Dubai Ports World controversy
Encyclopedia
The Dubai Ports World controversy began in February 2006 and rose to prominence as a national security
debate in the United States
. At issue was the sale of port management
businesses in six major U.S. seaports to a company based in the United Arab Emirates
(UAE), and whether such a sale would compromise port security
.
The controversy pertained to management contracts of six major United States
ports. The purchaser was DP World (DPW), a state-owned company in the UAE. The contracts had already been foreign-owned, by Peninsular and Oriental Steam Navigation Company
(P&O), a British firm taken over by DPW (completed in March 2006). Although the sale was approved by the executive branch of the United States Government
, various United States political figures argued that the takeover would compromise U.S. port security.
U.S. President George W. Bush
argued vigorously for the approval of the deal, claiming that the delay sends the wrong message to U.S. allies. Legislation was introduced to the United States Congress
to delay the sale.
in the United Arab Emirates, via a holding company. This holding company is under the direct control of the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum
, who is also the prime minister of the UAE.
In mid-October 2005, DP World approached the Committee on Foreign Investment in the United States
(CFIUS) to clear regulatory hurdles for a possible acquisition of the British firm P&O. The CFIUS is the multi-agency federal panel that passes judgment on deals with foreign corporations that raise antitrust or national security questions, Soon after, DPW began negotiating the terms of the takeover with P&O. They were advised by former President Bill Clinton to submit to a 45-day review of the acquisition.
In December 2005, Coast Guard intelligence officials raised the possibility of significant security risks associated with the management of some U.S. port operations by a Dubai company, stating in a report that broad intelligence gaps prevented them from assessing the risks.
In February 2006, the stockholders of the Peninsular and Oriental Steam Navigation Company (P&O), a British
firm, agreed to a sale of that company to DPW over a bid by PSA International
of Singapore
. As part of the sale, DPW would assume the leases of P&O to manage major U.S. port facilities in New York
, New Jersey
, Philadelphia
, Baltimore, New Orleans
, and Miami
, as well as operations in 16 other ports.
After P&O stockholders approved the deal, the arrangement was reviewed by the CFIUS headed by the U.S. Treasury Department. The transfer of leases was approved.
Once the deal appeared in the business press, it was noticed by Eller & Company, a Florida firm. Eller has two joint ventures with P&O and it feared becoming an "involuntary business partner of DP World", Said Michael Kreitzer, Eller's lawyer. According to Kreitzer, Eller hired semi-retired lobbyist Joe Muldoon as a last ditch effort to persuade Congress to block the deal. Soon Muldoon and Kreitzer got the attention of Democratic New York Senator Charles E. Schumer and an Associated Press
reporter. Within days, Schumer held a press conference calling for a review and the AP ran the story nationally.
Congressional politicians were quick to respond after Schumer's press conference and the AP story put the Dubai Ports deal in the national spotlight. Both Democratic and Republican members of Congress
started to question the approval. Republican leaders Dennis Hastert
and Bill Frist
, who usually work closely with the office of the President, publicly questioned the deal. Frist said "If the administration cannot delay the process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review."
On February 22, 2006, President Bush threatened to veto
any legislation passed by Congress to block the deal, a veto that would be his first. In a statement to reporters, Bush claimed, "It would send a terrible signal to friends and allies not to let this transaction go through." DP Worlds Chief Operating Officer, Ted Bilkey engaged a number of high profile lobbying firms to garner congressional support for the deal.
The controversy has created a public and unusually high-profile dispute within the Republican Party, and between the Republican-controlled Congress and the Republican-controlled White House
.
On February 23, 2006, DPW volunteered to postpone its takeover of significant operations at the ports to give the White House more time to convince lawmakers that the deal poses no increased risks from terrorism.
On February 24, 2006, it was reported that there are 22 U.S. ports in the deal, not just the six major ports mentioned in initial news stories and reports. According to the website of P&O Ports, the port-operations subsidiary of P&O, DPW would take over stevedore
services at 12 East Coast ports including Portland, Maine
; Boston, Massachusetts; Davisville, Rhode Island
; New York City
; Newark, New Jersey
; Philadelphia, Pennsylvania
; Camden, New Jersey
; Wilmington, Delaware
; Baltimore, Maryland; and Virginia
locations at Newport News
, Norfolk
, and Portsmouth
.
