but that has to extend to more than just speeches.''
Traveling with the president, White House spokesman Scott McClellan on Monday repeated the administration's contention that the sale was thoroughly vetted by a ''rigorous review process.'' His comments came after he was asked if Bush was ''comfortable'' with the deal after Sunday morning talk shows featured Republicans criticizing it.
The Port of Miami-Dade is taking a neutral position, stressing that DP World would only be the majority owner in one of three terminals. But Miami-Dade Mayor Carlos Alvarez said Monday the matter ``raises issues.''
At Miami's port, P&O Ports owns 50 percent of the Port of Miami Terminal Operating Co., which handles about half the cargo containers at the port.
Senate hearings are already planned and Sen. Bob Menendez, a New Jersey Democrat, vowed Monday to push legislation to block the sale if President Bush doesn't act by March 2 -- the day the sale is set to close, affecting ports in Baltimore, New York, Philadelphia, New Orleans and New Jersey, as well as Miami.
Visiting Dubai, Undersecretary of State Karen Hughes sought to rebuff suggestions that Congress' criticism is based on anti-Arab sentiment, according to the Associated Press.
''The lawmakers are questioning about security concerns in light of the fact that a couple of the Sept. 11 hijackers did come from the United Arab Emirates,'' Hughes said, adding that the Middle Eastern nation has been ``a strong partner in the war against terror.''
PREJUDICE ALLEGED
The Council on American-Islamic Relations, a Washington group that seeks to promote a positive image of Islam and Muslims, said some of the reaction smacks of prejudice.
''No one seems to be criticizing the company itself, but they're most concerned with the religion and ethnicity of its owners,'' said spokesman Ibrahim Hooper. ``It's what we have to deal with in the post-9/11 era.''
But lawmakers like Ros-Lehtinen, who is aiming to become the next chair of the House International Relations Committee, were unapologetic about their stance.
''They've been a strong ally, but what about tomorrow?'' Ros-Lehtinen said of the United Arab Emirates.
Miami Herald staff writer Steve Harrison contributed to this report from Miami.
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Bush Port Defiance Fuels Bipartisan Anger
By TOM RAUM, Associated Press Writer

President Bush's marquee issue, the war on terror, is being turned against him by Democrats and rebelling members of his own party in an election-year dustup over a deal that allows an Arab company to manage major U.S. ports.

People in both parties are suggesting it's another case of Bush seeming to be tone deaf to controversy — on top of government eavesdropping, Katrina recovery and Vice President Dick Cheney's hunting accident.

The storm is forcing the president to choose between losing face with the Arab world and embarking on what would be his first veto battle with the GOP-led Congress. And it has enabled Democrats to seemingly outflank him on a key GOP issue: national security.

Has Bush lost his way politically — or at least his touch?

"In regards to selling American ports to the United Arab Emirates, not just NO — but HELL NO," conservative Rep. Sue Myrick (news, bio, voting record), R-N.C., wrote Bush in a terse letter on Wednesday that she also posted on her Web site.

No matter that no American port is actually being sold, Bush faces a spreading rebellion among Republicans, Democrats and port-state governors.

"I think somebody dropped the ball. Information should have flowed more freely and more quickly up into the White House. I think it has been mishandled in terms of coming forward with adequate information," said Rep. Vito Fossella (news, bio, voting record), R-N.Y.

At issue: Bush's strong defense of an arrangement that would put a government-owned United Arab Emirates company in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The deal transferring port management from a British firm to Dubai Ports World has already been approved by both companies and an adminstration review panel.

Despite Bush's assertion that UAE has been one of the most helpful Arab countries in the war on terror, both Senate Majority Leader Bill Frist of Tennessee and House Speaker Dennis Hastert of Illinois threatened legislation to put the deal on hold. Bush, in turn, vowed to cast his first veto — if necessary — to stop any such attempt.

"It's a strange thing for Bush to have slipped into, given the savvy you expected from this administration, with a vice president who spent over a decade on Capitol Hill," said Princeton University political scientist Fred Greenstein. "It seems as if his people would have seen that there was potential for trouble, and at least done their homework on the Hill."

Although a veto showdown could still be avoided, port-deal opponents were optimistic they could muster the two-thirds majorities needed to override one. "This deal doesn't pass the national security test. I think it is a mistake," said Rep. Jim Saxton (news, bio, voting record), R-N.J., chairman of a House subcommittee on terrorism threats.

Bush learned about the arrangement himself only in recent days amid increasing news coverage, said presidential spokesman Scott McClellan.

While Bush had struck a defiant tone on Tuesday in back-to-back sessions with reporters on Air Force One and outside the White House, McClellan on Wednesday acknowledged Congress should have been briefed earlier "given all the attention that has been focused on this and given the fact that it has been mischaracterized."

The phrase "tone deaf" to describe Bush's interaction with Congress was uttered by lawmakers as politically different as Sens. Lindsey Graham, R-S.C., and Joseph Biden, D-Del.

The Dubai Ports deal "is not a national security issue," suggested GOP consultant Rich Galen. "It is an issue of this administration having a continuing problem with understanding how these things will play in the public's mind and not taking steps to set the stage so these things don't come as a shock and are presented in their worst possible light."

With Bush's ratings stuck at about 40 percent, the incident is one more major distraction to his efforts to focus on his second-term domestic agenda.

Syndicated radio host Laura Ingraham was among the conservatives criticizing the deal, asking on her Wednesday program, "How do we know people they're hiring are passing background checks?"

The dispute brought to mind a 1999 flap when conservatives admonished the Clinton administration for acquiesing on Panama's awarding of a contract to a China company, Hong Kong-based Hutchison Whampoa Ltd, to run ports at both ends of the Panama Canal.

But then, almost all the criticism was from Republicans. Now, it's bipartisan.

"I think there are certain things you have to be really worried about. And one of them is port safety," said Robert O. Boorstein, a senior national security adviser in the Clinton White House.

"You have to call it an increbile tin ear that this administration could do that, with nobody stopping and saying, `excuse me?' said Boorstein, now with the Center for American Progress, a liberal think tank.

___

EDITOR'S NOTE — Tom Raum has covered national and international affairs for The Associated Press since 1973.



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Terror fears, stoked by Bush, now bite him
By Alan Elsner
For almost five years President George W. Bush has warned Americans to fear terrorism, but now those words may come back to bite him.

The president, who has cast himself as America's protector against terrorism and Islamic militancy, has been thrown on the defensive by a bipartisan revolt over his administration's approval of a state-owned company from the United Arab Emirates assuming operation of six major U.S. seaports.

Bush and his aides have argued that the United Arab Emirates is an anti-terrorist ally and that the company would have no security role. But even Bush allies, like South Carolina Republican Sen. Lindsay Graham, have called the deal "politically tone deaf."

With Republican and Democratic lawmakers drafting legislation to block the port deal, Bush vowed on Tuesday to use his veto for the first time should any such law reach his desk, drawing the lines for a high-stakes political battle.

"Politically, for the president, it is a huge mistake for him to be defending this decision. The president will be overturned," said U.S. Rep. Tom DeLay, the former number two Republican in the House of Representatives.

Bush has long been successful in persuading Americans they were under constant threat and he was the best man to protect them, although polls reveal paradoxes in attitudes.

Last month, some 75 percent of Americans said in a Zogby survey that they expected the country to suffer a major terrorist attack within the next two years, but a CNN/Gallup/USA Today poll found that 64 percent of Americans had confidence in Bush's ability to prevent an attack.

Fears have not subsided, pollster John Zogby said, although the United States has not suffered a major attack since September 11, 2001. Bush two weeks ago revealed a plot foiled in 2002 to fly an airplane into the West Coast's tallest building and said the terrorist threat had not abated.

"That's what makes this story so ironic. I guess you can't have it both ways," Zogby said.

Cal Jillson, a political scientist at Southern Methodist University, said, "Bush is a victim of his own rhetoric. This deal flies in the face of the Bush administration's general posture, which has been that there is much to fear out there and they have been vigilant in protecting the country."

DEMOCRATS HIT BACK

Other factors may also be driving opposition to the proposed takeover by Dubai Ports World of operations at the six ports.

Among them may be general anti-Arab sentiment and political calculations in a congressional election year. For years, Bush has portrayed Democrats as weak on security. Now, they have taken the chance to hit back.

Meanwhile Republicans are less beholden to a second-term president with weak approval ratings.

"So far Bush has always managed to get Republicans back in line when he needed to, but his influence is waning and it will only get worse for this administration," Jillson said.

