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Dubai Ports World presses on with port takeover

(Reuters)
Filed on March 9, 2006

DUBAI - Dubai Ports World is pressing ahead with a takeover that gives it control of six major US ports despite a Congress committee vote to block the deal, sources familiar with the deal said on Thursday.

Government and company officials in the United Arab Emirates declined comment on Wednesday's vote by US lawmakers to block the deal on the grounds that handing the ports over to a Gulf Arab state-owned firm would threaten US national security.

But the sources said the vote had not taken Dubai Ports any closer to relinquishing the six ports at the center of a political firestorm.

'The vote in the House of Representatives has not change anything in that respect. We are not at that point,' one Dubai-based source said.

Analysts said the political furor was bound to provoke businesses in the world's biggest oil exporting region, which is an increasingly important source of financing for the huge US current account deficit.

'It's American double standards. Do you think that businesses and governments here won't react and even retaliate?' said Wadah Al Taha of the National Bank of Abu Dhabi.

He said the issue was likely to feature prominently in trade talks later this month between the United States and the UAE, a federation of seven emirates that includes Dubai.

The Dubai Ports row has reinforced fears in the Middle East that investments in the United States have become politically risky for Arabs and Muslims. Some Arabs say the US opposition to the deal smacks of racism.

Security fears

Some US politicians say the UAE has in the past been sympathetic to Islamist militants, noting that two of the September 11 hijackers came from that country.

President George W. Bush, however, says the UAE is a staunch ally in the US war on terrorism and he has vowed to veto any legislation that would block the ports deal.

Wednesday's 62-2 vote, by the House Appropriations Committee, will be followed next week by another vote by the full House of Representatives.

Dubai Ports officials said they were pushing ahead with plans to integrate British ports group P&O which runs the US ports. A Dubai Ports spokesman said the company would soon announce the de-listing of P&O now that shareholders had approved the $6.8 billion takeover.

Dubai Ports Chairman Sultan Ahmed Bin Sulayem and Chief Executive Mohammed Sharaf fly to London this week to discuss integration of the two companies which make up the world's third largest ports group.

'We are evaluating the situation,' Bin Sulayem said.

The UAE is a close ally of Washington and a frequent port of call for American warships. Concerns are growing that the fallout from the ports row will affect US economic ties with the Gulf.

UAE Economy Minister Sheikha Lubna Al Qassimi said last week the furor could prompt other countries to divert funds away from the United States.

American businesses in the UAE warned on Wednesday that trade worth more than $8 billion between the United States and the United Arab Emirates could be in jeopardy.


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