Additionally, DPW will take over P&O stevedoring
operations at nine ports along the Gulf of Mexico
including the Texas
ports of Beaumont
, Port Arthur
, Galveston
, Houston
, Freeport
, and Corpus Christi
, plus the Louisiana
ports of Lake Charles
and New Orleans
.
Former Senate Majority Leader and 1996 Republican presidential candidate Bob Dole
was hired by Dubai Ports World to lobby Congress on its behalf against bipartisan criticism of the deal. Mr. Dole is a special counsel in the Washington office of the law firm of Alston & Bird
. DP World hired the firm in 2005 to help shepherd its purchase of the British-based firm Peninsular and Oriental.
On March 8, 2006 the House Panel voted 62–2 to block the deal, and senator Charles Schumer
added amendments to a senate bill to block the deal, causing an uproar in the senate.
On March 9, 2006, Dubai Ports World released a statement saying they would turn over operation of U.S. ports to a U.S. "Entity"
. Later that same day, American Enterprise Institute
scholar Norm Ornstein reported on PBS
's "News Hour" that DP World was considering selling its U.S. operations to Halliburton
.
Dubai Ports World eventually sold P&O's American operations to American International Group
's asset management division, Global Investment Group for an undisclosed sum.
, author of Breakdown: How America's Intelligence Failures Led to September 11:
Frank Gaffney
, president of the Center for Security Policy
wrote:
Susan Collins
, Republican Senator from Maine (and Homeland Security Committee chairwoman at the time) wrote:
After the DM World announced its decision to transfer the U.S. port operations to a U.S. entity, the BBC
quoted Daniel T. Griswold
, director of the Cato Institute
's Center for Trade Policy Studies, as saying that the affair would "send a chilling signal": "It is just assuming that if a company is from the Middle East it is de facto disqualified from investing in the United States, and I think that is a terrible message to send."
The objections to approving the sale centered on arguments about who controls U.S. ports, especially after the September 11, 2001 attacks
. Some opposed to the sale have argued that no foreign government should be permitted to own such strategic assets while others argue that port security should remain in the hands of American firms under American control at the very least. Few had offered similar objections to the P&O's ownership, until the proposed DPW takeover brought attention to the situation. Over 80 percent of the terminals in the USA are already controlled by foreign owners. While the UAE's past actions regarding funding terrorist organizations (notably Hamas
) and DPW's state-ownership increased discomfort across major party lines in the United States few thought to reflect that significantly more holders of British passports are in Guantanamo Bay than Emirati. There are no UAE nationals in Guantánamo.
Those who expressed opposition to the deal included: The New York Times, Michael Savage
, Lindsey Graham
, The New Republic
, The John Birch Society
, Sean Hannity
, Lou Dobbs
, Laura Ingraham
; Bill Frist
and Hillary Clinton, prominent politicians from two different parties; Bob Menendez, John Gibson
, Jon Corzine
, and Peter King
. Senator Barack Obama
stated his opposition to the deal. So did Senators Carl Levin
and John Kerry
.
The objections commonly raised in public discourse differ from those lodged by Eller & Company, the Florida firm responsible for bringing national attention to the deal. Eller has two joint ventures with P&O and it feared becoming an "involuntary partner of DP World". For them, business rather than security or concerns over the approval process were the overriding factors driving their lobbying efforts to sink the deal.
Several additional arguments have circulated among critics of the deal, including:
The contracts under consideration are for the management of numerous American ports. Critics of the deal claim that this is tantamount to “outsourcing
” national security, given the vulnerability of ports for terror attacks or as an entry point for Al-Qaeda
operatives. This outsourcing argument revolves around concerns with foreign owners past relationship with terrorism and divided loyalties.
, The Wall Street Journal
, the Los Angeles Times
, The Washington Post
, The Economist
and commentators including Tony Snow
, Thomas Friedman
, Rush Limbaugh
, former president Jimmy Carter
, John Warner
, and Bill O'Reilly
. In addition Senator John McCain
stated he believed Americans "should trust the President on this issue."
Former President Bill Clinton advised top United Arab Emirates officials on how to address growing U.S. concerns over the acquisition, but later stated "He told them that he didn't know the details about the deal". In a press conference his spokesman Jay Carson stated Clinton "felt that any ports deal should be subject to the full scrutiny process and should also take steps to make ports safer, not maintain the status quo". However, his wife Senator Clinton was publicly opposed to the deal. Clarified in the same interview: "Like Senator Clinton and many others, he is concerned about foreign state ownership of our ports, and, to this end, he is supportive of her legislation," Carson told CNN.