Some in Congress have complained they were blindsided by the deal, which was approved by a panel whose deliberations are closed to the public.

Anger has also bubbled up among grassroots conservatives at the heart of Bush's political base who are expressing themselves on talk radio and the Internet.

Political analyst Michael Ledeen of the American Enterprise Institute compared the furor to a conservative revolt last year that thwarted Bush's nomination of White House legal counsel Harriet Miers to the Supreme Court. "It's the foreign policy equivalent of the Miers nomination. It's stupid," Ledeen said.



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Wednesday, February 22, 2006 · Last updated 5:21 p.m. PT

U.S., UAE have sensitive relationship

By ROBERT BURNS
AP MILITARY WRITER


Containers are loaded onto a cargo ship at the Port Newark Container Terminal in Newark, N.J., Wednesday, Feb. 22, 2006. President Bush was unaware of the pending sale of shipping operations at Port Newark and five other major U.S. seaports to a state-owned business in the United Arab Emirates until the deal already had been approved by his administration, the White House said Wednesday. Bush faces a rebellion from leaders of his own party, as well as from Democrats, about the deal that would put Dubai Ports in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. (AP Photo/ Jose F. Moreno)
WASHINGTON -- The United Arab Emirates is a U.S. military partner in the global war on terrorism, but the relationship is so politically sensitive in the UAE that the Pentagon does not openly discuss details.

The strategic importance of the UAE derives in large part from its location along the Strait of Hormuz, the narrow chokepoint for shipping in the Persian Gulf, a short distance from Iran's southern shores.

The UAE is the world's fifth-largest oil exporter.

Patrick Clawson, the deputy director of the Washington Institute for Near East policy, who lived in Dubai part of last year, said, "Dubai is a place with few rules, but one of the few things tightly regulated is port security, and that's why the U.S. Navy feels comfortable using Dubai more than any other port in the world."

Ironically, port security is at the heart of a Washington political storm over the Bush administration's decision to sell shipping operations at six major American seaports to a state-owned business in the UAE. Democrats and Republicans alike have protested, citing among other issues the UAE's support for the Taliban regime in Afghanistan before U.S. forces invaded and toppled the radical regime in the fall of 2001.

Secretary of State Condoleezza Rice will visit the UAE on Thursday, the final stop on a three-nation tour of Arab countries.

Gen. Peter Pace, chairman of the Joint Chiefs of Staff, told reporters Tuesday that the military relationship is "superb," and that U.S. forces use UAE seaports and air fields for logistics support and for training of Air Force pilots. Pace was in the Persian Gulf nation two months ago for talks with senior UAE military officials.

"In everything that we have asked and worked with them on, they have proven to be very, very solid partners," Pace said.

Among the specifics that Pace did not mention:

- Air Force U-2 spy planes and Global Hawk unmanned surveillance aircraft have been based at al-Dhafra air base, along with KC-10 aerial refueling planes. When a U-2 crashed in the UAE last June, killing the Air Force pilot, American officials did not publicly disclose the location "due to host nation sensitivities."

- U.S. sailors and Marines regularly make liberty calls at the port of Jebel Ali, near the UAE's largest city, Dubai.

- In March 2000 the UAE and the United States completed a sales agreement for 80 of the most sophisticated versions of the F-16 fighter jet.

- The threat to commercial shipping in the Gulf during the "tanker war" between Iran and Iraq in the 1980s was the impetus for the United States to develop closer ties to the UAE. Ties grew much closer after Iraq invaded Kuwait in August 1990.

The formal basis for the U.S.-UAE military relationship is a defense cooperation agreement signed in 1994. As with most other American allies in the Persian Gulf, including Saudi Arabia, the presence of American troops in the UAE is either cloaked in a degree of secrecy or de-emphasized out of concern about anti-US sentiment.

The Pentagon will not say how many U.S. troops are based in the UAE.

In his book, "Code Names," military historian and author William Arkin wrote that during the 1990s the CIA established liaison relations with its UAE counterparts and pressured them to sever ties with the Taliban regime in Afghanistan.

---

AP Diplomatic Writer Barry Schweid contributed to this report.

--------------------------------------------------------------------------------
Lawmakers Undeterred by Bush Veto Threat
- By TED BRIDIS, Associated Press Writer
Wednesday, February 22, 2006


(02-22) 06:49 PST WASHINGTON, (AP) --


Lawmakers determined to capsize the pending sale of shipping operations at six major U.S. seaports to a state-owned business in the United Arab Emirates said President Bush's surprise veto threat won't deter them.


Bush on Tuesday brushed aside objections by leaders in the Senate and House that the $6.8 billion sale could raise risks of terrorism at American ports. In a forceful defense of his administration's earlier approval of the deal, he pledged to veto any bill Congress might approve to block the agreement.


The sale's harshest critics were not appeased.


"I will fight harder than ever for this legislation, and if it is vetoed I will fight as hard as I can to override it," said Rep. Pete King, R-N.Y., chairman of the Homeland Security Committee. King and Democratic Sen. Charles Schumer of New York said they will introduce emergency legislation to suspend the ports deal.


Another Democrat, Sen. Bob Menendez of New Jersey, urged his colleagues to force Bush to wield his veto, which Bush — in his sixth year in office — has never done. "We should really test the resolve of the president on this one because what we're really doing is securing the safety of our people."


White House counselor Dan Bartlett said Wednesday the UAE company, Dubai Ports, "is a reputable firm that went through a congressionally approved vetting process." He said the U.S. has "the necessary safeguards to make sure that the security of our country is in place" and that rejecting the deal would send "a dangerous signal to people overseas that America plays favorites."


"The president wants this deal to go forward because it was followed by the book and he wants Congress to understand that," Bartlett said on CBS'"The Early Show." He told Fox News Channel that Bush felt strongly that "we need to be adding strategic partners" in the Mideast.


But Sen. Joseph Biden, D-Del., said the bipartisan opposition to the deal indicated "a lack of confidence in the administration" on both sides. "Sure, we have to link up with our Arab friends but ... we want to see and those in Congress want to know what ... safeguards are built in," Biden said on ABC's "Good Morning America."


The first-ever sale involving U.S. port operations to a foreign, state-owned company is set to be completed in early March. It would put Dubai Ports in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. "If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward," Bush said.


Defending his decision, Bush responded to a chorus of objections this week in Congress over potential security concerns in the sale of London-based Peninsular and Oriental Steam Navigation Co.


Bush's veto threat sought to quiet a political storm that has united Republican governors and Senate Majority Leader Bill Frist of Tennessee with liberal Democrats, including New York Sens. Hillary Rodham Clinton and Schumer.


To assuage concerns, the administration disclosed some assurances it negotiated with Dubai Ports. It required mandatory participation in U.S. security programs to stop smuggling and detect illegal shipments of nuclear materials; roughly 33 other port companies participate in these voluntarily. The Coast Guard also said it was nearly finished inspecting Dubai Ports' facilities in the United States.


Frist said Tuesday, before Bush's comments, that he would introduce legislation to put the sale on hold if the White House did not delay the takeover. He said the deal raised "serious questions regarding the safety and security of our homeland.


House Speaker Dennis Hastert, R-Ill., asked the president for a moratorium on the sale until it could be studied further. "We must not allow the possibility of compromising our national security due to lack of review or oversight by the federal government," Hastert said.


Bush took the rare step of calling reporters to his conference room on Air Force One after returning from a speech in Colorado. He also stopped to talk before television cameras after he returned to the White House.


"I can understand why some in Congress have raised questions about whether or not our country will be less secure as a result of this transaction," the president said. "But they need to know that our government has looked at this issue and looked at it carefully."


A senior executive from Dubai Ports World pledged the company would agree to whatever security precautions the U.S. government demanded to salvage the deal. Chief operating officer Edward "Ted" H. Bilkey promised Dubai Ports "will fully cooperate in putting into place whatever is necessary to protect the terminals."


Bush said protesting lawmakers should understand that if "they pass a law, I'll deal with it with a veto."


Lawmakers from both parties have noted that some of the Sept. 11 hijackers used the United Arab Emirates as an operational and financial base. In addition, critics contend the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist.


___


Associated Press writers Ben Feller, Will Lester, Terence Hunt, and Devlin Barrett in Washington, Matthew Verrinder in Newark, N.J., and Tom Stuckey in Annapolis, Md., contributed to this report.


URL: http://sfgate.com/cgi-bin/article.cgi?file.../w042723S91.DTL


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©2006 Associated Press

http://today.reuters.com/misc/PrinterFrien...ryID=nN22395330

U.S. terror fears, stoked by Bush, now bite him

By Alan Elsner

WASHINGTON, Feb 22 (Reuters) - For almost five years U.S. President George W. Bush has warned Americans to fear terrorism, but now those words may come back to bite him.

