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Why Dubai’s acquisition of P&O must go through

Claude Salhani
Filed on February 24, 2006

PRESIDENT George W Bush threatened to use his right of veto to ensure that a bid from a Dubai-based company would not die on the House floor, killed by worries that terrorism could infiltrate arms, personnel and explosives into the United States. If Bush carries through his veto threat, it would be the first of his presidency.


Lawmakers on the Capitol Hill and a large percentage of the American public are apparently worried that handing over the control of six major US ports to Dubai Ports World (DPW), a Dubai-based corporation, would jeopardise the security of the United States. Particularly, in this post-9/11 world of paranoia regarding anything and everything coming from the Arab world, the deal is not viewed in a very positive light. Those opposing the transaction include a number of officials from Bush’s own Republican Party.

Senate Majority leader Bill Frist and Speaker of the House Dennis Hastert —two of Bush’s most ardent supporters —said giving operational control to a Middle Eastern country raises serious questions as far as the homeland security is concerned.

But Connecticut Democrat Sen. Joseph Lieberman said that refusing to allow the deal through on the basis that the word "Arab" figured in the country’s name was pure discrimination. President Bush meanwhile argues that the United Arab Emirates is a friendly country and an ally of the United States in the war on terrorism.

"If there was any chance that this transaction would jeopardise the security of the United States, it would not go forward," said President Bush. The president said lawmakers were questioning the deal because a company from the United Arab Emirates was involved.

Two lawmakers from New York —Sen. Charles Schumer, a Democrat and Peter King, a Republican —said they would try and stop the deal going through by putting forward legislation demanding congressional involvement.

But what many Americans fail to understand is just how large a percentage of US businesses are owned and/or operated by foreign companies. To begin with, the six ports in question are currently owned by a British company. Additionally, it is not only in the shipping industry that foreign investment is active in the United States. Foreign companies own other aspects of American life. European and Japanese corporations are very active in America, selling Americans what they eat to the films they watch.

The Brussels-based Delhaize Group, a prominent supermarket chain, operates some 1,500 supermarkets in 16 states on the east coast of the United States. They are known in the US under the brand names of Food Lion, Hannaford Bros., Kash n’ Karry and Harveys. And Sony (Japan) owns a large segment of Hollywood’s dream-making enterprise —filmmaking —as a major shareholder of Universal Studios.

The fact that a Dubai-owned company manages one or more US ports should not affect security at the ports. Security is first and foremost the responsibility of the US Coast Guard, US Customs, Homeland Security and other branches of the US government. And so it should, and would remain. In fact, DPW operating American ports should be no different from a foreign airline operating its own terminal at a major American airport.

Additionally, the acquisition by DPW of the U.S. ports would not be a first. Ceres Terminal of Japan runs the ports of Bayonne, New Jersey; Baltimore, Maryland; Norfolk, Virginia; Charleston, South Carolina; Savannah, Georgia; Jacksonville, Florida; Cape Canaveral, Everglades and Miami in Florida. And that is just on the East coast. They run seven other ports in other parts of the country.

Another Japanese company, Mitsui O S K Lines runs 21 ports in the United States; Hanjin Shipping, South Korea operates 11 ports; Kawasaki, Kisen, Kaisha (Ltd.) of Japan manages three; APL Singapore runs nine; China Ocean Shipping Company operates 11; and APM Terminals, Denmark manages 11.

The six American ports DPW is taking over as part of a $6.8 billion deal —Boston, New York, Philadelphia, Baltimore, Miami and New Orleans —are currently operated by London-based Peninsular & Oriental Steam Navigation. The US Treasury Department’s Committee on Foreign Investment in the United States approved the deal in January.

In a move meant to reassure the American public and law makers on Capitol Hill, an official with Dubai Ports World said the company would agree to whatever security demands were made by the US government. And security would remain in the hands of US agencies.

This latest spat comes at a time when relations between the West and the Arab and Islamic world are at an all-time low following the publication of Danish caricatures in some European newspapers and the emergence of new images of prisoners’ abuses at Abu Ghraib. Nixing the deal will only make matters worse.

Claude Salhani is International Editor and a political analyst with United Press International in Washington. Comments may be sent to Claude@upi.com




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