Former Senate Majority Leader and 1996 Republican presidential candidate Bob Dole
was a special counsel in the Washington office of the law firm Alston & Bird. DP World hired the firm in 2005 to help shepherd its purchase of the British-based firm Peninsular and Oriental. His wife, North Carolina Republican Senator Elizabeth Dole, has also raised questions about the Dubai-based company. The chairman of the North Carolina Democratic Party, Jerry Meek, publicly called on Sen. Dole to remove herself from "any congressional oversight" of the Dubai port deal and stated "The fact that Dubai is paying her husband to help pass the deal presents both a financial and ethical conflict of interest for Senator Dole".
The Bush administration and other supporters of the deal made the following arguments:
Israel's largest shipping firm, Zim Integrated Shipping Services
, came out in support of the deal.
The controversy came shortly after the World Trade Organisation's Doha Round
of global trade talks. At which many member states called for the U.S. to open up its ports to international competition, in the same way that other industrialized nations have pushed poorer countries into opening up their service sectors (e.g. water, telecoms, etc.).
National security
National security is the requirement to maintain the survival of the state through the use of economic, diplomacy, power projection and political power. The concept developed mostly in the United States of America after World War II...
debate in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. At issue was the sale of port management
Port management
Port management is the management of ports.According to a course syllabus at the United Nations University:-See also:*Port security*channel *ships*lighter *tugboat*berth*anchorage*cargo*containers*warehouse*customs...
businesses in six major U.S. seaports to a company based in the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
(UAE), and whether such a sale would compromise port security
Port security
Port security refers to the defense, law and treaty enforcement, and counterterrorism activities that fall within the port and maritime domain...
.
The controversy pertained to management contracts of six major United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
ports. The purchaser was DP World (DPW), a state-owned company in the UAE. The contracts had already been foreign-owned, by Peninsular and Oriental Steam Navigation Company
Peninsular and Oriental Steam Navigation Company
The Peninsular and Oriental Steam Navigation Company, which is usually known as P&O, is a British shipping and logistics company which dated from the early 19th century. Following its sale in March 2006 to Dubai Ports World for £3.9 billion, it became a subsidiary of DP World; however, the P&O...
(P&O), a British firm taken over by DPW (completed in March 2006). Although the sale was approved by the executive branch of the United States Government
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
, various United States political figures argued that the takeover would compromise U.S. port security.
U.S. President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
argued vigorously for the approval of the deal, claiming that the delay sends the wrong message to U.S. allies. Legislation was introduced to the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
to delay the sale.
Background
DP World is a company owned by the government of DubaiDubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
in the United Arab Emirates, via a holding company. This holding company is under the direct control of the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum , also Sheikh Mohammed, , is the Prime Minister and Vice President of the United Arab Emirates , and absolute monarch of Dubai.-Personal life and education:...
, who is also the prime minister of the UAE.
Chronology
Committee on Foreign Investment in the United States
The Committee on Foreign Investment in the United States is an inter-agency committee of the United States Government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS includes representatives...
(CFIUS) to clear regulatory hurdles for a possible acquisition of the British firm P&O. The CFIUS is the multi-agency federal panel that passes judgment on deals with foreign corporations that raise antitrust or national security questions, Soon after, DPW began negotiating the terms of the takeover with P&O. They were advised by former President Bill Clinton to submit to a 45-day review of the acquisition.
In December 2005, Coast Guard intelligence officials raised the possibility of significant security risks associated with the management of some U.S. port operations by a Dubai company, stating in a report that broad intelligence gaps prevented them from assessing the risks.
In February 2006, the stockholders of the Peninsular and Oriental Steam Navigation Company (P&O), a British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
firm, agreed to a sale of that company to DPW over a bid by PSA International
PSA International
PSA International Pte Ltd, formerly Port of Singapore Authority is the second largest port operator in the world. The company's flagship operations are PSA Singapore Terminals, PSA HNN and PSA Marine...
of Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
. As part of the sale, DPW would assume the leases of P&O to manage major U.S. port facilities in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, Philadelphia
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
, Baltimore, New Orleans
New Orleans, Louisiana
New Orleans is a major United States port and the largest city and metropolitan area in the state of Louisiana. The New Orleans metropolitan area has a population of 1,235,650 as of 2009, the 46th largest in the USA. The New Orleans – Metairie – Bogalusa combined statistical area has a population...