The president, who has cast himself as America's protector against terrorism and Islamic militancy, has been thrown on the defensive by a bipartisan revolt over his administration's approval of a state-owned company from the United Arab Emirates assuming operation of six major U.S. seaports.

Bush and his aides have argued that the United Arab Emirates is an anti-terrorist ally and that the company would have no security role. But even Bush allies, like South Carolina Republican Sen. Lindsay Graham, have called the deal "politically tone deaf."

With Republican and Democratic lawmakers drafting legislation to block the port deal, Bush vowed on Tuesday to use his veto for the first time should any such law reach his desk, drawing the lines for a high-stakes political battle.

"Politically, for the president, it is a huge mistake for him to be defending this decision. The president will be overturned," said U.S. Rep. Tom DeLay, the former number two Republican in the House of Representatives.

Bush has long been successful in persuading Americans they were under constant threat and he was the best man to protect them, although polls reveal paradoxes in attitudes.

Last month, some 75 percent of Americans said in a Zogby survey that they expected the country to suffer a major terrorist attack within the next two years, but a CNN/Gallup/USA Today poll found that 64 percent of Americans had confidence in Bush's ability to prevent an attack.

Fears have not subsided, pollster John Zogby said, although the United States has not suffered a major attack since Sept. 11, 2001. Bush two weeks ago revealed a plot foiled in 2002 to fly an airplane into the West Coast's tallest building and said the terrorist threat had not abated.

"That's what makes this story so ironic. I guess you can't have it both ways," Zogby said.

Cal Jillson, a political scientist at Southern Methodist University, said, "Bush is a victim of his own rhetoric. This deal flies in the face of the Bush administration's general posture, which has been that there is much to fear out there and they have been vigilant in protecting the country."


DEMOCRATS HIT BACK

Other factors may also be driving opposition to the proposed takeover by Dubai Ports World of operations at the six ports.

Among them may be general anti-Arab sentiment and political calculations in a congressional election year. For years, Bush has portrayed Democrats as weak on security. Now, they have taken the chance to hit back.

Meanwhile Republicans are less beholden to a second-term president with weak approval ratings.

"So far Bush has always managed to get Republicans back in line when he needed to, but his influence is waning and it will only get worse for this administration," Jillson said.

Some in Congress have complained they were blindsided by the deal, which was approved by a panel whose deliberations are closed to the public.

Anger has also bubbled up among grassroots conservatives at the heart of Bush's political base who are expressing themselves on talk radio and the Internet.

Political analyst Michael Ledeen of the American Enterprise Institute compared the furor to a conservative revolt last year that thwarted Bush's nomination of White House legal counsel Harriet Miers to the Supreme Court. "It's the foreign policy equivalent of the Miers nomination. It's stupid," Ledeen said.



--------------------------------------------------------------------------------

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http://www.prisonplanet.com/articles/febru...portsellout.htm

The Port Sell-Out and the Dismantling of America
Globalists swallowing US sovereignty through front countries like UAE but China threat ignored

Alex Jones & Paul Joseph Watson/Prison Planet.com | February 23 2006

It is a stated goal of the Bilderberg Group, the Trilateral Commission and the CFR to promote what they call 'interdependence' and to lobby governments to sell off key infrastructure such as roads, lakes, ports, and highways to international corporations so that corporations can grow to be bigger in size than government.

44 of the world's 100 biggest economies are not countries, they are corporations. There is no vote, there is no access to shareholder or CEO records. These corporations take over governmental functions by paying off politicians to hand over assets and then declare there to be no means of oversight of their activities.

In 1997 the Communist Chinese government took over the Long Beach Naval Air Base, the only major deep water port that can take large ships on the west coast. In 2000, the Communist Chinese, Hutchinson Whampoa which is run by the PLA, took over the Panama Canal and has stationed between 15,000 and 30,000 troops at the facility.

May we remind our readers that top Chinese generals continue to threaten nuclear attacks on America. There is absolutely no mention of the Chinese takeover of these facilities amidst the media merry-go-round of the UAE ports debate and the same people that now criticize the UAE deal, like Chuckie Schumer, supported the ports sell-out to the Communist Chinese under Bill Clinton.



Alex Jones' first documentary film America: Destroyed By Design, made in 1997, warned Americans that the sell-out to the Chinese was the first step on the road to the sacking of the American economy and pulling the plug on key US infrastructure.

Click here to view a segment where Alex Jones discusses the Chinese sell-out.

Why are people so concerned about the United Arab Emirates when the fastest growing military on the planet and a superpower that continually threatens to annihilate the US has been metaphorically handed the keys to the kingdom and is encircling the country?

During the Chinese sell-out it was Republican politicians that would bash Bill Clinton for making the deal yet it was yesterday's Republicans and today's Neo-Cons who were affiliated with the companies making millions from the transfer. This is why we are less than confident that Democrats have any real agenda to stop the UAE deal.

Just as now claims of 'Islamophobia' are raised to attack critics of the UAE deal, in 1997 and 2000 it was 'Asianphobia'. This has nothing to do with race, it is a matter of national sovereignty. If American corporations tried to buy up key Chinese infrastructure they would be firmly rebuffed.

As a country we are not just being robbed of our ability to create wealth, we are being robbed of our infrastructure, our land and our capacity to work the land. Your currency, your future and your sovereignty is systematically being dismantled, looted and sold to the highest bidder. The taxpayer pays for and builds the infrastructure only for foreign lobbyists to pay off corrupt politicians who 'lease' the infrastructure or outright sell it to the foreign lobbyists for 50, 60, 70 years.



The continued weakness of the dollar allows foreign entities to step in and buy more and more infrastructure while American families work three or four jobs just to get by.

The United Arab Emirates is a British holding and the British empire is simply re-shuffling some of its marbles. Claims that the UAE has links to terrorism are a distraction. The fact is that the UAE is in the pocket of the Globalists and is simply a front for the Internationalists to swallow up more of American sovereignty.

What we have is an 'oligopoly'. What is an oligopoly? It is where, similar to the Italian mafia, cartels and different corporate owners meet to affect the same thing as a monopoly. They decide which countries will control which interests and that is how the New World Order works.

http://today.reuters.com/misc/PrinterFrien...NTELLIGENCE.xml

Intelligence agencies scrutinized ports deal: White House
Wed Feb 22, 2006 10:46 AM ET



WASHINGTON (Reuters) - U.S. intelligence agencies scrutinized a deal to allow a state-owned Dubai company to manage major U.S. ports and found no security concerns, White House spokesman Scott McClellan said on Wednesday.

President George W. Bush is facing heavy resistance, including a revolt from members of his Republican Party in Congress, over a deal that critics say could pose risks to security at seaports.

Bush said on Tuesday he would use his veto power to block any legislation aimed at halting the agreement with Dubai Ports World.

Defending the president's stance, McClellan said: "The counterterrorism experts looked at it. The intelligence community did assessments to make sure that there was no national security threat."

Bush said on Tuesday the Dubai company would not be in charge of security, that the deal had been thoroughly reviewed and the country would be no less safe as a result of the transaction.

The question of whether a state-controlled company from the United Arab Emirates should be allowed to control the ports has sparked a political storm for Bush at a time when he is struggling to boost sagging public approval ratings.



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http://www.nydailynews.com/front/story/393375p-333478c.html
W aides' biz ties to Arab firm



BY MICHAEL McAULIFF
DAILY NEWS WASHINGTON BUREAU

Breaking news update: Bush shrugs off objections to port deal

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 agency 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 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 9/11 hijackers.

"The more you look at this deal, the more the deal is called into question," said Sen. Chuck 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-S.I.) said, but insisted that stopping the deal was more important.

The Daily News has learned that lawmakers also want to know if a detailed 45-day probe should have been conducted instead of one that lasted no more than 25 days.

According to a 1993 congressional measure, the longer review is mandated when the company is owned by a foreign government and the purchase "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."

Congressional sources said the President has until March 2 to trigger that harder look.

"The most important thing is for someone to explain how this is consistent with our national security," Fossella said.

February 23, 2006
News Analysis
Big Problem, Dubai Deal or Not
By DAVID E. SANGER
WASHINGTON, Feb. 22 — In the political collision between the White House and Congress over the $6.8 billion deal that would give a Dubai company management of six American ports, most experts seem to agree on only one major point: The gaping holes in security at American ports have little to do with the nationality of who is running them.

