Congress questions Emirates pact
Accord on ports stirs concerns about security
WASHINGTON -- The management of major US ports taken over by an Arab-owned company? What was the Bush administration thinking when it allowed such a thing?
That is the question being asked by members of Congress from both parties. Their indignation is aimed at the $6.8 billion purchase by Dubai Ports World, a state-owned company in the United Arab Emirates, a corporation that handles most operations at ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
At a news conference yesterday, a group of seven House and Senate members from both parties demanded that an interagency task force on foreign investments, which approved the transaction, examine it more closely.
The group asserted that although the United Arab Emirates may have a strongly pro-US government, some of the Sept. 11, 2001, hijackers allegedly used the country as a transit point, and that its banking system has been used by several groups allegedly affiliated with Al Qaeda.
''Our ports are major potential terrorist targets," said Senator Christopher Dodd, a Democrat of Connecticut. ''I strongly urge the administration to thoroughly investigate this acquisition."
Senator Tom Coburn, a Republican of Oklahoma, said, ''Handing the keys to US strategic ports to a regime that recognized the Taliban is not a sound next step in our war against terror."
Administration officials defended approval of the deal by the Committee on Foreign Investment in the United States, a panel with representatives from 12 US agencies that reviews foreign takeovers of US companies or possible risks to national security.
The company that now operates the ports, they said, is foreign, Peninsular and Oriental Steam Navigation Co., a British firm. Its employees in US ports, who are mostly Americans, are expected to do the same work they're doing now. Furthermore, Dubai Ports World, which won the bidding this month for the company, has been a reliable partner in screening cargo headed for the United States. And once cargo arrives, federal agents would continue their current level of inspections.
''This company will be subject to any US laws that apply to port security, and will be obliged to have a port security plan that we will review," Stewart Baker, the assistant secretary for policy at the Department of Homeland Security, said in a phone interview. ''So if there's a falloff in compliance on security here in the United States, we're not completely lacking in ability to respond to that."
The flap has some implications beyond the port security issue, as illustrated by the readiness of administration officials to comment on the decision made by the committee, which deliberates in secret.
After many years in which foreign investment in the United States has become generally welcome as a generator of jobs, Congress has recently become more wary of purchases by certain foreign interests.
The takeover last year by a Chinese company of
Talk of major changes in the law has subsided, but the Dubai Ports World deal could reignite the effort.
If the administration is perceived as not reviewing the deal carefully, congressional skeptics of foreign investment may feel obliged to take matters into their own hands, said Todd Malan, executive director of the Organization for International Investment, which represents the US subsidiaries of many foreign companies.
Malan was especially concerned because the Committee on Foreign Investment in the United States did not conduct a 45-day investigation on top of the initial 30-day review that it usually gives to foreign purchases of US businesses.
''There's obviously a very broad interest in Congress in this particular transaction, and we hope that it doesn't lead to broad changes" in the Committee on Foreign Investment in the United States, Malan said. ''Clearly, a larger number of members of Congress would have been more comfortable if this transaction had gone to the full investigation phase."
DP World, the company at the center of the controversy, has been expanding since 1999 from its base in Dubai into operating ports in many other parts of the world, including Asia, Europe and South America.
''We have a relationship with this company because they have been a participant in some of our cargo and port security measures," Baker said. ''Remember, our interest in port security extends well beyond the United States. If we discover weapons of mass destruction inside a US port, we've already lost."
Extra investigation is not necessary, Baker said, because the company approached the Committee on Foreign Investment in the United States, in late November, when it decided to bid for Peninsular and Oriental.