, and Miami
Miami, Florida
Miami is a city located on the Atlantic coast in southeastern Florida and the county seat of Miami-Dade County, the most populous county in Florida and the eighth-most populous county in the United States with a population of 2,500,625...
, as well as operations in 16 other ports.
After P&O stockholders approved the deal, the arrangement was reviewed by the CFIUS headed by the U.S. Treasury Department. The transfer of leases was approved.
Once the deal appeared in the business press, it was noticed by Eller & Company, a Florida firm. Eller has two joint ventures with P&O and it feared becoming an "involuntary business partner of DP World", Said Michael Kreitzer, Eller's lawyer. According to Kreitzer, Eller hired semi-retired lobbyist Joe Muldoon as a last ditch effort to persuade Congress to block the deal. Soon Muldoon and Kreitzer got the attention of Democratic New York Senator Charles E. Schumer and an Associated Press
Associated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
reporter. Within days, Schumer held a press conference calling for a review and the AP ran the story nationally.
Congressional politicians were quick to respond after Schumer's press conference and the AP story put the Dubai Ports deal in the national spotlight. Both Democratic and Republican members of Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
started to question the approval. Republican leaders Dennis Hastert
Dennis Hastert
John Dennis "Denny" Hastert was the 59th Speaker of the House serving from 1999 to 2007. He represented as a Republican for twenty years, 1987 to 2007.He is the longest-serving Republican Speaker in history...
and Bill Frist
Bill Frist
William Harrison "Bill" Frist, Sr. is an American physician, businessman, and politician. He began his career as an heir and major stockholder to the for-profit hospital chain of Hospital Corporation of America. Frist later served two terms as a Republican United States Senator representing...
, who usually work closely with the office of the President, publicly questioned the deal. Frist said "If the administration cannot delay the process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review."
On February 22, 2006, President Bush threatened to veto
Veto
A veto, Latin for "I forbid", is the power of an officer of the state to unilaterally stop an official action, especially enactment of a piece of legislation...
any legislation passed by Congress to block the deal, a veto that would be his first. In a statement to reporters, Bush claimed, "It would send a terrible signal to friends and allies not to let this transaction go through." DP Worlds Chief Operating Officer, Ted Bilkey engaged a number of high profile lobbying firms to garner congressional support for the deal.
The controversy has created a public and unusually high-profile dispute within the Republican Party, and between the Republican-controlled Congress and the Republican-controlled White House
White House
The White House is the official residence and principal workplace of the president of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., the house was designed by Irish-born James Hoban, and built between 1792 and 1800 of white-painted Aquia sandstone in the Neoclassical...
.
On February 23, 2006, DPW volunteered to postpone its takeover of significant operations at the ports to give the White House more time to convince lawmakers that the deal poses no increased risks from terrorism.
On February 24, 2006, it was reported that there are 22 U.S. ports in the deal, not just the six major ports mentioned in initial news stories and reports. According to the website of P&O Ports, the port-operations subsidiary of P&O, DPW would take over stevedore
Stevedore
Stevedore, dockworker, docker, dock labourer, wharfie and longshoreman can have various waterfront-related meanings concerning loading and unloading ships, according to place and country....
services at 12 East Coast ports including Portland, Maine
Portland, Maine
Portland is the largest city in Maine and is the county seat of Cumberland County. The 2010 city population was 66,194, growing 3 percent since the census of 2000...
; Boston, Massachusetts; Davisville, Rhode Island
Davisville, Rhode Island
Davisville, Rhode Island was the former home of the U.S. Navy SeaBees. It was located at Quonset Point on Narragansett Bay, an area now included in the town of North Kingstown. The Navy acquired the property in 1939 and built Naval Air Station Quonset Point...
; New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
; Newark, New Jersey
Newark, New Jersey
Newark is the largest city in the American state of New Jersey, and the seat of Essex County. As of the 2010 United States Census, Newark had a population of 277,140, maintaining its status as the largest municipality in New Jersey. It is the 68th largest city in the U.S...
; Philadelphia, Pennsylvania
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
; Camden, New Jersey
Camden, New Jersey
The city of Camden is the county seat of Camden County, New Jersey. It is located across the Delaware River from Philadelphia, Pennsylvania. As of the 2010 United States Census, the city had a total population of 77,344...
; Wilmington, Delaware
Wilmington, Delaware
Wilmington is the largest city in the state of Delaware, United States, and is located at the confluence of the Christina River and Brandywine Creek, near where the Christina flows into the Delaware River. It is the county seat of New Castle County and one of the major cities in the Delaware Valley...