The deal would transfer the leases for ports in New York, Baltimore and Miami, among others, from a British-owned company to one controlled by the government of Dubai, part of the United Arab Emirates. But the security of the ports is still the responsibility of Coast Guard and Customs officials. Foreign management of American ports is nothing new, as the role already played by companies from China, Singapore, Japan, Taiwan and trading partners in Europe attests.

While critics of the deal have raised the specter that it might open the way to the "infiltration" of American ports by terrorists from the Middle East, the Dubai company would in most cases inherit a work force that is mainly American, with hiring subject to the same regulations as under the current British management.

Among the many problems at American ports, said Stephen E. Flynn, a retired Coast Guard commander who is an expert on port security at the Council on Foreign Relations, "who owns the management contract ranks near the very bottom."

It is clear that the questions involving the Dubai company, Dubai Ports World, have become a proxy for long simmering debates about security and a battleground for resurgent tensions between the White House and Congress. In the end, as Mr. Bush has discovered, the politics of globalization are local and emotional.

The unstated assumption behind the Democratic and Republican critique of the deal is that transferring corporate responsibility for the port terminal leases to a conservative Muslim country that bred two of the Sept. 11 hijackers increases the likelihood of another act of terror.

Some independent experts, like Dr. Irwin Redlener of the National Center for Disaster Preparedness at Columbia University, warn of the risk that "a lot of critical information about the movement of cargo is now accessible to new owners."

Mr. Bush, however, has suggested that the criticism of Arab ownership may have racial overtones. And in interviews Wednesday, officials of Peninsular & Oriental Ports North America, the British company that now manages the six terminals, dismissed the criticism as the imaginings of politicians who have little familiarity with American ports.

"We will still exist, with the same workers, and the same facility security plan, regulated by the same Coast Guard and Customs officials," Michael Seymour, who runs the operation, said in sketching what would happen if the Dubai company took over the management role. "And we'll be audited just as often — maybe more often."

Such arguments are not likely to quell the debate, which is already turning to the question of whether the Bush administration cut some corners in speeding the review through the approval process to avoid the scrutiny that could touch off a political firestorm.

Among other battles playing out are whether the Bush administration is spending enough money on port security and whether it is focusing its energies on the right problems.

Another is whether the White House's case on port security is harmed by the fact that the major player is the Department of Homeland Security, whose failures after Hurricane Katrina will be the centerpiece on Thursday of a White House-directed report on "lessons learned" from the multiple failures in the devastation of New Orleans.

"The management of these ports is the door which you walk through to get to all of these other questions," said Senator John Kerry, Democrat of Massachusetts, who, like Mr. Bush, used cargo ports as the backdrop for speeches about the post-Sept. 11 world in 2004. "It raises a lot of questions about the lobbying, the connections and the terms of the deal, and the security problems the administration has left unaddressed."

It is also convenient for the Democrats, who are able to sound more hawkish on domestic security than President Bush. Mr. Bush finds himself burdened with the more nuanced argument that turning down this deal would send a message to the entire Arab world that it is not to be trusted, no matter how friendly individual countries may have been.

The administration's core problem at the ports, most experts agree, is how long it has taken for the federal government to set and enforce new security standards — and to provide the technology to look inside millions of containers that flow through them.

Only 4 percent or 5 percent of those containers are inspected. There is virtually no standard for how containers are sealed, or for certifying the identities of thousands of drivers who enter and leave the ports to pick them up. If a nuclear weapon is put inside a container — the real fear here — "it will probably happen when some truck driver is paid off to take a long lunch, before he even gets near a terminal," said Mr. Flynn, the ports security expert.

That is where concerns about Dubai come in. While the company in question has not been a focus of investigations, Dubai has been a way station for contraband, some of it nuclear. Abdul Qadeer Khan, the Pakistani nuclear engineer, made Dubai his transshipment point for the equipment he sent to Libya and Iran because he could operate there without worrying about investigators.

"I'm not worried about who is running the New York port," a senior inspector for the International Atomic Energy Agency said, insisting he could not be named because the agency's work is considered confidential. "I'm worried about what arrives at the New York port."

That port, along with the five others Dubai Ports hopes to manage, are the last line of defense to stop a weapon from entering this country. But Mr. Seymour, head of the subsidiary now running the operations, says only one of the six ports whose fate is being debated so fiercely is equipped with a working radiation-detection system that every cargo container must pass through.

Closing that gaping hole is the federal government's responsibility, he noted, and is not affected by whether the United Arab Emirates or anyone else takes over the terminals.



Copyright 2006The New York Times

--------------------------------------------------------------------------------

February 23, 2006
The Reaction
Panel Saw No Security Issue in Port Contract, Officials Say
By ELISABETH BUMILLER and CARL HULSE
WASHINGTON, Feb. 22 — The Bush administration decided last month that a deal to hand over operations at major American ports to a government-owned company in Dubai did not involve national security and so did not require a more lengthy review, administration officials said Wednesday.

The decision was made by an interagency committee led by Deputy Treasury Secretary Robert M. Kimmitt. The group included officials from 12 departments and agencies, including the Departments of Defense, Justice, State and Homeland Security, as well as the National Security Council and the National Economic Council.

In a telephone interview on Wednesday, Mr. Kimmitt said that the company, Dubai Ports World, had been thoroughly investigated by the administration, including by intelligence agencies, and that on Jan. 17 the panel members unanimously approved the transfer.

"None of them objected to the deal proceeding on national security grounds," he said.

Mr. Kimmitt made his comments as the political furor over the ports dominated Washington, where Republicans in Congress remained in open rebellion against President Bush and the White House spent the day trying to tamp down the uprising.

An objection from any member of the interagency committee would have started, as required by law, an additional 45-day review. Such a review is being urged by governors and members of Congress.

Mr. Bush and his top aides are strongly resisting that. Even before the transfer became known, the administration's review of foreign business deals had come under criticism for not being sufficiently sensitive to national security.

In September, the Government Accountability Office, an investigative arm of Congress, said the Treasury Department, as head of the interagency committee that reviews such deals, had used an overly narrow definition of national security threats because it wanted to encourage foreign investment.

The department disputed those findings, saying that the committee had used an adequate definition and that decisions had been reached by consensuses of agencies with differing interests.

The review began in mid-October. The chief operating officer of Dubai Ports World, Edward H. Bilkey, said he and other executives met in December with Mr. Kimmitt's committee and then had numerous additional meetings before the final decision.

"There is no big deal about it," Mr. Bilkey said in an interview. "We complied with what the requirements were, and there was no problem."

Scott McClellan, the president's spokesman, said Mr. Bush became aware over the weekend of the deal, for some of the facilities in several major ports, including New York, Baltimore and Miami.

"One thing the president did, and even after all this press coverage of this transaction, was go back to every cabinet member whose department is involved in this process and ask them, 'Are you comfortable with this deal going forward?' " Mr. McClellan said. "And each and every one expressed that they were comfortable with this transaction going forward."

In a rare admission of error and in an indication that the White House might be seeking a deal with Capitol Hill to halt the furor, Mr. McClellan also said, "We probably should have briefed Congress about it sooner."

Republicans said an agreement by the White House to delay the transfer would help.

"If the president announces between now and next Monday or Tuesday that he is going to hold it for 45 days, have an investigation and consult with Congress, I think that would at least buy time," said Representative Peter T. King, a New York Republican who is a leading opponent of the new port management.

He said Speaker J. Dennis Hastert of Illinois had assured him that they "were on the same page" on halting the sale.

The White House dispatched aides to brief advisers to the Republican leadership on the rationale for the deal, and the port company retained high-powered help to deal with Capitol Hill, including former Senator Bob Dole and the lobbying firm of former Secretary of State Madeleine K. Albright.

Mr. Bush threatened on Tuesday to veto any bills to block a deal for the company to run the ports.

Lawmakers and aides said the nearly united Republican resistance in Congress was a new atmosphere for a White House accustomed to strong public support for its policies and the willingness to settle any disagreements privately. But it was not seen as a permanent break.

"Over the past five years, the president has made the right call over and over again," said Eric Ueland, chief of staff for Senator Bill Frist of Tennessee, the majority leader. "This is one time. Nobody wants to come to a giant battle over this. We want homeland security. He wants homeland security."

Democrats who joined in the call to scuttle the port transfer said they considered Congressional Republicans newcomers on port security. They began circulating voting records to show that Republicans had rejected increases in spending on port safety.

"All of the sudden, they want to act really tough," said Representative Rahm Emanuel of Illinois, chairman of the Democratic Congressional Campaign Committee. "But when it came to strengthening port security and implementing the 9/11 commission recommendations, they were nowhere to be found."

Before the administration approved the transfer from a British company, P&O Ports, Dubai Ports World had to agree to cooperate with future United States investigations, said an administration official who spoke only if granted anonymity because of the confidentiality of the agreement.

The official, confirming details first reported by the Associated Press, said the company agreed to disclose on demand records about "foreign operational direction" of its United States ports, including details on equipment, design and operations. The company does not have to keep copies of business records on American soil, where they would be subject to court orders, the official said. The report by the General Accountability Office in September included sharp criticism of the review process carried out by the Committee on Foreign Investment in the United States, the committee created in 1975 to review foreign investments that could affect national security. The report said the committee, under the Clinton and Bush administrations, had often construed national security too narrowly, looking only at such factors as the control over technology exports, classified contracts and specific derogatory information about a company.

For that reason, the report said, the committee had too rarely subjected investments to intensive scrutiny. In addition, the report said Treasury officials believed that "being the subject of an investigation may have negative connotations for a company." Since 1997, the government has investigated 8 out of 470 notifications of pending contracts.

Stephen Labaton and Eric Lipton contributed reporting for this article.



Copyright 2006The New York Times

Bush vows to answer Congress concerns on port deal 5 minutes ago

President George W. Bush said on Thursday his administration would try to overcome congressional doubts over a deal for a Dubai company to manage six U.S. ports, which has provoked a bipartisan outcry.

"We will continue to talk to people in Congress and explain clearly why the decision was made," Bush told reporters during a Cabinet meeting.

Bush insisted that the sale of British-based P&O to Dubai Ports World based in the United Arab Emirates would not pose a security risk. He has threatened to veto any legislative attempts to intervene.

"This wouldn't be going forward if we were not certain that our ports would be secure," he said. "The more people learn about the transaction that has been scrutinized and approved by my government the more they will be comforted that our ports will be secure."

Bush has been defending his administration's decision ever since congressional Republicans and Democrats raised concerns about possible security problems at American ports. Administration officials planned to appear at a Senate committee later in the day to try to answer some of those concerns.




Copyright © 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.


Copyright © 2006 Yahoo! Inc. All rights reserved.

Bush's Stance on Ports Deal Fuels Anger
By TOM RAUM, Associated Press Writer

President Bush's marquee issue, the war on terror, is being turned against him by Democrats and rebelling members of his own party in an election-year dustup over a deal that allows an Arab company to manage major U.S. ports.

People in both parties are suggesting it's another case of Bush seeming to be tone deaf to controversy — on top of government eavesdropping, Katrina recovery and Vice President Dick Cheney's hunting accident.

The storm is forcing the president to choose between losing face with the Arab world and embarking on what would be his first veto battle with the GOP-led Congress. And it has enabled Democrats to seemingly outflank him on a key GOP issue: national security.

Has Bush lost his way politically — or at least his touch?

"In regards to selling American ports to the United Arab Emirates, not just NO — but HELL NO," conservative Rep. Sue Myrick (news, bio, voting record), R-N.C., wrote Bush in a terse letter on Wednesday that she also posted on her Web site.

No matter that no American port is actually being sold, Bush faces a spreading rebellion among Republicans, Democrats and port-state governors.

"I think somebody dropped the ball. Information should have flowed more freely and more quickly up into the White House. I think it has been mishandled in terms of coming forward with adequate information," said Rep. Vito Fossella (news, bio, voting record), R-N.Y.

At issue: Bush's strong defense of an arrangement that would put a government-owned United Arab Emirates company in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The deal transferring port management from a British firm to Dubai Ports World has already been approved by both companies and an administration review panel.

Despite Bush's assertion that UAE has been one of the most helpful Arab countries in the war on terror, both Senate Majority Leader Bill Frist of Tennessee and House Speaker Dennis Hastert of Illinois threatened legislation to put the deal on hold. Bush, in turn, vowed to cast his first veto — if necessary — to stop any such attempt.

"It's a strange thing for Bush to have slipped into, given the savvy you expected from this administration, with a vice president who spent over a decade on Capitol Hill," said Princeton University political scientist Fred Greenstein. "It seems as if his people would have seen that there was potential for trouble, and at least done their homework on the Hill."

Although a veto showdown could still be avoided, port-deal opponents were optimistic they could muster the two-thirds majorities needed to override one. "This deal doesn't pass the national security test. I think it is a mistake," said Rep. Jim Saxton (news, bio, voting record), R-N.J., chairman of a House subcommittee on terrorism threats.

Bush learned about the arrangement himself only in recent days amid increasing news coverage, said presidential spokesman Scott McClellan.

While Bush had struck a defiant tone on Tuesday in back-to-back sessions with reporters on Air Force One and outside the White House, McClellan on Wednesday acknowledged Congress should have been briefed earlier "given all the attention that has been focused on this and given the fact that it has been mischaracterized."

The phrase "tone deaf" to describe Bush's interaction with Congress was uttered by lawmakers as politically different as Sens. Lindsey Graham, R-S.C., and Joseph Biden, D-Del.

The Dubai Ports deal "is not a national security issue," suggested GOP consultant Rich Galen. "It is an issue of this administration having a continuing problem with understanding how these things will play in the public's mind and not taking steps to set the stage so these things don't come as a shock and are presented in their worst possible light."

With Bush's ratings stuck at about 40 percent, the incident is one more major distraction to his efforts to focus on his second-term domestic agenda.

Syndicated radio host Laura Ingraham was among the conservatives criticizing the deal, asking on her Wednesday program, "How do we know people they're hiring are passing background checks?"

The dispute brought to mind a 1999 flap when conservatives admonished the Clinton administration for acquiescing on Panama's awarding of a contract to a China company, Hong Kong-based Hutchison Whampoa Ltd., to run ports at both ends of the Panama Canal.

But then, almost all the criticism was from Republicans. Now, it's bipartisan.

"I think there are certain things you have to be really worried about. And one of them is port safety," said Robert O. Boorstein, a senior national security aide in the Clinton White House.

"You have to call it an incredible tin ear that this administration could do that, with nobody stopping and saying, `excuse me?' said Boorstein, now with the Center for American Progress, a liberal think tank.

___

EDITOR'S NOTE — Tom Raum has covered national and international affairs for The Associated Press since 1973.



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Bush Says Ports Deal Not a Security Threat
By TED BRIDIS, Associated Press Writer

President Bush on Thursday sought to calm an uproar over an Arab company taking over operations at six major American ports, saying "people don't need to worry about security."

Under a secretive agreement with the administration, a company in the United Arab Emirates promised to cooperate with U.S. investigations as a condition of its takeover of operations at six major American ports, according to documents obtained by The Associated Press.

The U.S. government chose not to impose other, routine restrictions.

"The more people learn about the transaction," Bush said, "the more they'll be comforted that the ports will be secure." He spoke to reporters at the end of a Cabinet meeting.

In approving the $6.8 billion purchase, the administration chose not to require state-owned Dubai Ports World to keep copies of its business records on U.S. soil, where they would be subject to orders by American courts. It also did not require the company to designate an American citizen to accommodate requests by the government.

Outside legal experts said such obligations are routinely attached to U.S. approvals of foreign sales in other industries.

Bush said he was struck by the fact that people were not concerned about port security when a British company was running the port operation, but they felt differently about an Arab company at the helm. He said the United Arab Emirates was a valuable partner in the war in terror and cautioned against sending "mixed messages" as the U.S. works with countries in fighting terrorism.

He said his administration would continue talks with members of Congress — Republicans and Democrats alike — who have rebelled against the takeover. He said the briefings were "bringing a sense of calm to this issue."

"This wouldn't be going forwad if we weren't certain our ports would be secure," the president said.

Dubai Ports agreed to give up records on demand about "foreign operational direction" of its business at the U.S. ports, according to the documents. Those records broadly include details about the design, maintenance or operation of ports and equipment. It also pledged to continue participating in programs to stop smuggling and detect illegal shipments of nuclear materials.

"They're not lax but they're not draconian," said James Lewis, a former U.S. official who worked on such agreements. If White House officials negotiating the deal had predicted the firestorm of criticism over it, "they might have made them sound harder."

The conditions over the sale of London-based Peninsular and Oriental Steam Navigation Co. were detailed in U.S. documents marked "confidential." Such records are regularly guarded as trade secrets, and it is highly unusual for them to be made public.

The Republican head of the Senate Armed Services Committee, John Warner of Virginia, planned an oversight hearing Thursday. Warner has expressed support for the agreement, describing the UAE as an important ally against terrorism.