; Baltimore, Maryland; and Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
locations at Newport News
Newport News, Virginia
Newport News is an independent city located in the Hampton Roads metropolitan area of Virginia. It is at the southeastern end of the Virginia Peninsula, on the north shore of the James River extending southeast from Skiffe's Creek along many miles of waterfront to the river's mouth at Newport News...
, Norfolk
Norfolk, Virginia
Norfolk is an independent city in the Commonwealth of Virginia in the United States. With a population of 242,803 as of the 2010 Census, it is Virginia's second-largest city behind neighboring Virginia Beach....
, and Portsmouth
Portsmouth, Virginia
Portsmouth is located in the Hampton Roads metropolitan area of the U.S. Commonwealth of Virginia. As of 2010, the city had a total population of 95,535.The Norfolk Naval Shipyard, often called the Norfolk Navy Yard, is a historic and active U.S...
.
Additionally, DPW will take over P&O stevedoring
Stevedore
Stevedore, dockworker, docker, dock labourer, wharfie and longshoreman can have various waterfront-related meanings concerning loading and unloading ships, according to place and country....
operations at nine ports along the Gulf of Mexico
Gulf of Mexico
The Gulf of Mexico is a partially landlocked ocean basin largely surrounded by the North American continent and the island of Cuba. It is bounded on the northeast, north and northwest by the Gulf Coast of the United States, on the southwest and south by Mexico, and on the southeast by Cuba. In...
including the Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
ports of Beaumont
Beaumont, Texas
Beaumont is a city in and county seat of Jefferson County, Texas, United States, within the Beaumont–Port Arthur Metropolitan Statistical Area. The city's population was 118,296 at the 2010 census. With Port Arthur and Orange, it forms the Golden Triangle, a major industrial area on the...
, Port Arthur
Port Arthur, Texas
-Demographics:As of the 2000 census, there were 57,755 people, 21,839 households, and 14,675 families residing in the city. The population density was 696.5 people per square mile . There were 24,713 housing units at an average density of 298.0 per square mile...
, Galveston
Galveston, Texas
Galveston is a coastal city located on Galveston Island in the U.S. state of Texas. , the city had a total population of 47,743 within an area of...
, Houston
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
, Freeport
Freeport, Texas
Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown metropolitan area and is situated in Southeast Texas. As of the 2000 U.S...
, and Corpus Christi
Corpus Christi, Texas
Corpus Christi is a coastal city in the South Texas region of the U.S. state of Texas. The county seat of Nueces County, it also extends into Aransas, Kleberg, and San Patricio counties. The MSA population in 2008 was 416,376. The population was 305,215 at the 2010 census making it the...
, plus the Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
ports of Lake Charles
Lake Charles, Louisiana
Lake Charles is the fifth-largest incorporated city in the U.S. state of Louisiana, located on Lake Charles, Prien Lake, and the Calcasieu River. Located in Calcasieu Parish, a major cultural, industrial, and educational center in the southwest region of the state, and one of the most important in...
and New Orleans
New Orleans, Louisiana
New Orleans is a major United States port and the largest city and metropolitan area in the state of Louisiana. The New Orleans metropolitan area has a population of 1,235,650 as of 2009, the 46th largest in the USA. The New Orleans – Metairie – Bogalusa combined statistical area has a population...
.
Former Senate Majority Leader and 1996 Republican presidential candidate Bob Dole
Bob Dole
Robert Joseph "Bob" Dole is an American attorney and politician. Dole represented Kansas in the United States Senate from 1969 to 1996, was Gerald Ford's Vice Presidential running mate in the 1976 presidential election, and was Senate Majority Leader from 1985 to 1987 and in 1995 and 1996...
was hired by Dubai Ports World to lobby Congress on its behalf against bipartisan criticism of the deal. Mr. Dole is a special counsel in the Washington office of the law firm of Alston & Bird
Alston & Bird
Alston & Bird LLP, commonly abbreviated , is the largest law firm in Atlanta and the forty-third largest in the United States.-History:...
. DP World hired the firm in 2005 to help shepherd its purchase of the British-based firm Peninsular and Oriental.