Rep. Peter King (news, bio, voting record) of New York, the Republican chairman of the House Homeland Security Committee, said the conditions are evidence the Bush administration was concerned about security. "There is a very serious question as to why the records are not going to be maintained on American soil subject to American jurisdiction," King said.

Another critic, Sen. Charles Schumer (news, bio, voting record), D-N.Y., added: "These new revelations ask more questions than they answer."

The disclosure of the negotiated conditions came as the White House acknowledged Bush was unaware of the pending sale until the deal had been already approved by his administration.

Bush has pledged to veto any bill Congress might approve to block the agreement, but some lawmakers said they still were determined to capsize it.

Dubai Port's top American executive, chief operating officer Edward H. Bilkey, said he will work in Washington to persuade skeptical lawmakers they should endorse the deal; several Senate oversight hearings already are scheduled.

"We're disappointed," Bilkey told the AP in an interview. "We're going to do our best to persuade them that they jumped the gun. The UAE is a very solid friend, as President Bush has said."

Under the deal, the government asked Dubai Ports to operate American seaports with existing U.S. managers "to the extent possible." The company promised to take "all reasonable steps" to assist the Homeland Security Department.

The administration required Dubai Ports to designate an executive to handle requests from the U.S. government, but it did not specify this person's citizenship.

It said Dubai Ports must retain paperwork "in the normal course of business" but did not specify a time period or require corporate records to be housed in the United States. Outside experts said stricter provisions are routine in other industries.

Foreign communications companies with American customers are commonly required to store business records in the United States. A senior U.S. official said the Bush administration considers shipping manifests less sensitive. The official spoke on condition of anonymity because of the confidential nature of the agreement.

Bush faces a potential rebellion over the sale from leaders of his own party, as well as a fight from Democrats. It puts Dubai Ports in charge of major terminal operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

In Lebanon, Secretary of State Condoleezza Rice said Thursday that the agreement was thoroughly vetted in a review process that took approximately three months. "This is supposed to be a process that raises security concerns, if they are there, but does not presume that a country in the Middle East should not be capable of doing a deal like this." She described the United Arab Emirates as "a very good ally" and said "if more details need to be made available then I'm sure they will be."

The White House said President Bush did not know about the agreement until recently. The AP first reported U.S. approval of the sale to Dubai Ports on Feb. 11, and many members of Congress have said they learned about it from the AP.

"I think somebody dropped the ball," said Rep. Vito Fossella (news, bio, voting record), R-N.Y. "Information should have flowed more freely and more quickly up into the White House. I think it has been mishandled in terms of coming forward with adequate information."

___

Associated Press Writer Anne Gearan in Riyadh, Saudi Arabia, contributed to this report.



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DeLay Says Bush Making Mistake on Port Wed Feb 22, 9:44 PM ET

U.S. Rep. Tom DeLay said Wednesday that President Bush is making a big mistake backing a sale of shipping operations at six major U.S. seaports to a state-owned business in the United Arab Emirates.

The former Republican majority leader said the administration's approval of the deal is "pretty outrageous." DeLay made the remarks during a campaign event with Houston real estate executives.

Separately, U.S. Rep. Ted Poe, R-Humble, said he is concerned about Texas ports where military cargo is handled by London-based Peninsular and Oriental, the company to be purchased by the UAE's Dubai Ports World.

Poe said ports in Beaumont and Corpus Christi move military goods, materials and records of which he would not want UAE employees to have access.

Concerned lawmakers from both parties have noted that some of the Sept. 11 hijackers used the United Arab Emirates as an operational and financial base.

"We would be bringing trouble upon ourselves," Poe said. "I've heard the UAE is our friend on the war on terror, despite the past, but they may not be our friend tomorrow.

"They would have access to every manifest regarding shipping, all cargo going out, what's on it, where it's going and all incoming shipping coming back to the port."

John LaRue, director for the Port of Corpus Christi, said he appreciates Poe's concern, but says ports such as his have experience in working with foreign companies.

"I understand that he wants to review the process that went on. I think most people need that sort of interpretation," he said. "At the same time, ports all over the U.S. are run by companies like Dubai."

Rep. Solomon Ortiz (news, bio, voting record), D-Corpus Christi, said he too is concerned about military shipments handled by a UAE government-owned company.

"I think in the world we are living in today, we need to take all the precautions necessary, and I think there is a lack of oversight," he said.

"So many of us in Congress are disappointed there was insufficient oversight on this."

At the Port of Houston, one of the nation's largest ports, Peninsular and Oriental handle freight and have longshoremen load and unload ships, but there is no military cargo moved, port officials said.

The port's Executive Director Thomas Kornegay said any deal with the UAE company won't change security operations or efficiency.

"They load and unload the ships, but we have the cargo checked by the customs and border protection," Kornegay said.

"And the U.S. Coast Guard does all the terminal security and checking the vessels before the come into the port. That is not going to change."

Still, DeLay said the deal would be overturned by Congress.

"When it's a matter of national security, the president will be overturned," DeLay said in an account that appeared on the Web site of the Austin American-Statesman. "We will overturn it within the next few weeks."

The White House said Wednesday that President Bush was unaware of the pending sale until it already had been approved by his administration.

The administration also said that it should have briefed Congress sooner about the transaction, which has triggered a major political backlash among Republicans and Democrats.

In the Houston area, DeLay faces Tom Campbell, Michael Fjetland and Pat Baig in his Republican primary. Democrat Nick Lampson, a former congressman, is unopposed and will face the GOP winner in November.

DeLay resigned his House leadership post amid Republicans' concern about a corruption scandal tied to lobbyist Jack Abramoff. He's also awaiting a Texas trial on money-laundering charges connected with the transfer of $190,000 in corporate contributions donated to candidates through a Texas political action committee he founded.



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--------------------------------------------------------------------------------

February 28, 2006
Coast Guard Worries Reanimate Ports Debate
By THE ASSOCIATED PRESS
Filed at 8:58 a.m. ET

WASHINGTON (AP) -- Republican congressional leaders had hoped to curtail bipartisan outcries over a United Arab Emirates-based company's pending takeover of some U.S. port operations by brokering an agreement for a new investigation of the deal's potential security risks.

Then came the disclosure that the U.S. Coast Guard had raised concerns weeks ago that, because of U.S. intelligence gaps, it could not determine whether the UAE company, DP World, might support terrorist operations.

Bush administration officials say those concerns were addressed and resolved.

Nevertheless, both Republicans and Democrats seized on the Coast Guard assessment, which was released by Sen. Susan Collins, R-Maine, at a Senate Homeland Security Committee hearing Monday, to launch a fresh round of criticism just as the furor over the ports deal appeared on the brink of subsiding.

''I am more convinced than ever that the process was truly flawed,'' said Collins, the Homeland Security Committee's chairwoman. ''I can only conclude that there was a rush to judgment, that there wasn't the kind of painstaking, thorough analysis that needed to be done, despite serious questions being raised and despite the involvement of a wide variety of agencies.''

''If this isn't a smoking gun,'' Sen. Charles Schumer, D-N.Y., said, ''it shows that there may be one undetected'' by the multi-agency panel that approved DP World's proposed purchase of London-based Peninsular & Oriental Steam Navigation Co. The panel signed off on the deal without doing a 45-day investigation into security implications, which critics say the law requires.

More fuel could be added to the fire Tuesday when the Senate Commerce Committee holds a hearing to review the DP World deal. Edward H. Bilkey, DP World's chief operating officer, was to testify.

In February, the Commerce Committee vetted the appointment of David C. Sanborn of Virginia, a senior DP World executive, to be the new administrator of the Maritime Administration of the Transportation Department.

The White House appointed Sanborn, who worked as DP World's director of operations for Europe and Latin America, to the post in January, the same month the Treasury Department's Committee on Foreign Investment in the United States approved the DP World takeover.

Two Democrats, Sen. John Kerry of Massachusetts and Bill Nelson of Florida, have vowed to block Sanborn's nomination unless he testifies again before the Commerce Committee. ''He worked for Dubai Ports World when this deal was rushed through under cover of darkness without sufficient security review,'' Kerry said in a statement Tuesday. ''In the post 9/11 world, we need to know why.''

White House spokesman Scott McClellan has said the DP World deal ''went through the normal review process and was carefully checked.''

The deal has threatened to divide the Republican Party on its signature issues -- national security and fighting terrorism -- during a pivotal election year in which the entire House and a third of the Senate faces re-election.

Looking to head off a Republican revolt, Senate Majority Leader Bill Frist and other GOP congressional leaders sought to ensure the White House would be able to stand with members of the president's own party and counter Democratic criticism that they were soft on terrorism.

Under the agreement congressional GOP leaders negotiated over the weekend, the Bush administration agreed to the company's request for a highly unusual 45-day national security review of its business deal.

But a bipartisan group of senators on Monday introduced a bill anyway that would delay the deal and give Congress an opportunity to block the takeover. Separately, Democrats introduced legislation that would prohibit companies owned by foreign governments from controlling operations at U.S. ports.

At a Homeland Security Committee hearing, Collins released an unclassified excerpt of a Coast Guard intelligence assessment done before the government approved the DP World takeover.

''There are many intelligence gaps, concerning the potential for DPW (DP World) or P&O (Peninsular & Oriental) assets to support terrorist operations, that precludes an overall threat assessment'' of the potential merger, the half-page excerpt said. ''The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities.''

The Coast Guard document raised questions about the security of the companies' operations, the backgrounds of people working for the companies, and whether other foreign countries influenced operations that affect security.

''We were never told about this,'' Michael Moore, DP World's senior vice president, said of the excerpt. However, he said it shows ''serious and probing'' questions were asked and that the initial approval of the deal indicates those questions were answered.

In a statement, the Coast Guard said the assessment was part of a broader classified Coast Guard analysis that concluded that DP World's pending takeover ''in and of itself, does not pose a significant threat to U.S. assets in (continental United States) ports.''

------

Associated Press Writer Ted Bridis contributed to this report.



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Bush: Ports deal not a security threat 2 hours,

President George W. Bush said on Tuesday he stood by his view that a deal to allow a Dubai-based company to run terminals at some U.S. ports did not pose a security threat.

"My position hasn't changed to my message to the Congress," Bush said as another day of hearings into the contested takeover bid were scheduled on Capitol Hill.

"If there was any doubt in my mind or people in my administration's minds that our ports would be less secure or the American people in danger, this deal wouldn't go forward," Bush said.

Facing a bipartisan uproar over the agreement to have Dubai Ports World manage terminals at six U.S. ports, the White House agreed Sunday to a new, 45-day security review of the deal.

At the end of it, Bush will have to authorize or reject the agreement. As of Monday afternoon the new review had not begun, a Treasury Department spokesman said.

"My question to the members of Congress as they review this matter is one, please look at the facts," Bush said following a meeting with Italian Prime Minister Silvio Berlusconi.

Bush did not repeat his earlier threat to veto legislation to block the ports deal with the state-owned Dubai company of the United Arab Emirates.

But as Bush spoke, U.S. lawmakers continued to express concern about the takeover that has contributed to another drop in the president's approval rating, according to a new poll.

Sen. John Warner (news, bio, voting record), a Virginia Republican, said, "While there were flaws in the (review) process the first time around, the 45-day option ... will, I think, bring such clarity as needed."

"And we, hopefully, can go forward as a nation with this transaction, assuming we do not discover in the next 45 days a basis for not doing so," he said at a Senate Armed Service Committee hearing on global threats.




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http://www.wpherald.com/storyview.php?Stor...26-051450-5071r
Ports controversy underscores globalization
By William Glanz
The Washington Times
Published February 26, 2006


WASHINGTON -- The furor over a United Arab Emirates company taking over some operations at six U.S. ports underscores the global nature of the shipping industry and the minor role played by American interests.

Foreign-owned companies dominate the maritime industry amid the war on terrorism, and many U.S. ports would be drowsy backwaters without them.


The role of U.S. shippers, stevedores and terminal operators has declined since the late 1990s, when two shipping firms were bought by foreign competitors.

The Bush administration's quiet approval of Dubai Ports World's $6.8 billion purchase of Peninsular and Oriental Steam Navigation Co. (P&0), based in London, sparked a fierce public debate over port security and the threat of terrorists penetrating P&O operations.

The decision also shed light on the international nature of the shipping industry and underscores consumer ignorance of how everything from beer to automobiles is moved around the world.

"I'm willing to guess there's a very large segment of the U.S. population that doesn't know where many things are made, or more importantly, how they got from where they are made to the target in Peoria," says Michael Berzon, president of Mar-Log Inc., a Maryland supply-chain and supply-chain security consultant.

Scandinavian ships flying the flag of Panama, where the vessel is registered, employing Filipino workers, regularly sail into the Port of Baltimore. A German ship flying the Greek flag arrives weekly at the Virginia Port Authority's terminals in Norfolk with cargo from China.

"This is a global business, not an American business. Maybe we as an industry have not done a good job explaining that, but we've never been asked," says Peter S. Shaerf, managing director of merchant banking firm AMA Capital Partners LLC, in New York.

International operator

Mr. Shaerf describes Dubai Ports World as a respected, well-run terminal operator. Under the terms of purchase, the United Arab Emirates company would operate some terminals at six ports -- Baltimore, Philadelphia, Miami, New Orleans, New York and Newark, N.J.

In Baltimore, the company would take over operation of two of the 14 terminals. In addition to U.S. contracts, the P&O Ports acquisition covers ports in Vancouver, Canada, Buenos Aires and locations in Britain, France and several Asian countries.

Dubai Ports World, owned by the Dubai government, already operates 22 marine terminals in 15 countries, including China, India, Venezuela and Australia. Other ventures include trucking operations, freight transportation logistics, airport operations and business-enterprise zones.

The purchase was scheduled to take effect Thursday, but Dubai Ports World said late last week it will not exercise control over new operations in the U.S. while the Bush administration tries to soothe congressional critics and alarmed governors who raised concerns over port security.

President Bush said he will oppose efforts to block the transaction, and Dubai Ports World said it intends to complete its purchase of P&O.

The Treasury Department's 12-member foreign-investment committee reviewed the sale and unanimously agreed it posed no problem, according to the department.

Like others in the industry, Dubai Ports Chief Operating Officer Edward H. Bilkey last week said the company was puzzled by the U.S. response to the purchase.

"The reaction in the United States has occurred in no other country in the world," Mr. Bilkey said. "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."

Global commerce

Dubai Ports World is surrounded by other foreign competitors at U.S. ports. Foreign businesses keep many ports running.

The top 10 containership fleets are based in Denmark, Switzerland, Taiwan, China, Germany, France, Japan, Hong Kong and Singapore.

The world's top terminal operators are not U.S. companies. Hutchison Port Holdings, the largest, is based in Hong Kong. PSA International Pse. Ltd., owned in part by the investment arm of the Singapore government, is the second-leading terminal operator. Dubai Ports World ranks seventh and would become the second-largest terminal operator, based on the number of containers handled, after its takeover of P&O.

"It's the reality of the globalization of commerce. Ports and terminal operations are no exception to that," says Kurt J. Nagle, president and chief executive of the American Association of Port Authorities, which represents 86 of the nation's public port authorities.

At the Virginia International Terminals, the operating arm of the Virginia Port Authority, Cooper/T. Smith Stevedoring and P&O Ports North America Inc., a subsidiary that would be owned by Dubai Ports World, announced they will combine operations in a new company to be called CP&O LLC. The merger is to be completed Oct. 1.

Stevedoring companies are hired by shipping lines to load and unload cargo ships. Ceres Marine Terminals Inc. is the Virginia port's other major stevedoring firm and is owned by Japanese shipping firm NYK Line. Norfolk also is the U.S. headquarters of CMA-CGM Group, a French shipping line, and Israeli shipper Zim-American Israeli Shipping Co.

Denmark's A.P. Moeller-Maersk, the largest terminal operator in the United States and owner of the world's largest shipping fleet, owns APM Terminals NA, which is building a $500 million private container terminal in Portsmouth, Va., scheduled to open next year. The terminal will be used solely by Maersk vessels.

"If you pulled the foreign shipping companies out of this port or any port, I don't know what we would do. It's as international a business as you can put your hands on," says Joe Harris, spokesman for the Virginia Port Authority, which operates three terminals.

America's role

There haven't been any major U.S. container shippers since Maersk bought Sea-Land Corp. from CSX Corp. in 1999. Maersk now navigates an operating fleet of 585 ships. That's more than twice as many vessels as its nearest competitor, Swiss-owned Mediterranean Shipping Co., with 282 ships.

While it was independent, Sea-Land had an operating fleet of 70 ships.

Neptune Orient Lines, in Singapore, bought California shipper American President Lines in 1997.

"America plays a very small role in terms of liner and container companies," Mr. Shaerf says.

The biggest American container shipper is Matson Navigation Co. Inc., in Oakland, and it ranks 31st in terms of shipping capacity with 18 ships, Mr. Shaerf says. Horizon Lines Inc., in Charlotte, N.C., with 16 ships, is the world's 35th-largest shipper.

Sea-Land is credited with starting the container shipping industry when it sailed a cargo ship from New York to Houston in 1956. The first trans-Atlantic container ships sailed 10 years later.

Landlords at ports

Among terminal operators, U.S. companies have a larger presence, but they are overshadowed by foreign competitors.

SSA Marine, a privately held family firm based in Seattle, is the world's ninth-largest terminal operator, based on the number of containers handled. It operates 105 terminals worldwide.

The four busiest U.S. ports are operated by government port authorities that act as mere landlords and contract with privately held firms such as SSA Marine and P&O to manage terminal operations.

The Port of Los Angeles, the nation's busiest port, has been run by private companies since 1911. It and the Port of Long Beach, Calif., account for 43 percent of U.S. imports.

Terminal operators want to expand their reach to manage terminals at ports in states including Georgia, South Carolina and Virginia, but those states are among 32 port authorities -- run by states, cities and counties -- that chose to operate ports on their own and shun the landlord approach.

South Carolina did employ terminal operators, but took back control of ports from unions to avoid labor strife. The port authority reported revenue of $130 million in fiscal 2005. The Virginia Port Authority reported fiscal 2005 revenue of $202 million.

"The industry wants to privatize," says Chuck Carroll, general counsel for the National Association of Waterfront Employers, a trade group representing private-sector terminal operators.

It's not clear that privatization would help U.S. terminal operators compete with bigger, foreign-backed competitors.

Increasingly, the companies managing terminals are foreign businesses that also own shipping lines and unload cargo. In the fragmented shipping industry, behemoth foreign firms are in greater position to acquire smaller competitors and broaden their reach into more U.S. ports.

"Most people look at the port in Baltimore and say 'That's a port,' and they move on," Mr. Berzon says. "Now all of the sudden they say, 'Arabs are going to run the port.' Well, it's two terminals and it's an international business."

http://www.bloomberg.com/apps/news?pid=710...id=awBC4rZa8loo
Negroponte Says U.S. Security Risk `Low' in Port Deal (Update1)
Feb. 28 (Bloomberg) -- The top U.S. intelligence official said a state-owned Dubai company's planned takeover of facilities at six U.S. seaports presents a ``low'' risk to national security.

``We assessed the threat to U.S. national security posed by DP World to be low,'' National Intelligence Director John Negroponte told the Senate Armed Services Committee. ``We didn't see any red flags come up during the course of our inquiry.''

Negroponte said the U.S. intelligence community gave the findings of its month-long review to the Bush the Bush administration panel that reviewed the deal on Dec. 5. He showed no concern over a Coast Guard report a week later that said ``intelligence gaps'' made a threat assessment impossible.

U.S. lawmakers may try to block DP World's deal to take over some terminal operations at Miami, Baltimore, Philadelphia, New Orleans, New York and Newark, New Jersey from London-based Peninsular & Oriental Steam Navigation Co. The Bush administration approved the transaction last month and it's slated to close March 2.

Lawmakers say that giving control of some port facilities to a company based in the United Arab Emirates might threaten U.S. security, and DP World on Feb. 26 agreed to a second review of the deal. The container terminals are among the 29 DP World is acquiring as part of its purchase of P&O.

Legislation

Bipartisan legislation introduced in the Senate yesterday would require the 45-day review and then give Congress 30 days to weigh the results and pass on the deal.

The measure also would require that President George W. Bush put a hold on the acquisition and that administration officials brief Congress on the review's findings. Currently, the administration alone determines whether the acquisition goes through.

Bush today said he stood by his administration's decision to let the deal proceed and his threat to veto any legislation passed by Congress that would block the transaction.

``If there was any doubt in my mind, or people in my administration's mind, that our ports would be less secure and the American people in danger, this deal wouldn't go forward,'' Bush said today after meeting with Italian Prime Minister Silvio Berlusconi at the White House.

Bush said U.S. port security would remain in the hands of the Coast Guard and Customs Service. Bush also noted that ``there are a lot of foreign companies managing U.S. ports.''

`Personal Interest'

Negroponte's comments came during his annual briefing on threats to U.S. security to the armed services panel. Lawmakers pressed him for his views on the port deal and urged that he take an active role in the second review.

Negroponte said that, while the intelligence community is ``not per se a member'' of the Committee on Foreign Investments in the United States, ``You can be assured that I will take a personal interest'' in this review.

John Warner of Virginia, who chairs the armed services panel, urged lawmakers to consider the support given by the United Arab Emirates to the war on terror and the ``high degree of mutual trust'' that exists between that nation and the U.S.

``You cannot look in isolation at a business contract like this without considering the diplomatic ramifications, the economic ramifications with other nations who are contemplating transactions with the United States and, indeed, as I've said, the military ramifications,'' Warner said.

Warning from U.A.E.

The emirates' economy minister today said that Arab and Muslim investors may divert funds away from the U.S. to Europe and Asia because of political opposition to this deal.

``Some of the countries will probably start thinking there are easier countries to invest money in,'' the emirates' economy minister, Sheikha Lubna al-Qasimi, 48, said in an interview in Abu Dhabi.

Dubai last year spent more than $1 billion on New York real estate. Members of the Organization of Petroleum Exporting Countries, of which the U.A.E. is the fourth largest, held $66.7 billion of U.S. Treasury securities at the end of 2005, up from $62.1 billion a year earlier, according to the Treasury Department.

The U.S. is treating DP World's request for a second review as a new application, separate from its previous assessment.

``The transaction is different,'' Tony Fratto, the Treasury Department's chief spokesman, told reporters yesterday.

``The company since its initial filing back in December has come forward with new assurances and changes to the transaction involving the treatment of the six U.S. ports,'' Fratto said.

Bush, Snow to Sign Off

The final decision will be left to the president, who has 15 days to accept or reject the transaction after receiving the panel's recommendation. Treasury Secretary John Snow will sign off on the recommendation this time before the report is sent to the White House, Fratto said.

Snow and Bush have said they didn't learn of the planned takeover until well after the first review was completed and the deal approved.

Fratto said he understood that some people may question the objectivity of the second review, given the administration's support of the transaction the first time around. ``The best thing we can do is ensure that these people are allowed to do their jobs,'' he said.



To contact the reporter on this story:
Judy Mathewson in Washington at jmathewson@bloomberg.net.

Last Updated: February 28, 2006 12:07 EST

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Feb. 28, 2006 2:55 | Updated Feb. 28, 2006 16:08
Exclusive: Dubai ports firm enforces Israel boycott
By MICHAEL FREUND


The parent company of a Dubai-based firm at the center of a political storm in the US over the purchase of American ports participates in the Arab boycott against Israel, The Jerusalem Post has learned.

The firm, Dubai Ports World, is seeking control over six major US ports, including those in New York, Miami, Philadelphia and Baltimore. It is entirely owned by the Government of Dubai via a holding company called the Ports, Customs and Free Zone Corporation (PCZC), which consists of the Dubai Port Authority, the Dubai Customs Department and the Jebel Ali Free Zone Area.

"Yes, of course the boycott is still in place and is still enforced," Muhammad Rashid a-Din, a staff member of the Dubai Customs Department's Office for the Boycott of Israel, told the Post in a telephone interview.

"If a product contained even some components that were made in Israel, and you wanted to import it to Dubai, it would be a problem," he said.

A-Din noted that while the head office for the anti-Israel boycott sits in Damascus, he and his fellow staff members are paid employees of the Dubai Customs Department, which is a division of the PCZC, the same Dubai government-owned entity that runs Dubai Ports World.

Moreover, the Post found that the website for Dubai's Jebel Ali Free Zone Area, which is also part of the PCZC, advises importers that they will need to comply with the terms of the boycott.

In a section entitled "Frequently Asked Questions", the site lists six documents that are required in order to clear an item through the Dubai Customs Department. One of them, called a "Certificate of Origin," "is used by customs to confirm the country of origin and needs to be seen by the office which ensures any trade boycotts are enforced," according to the website.

A-Din of the Israel boycott office confirmed that his office examines certificates of origin as a means of verifying whether a product originated in the Jewish state.

On at least three separate occasions last year, the Post has learned, companies were fined by the US government's Office of Anti-boycott Compliance, an arm of the Commerce Department, on charges connected to boycott-related requests they had received from the Government of Dubai.

US law bars firms from complying with such requests or cooperating with attempts by Arab