On March 8, 2006 the House Panel voted 62–2 to block the deal, and senator Charles Schumer
Charles Schumer
Charles Ellis "Chuck" Schumer is the senior United States Senator from New York and a member of the Democratic Party. First elected in 1998, he defeated three-term Republican incumbent Al D'Amato by a margin of 55%–44%. He was easily re-elected in 2004 by a margin of 71%–24% and in 2010 by a...
added amendments to a senate bill to block the deal, causing an uproar in the senate.
On March 9, 2006, Dubai Ports World released a statement saying they would turn over operation of U.S. ports to a U.S. "Entity"
United States entity
United States entity is a designation given to some entities , e.g. for International Traffic in Arms Regulations purposes:For purposes of the preceding paragraph, a U.S. entity is a firm incorporated in the United States that is controlled by U.S. citizens or by another U.S...
. Later that same day, American Enterprise Institute
American Enterprise Institute
The American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...
scholar Norm Ornstein reported on PBS
Public Broadcasting Service
The Public Broadcasting Service is an American non-profit public broadcasting television network with 354 member TV stations in the United States which hold collective ownership. Its headquarters is in Arlington, Virginia....
's "News Hour" that DP World was considering selling its U.S. operations to Halliburton
Halliburton
Halliburton is the world's second largest oilfield services corporation with operations in more than 70 countries. It has hundreds of subsidiaries, affiliates, branches, brands and divisions worldwide and employs over 50,000 people....
.
Dubai Ports World eventually sold P&O's American operations to American International Group
American International Group
American International Group, Inc. or AIG is an American multinational insurance corporation. Its corporate headquarters is located in the American International Building in New York City. The British headquarters office is on Fenchurch Street in London, continental Europe operations are based in...
's asset management division, Global Investment Group for an undisclosed sum.
Opinions and comment
According to Bill GertzBill Gertz
Bill Gertz is an American editor, columnist and reporter for The Washington Times. He is the author of six books and writes a weekly column on the Pentagon and national security issues called "Inside the Ring". During the administration of Bill Clinton Gertz was known for his stories exposing...
, author of Breakdown: How America's Intelligence Failures Led to September 11:
- "Intelligence and security officials opposed to the deal with Dubai Ports World said ports are vulnerable to the entry of terrorists or illicit weapons because of the large number of containers that enter U.S. territory, regardless of who manages them."
Frank Gaffney
Frank Gaffney
Frank J. Gaffney, Jr. is the founder and president of the American Center for Security Policy, columnist at the Washington Times, blogger at Big Peace and radio host on Secure Freedom Radio....
, president of the Center for Security Policy
Center for Security Policy
The Center for Security Policy is a Washington, D.C. think tank that focuses on national security issues. The Center was founded in 1988 by Frank Gaffney, Jr....
wrote:
- "At the very least, the company will have to be read-in on these ports' security plans as it will have some role in their implementation."
Susan Collins
Susan Collins
Susan Margaret Collins is the junior United States Senator from Maine and a member of the Republican Party. First elected to the Senate in 1996, she is the ranking member of the Senate Committee on Homeland Security and Governmental Affairs...
, Republican Senator from Maine (and Homeland Security Committee chairwoman at the time) wrote:
- "[A] careful review of the 'assurances letter' reveals that DP World is not, in fact, bound to provide the U.S. government with the information it would need to close the intelligence gaps the Coast Guard identified...The language is weak... Indeed, the assurances appear to amount to little more than a restatement of what the FBI or other law enforcement agenc[ies] could gather anyway in the course of an investigation."
After the DM World announced its decision to transfer the U.S. port operations to a U.S. entity, the BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
quoted Daniel T. Griswold
Daniel T. Griswold
Daniel T. Griswold is director of the Cato Institute's Center for Trade Policy Studies, where he has authored numerous studies on trade and immigration policy. Before joining Cato in 1997, Griswold served as a congressional press secretary and a daily newspaper editorial page editor...
, director of the Cato Institute
Cato Institute
The Cato Institute is a libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Edward H. Crane, who remains president and CEO, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries, Inc., the largest privately held...
's Center for Trade Policy Studies, as saying that the affair would "send a chilling signal": "It is just assuming that if a company is from the Middle East it is de facto disqualified from investing in the United States, and I think that is a terrible message to send."
Opposition to the deal
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
. Some opposed to the sale have argued that no foreign government should be permitted to own such strategic assets while others argue that port security should remain in the hands of American firms under American control at the very least. Few had offered similar objections to the P&O's ownership, until the proposed DPW takeover brought attention to the situation. Over 80 percent of the terminals in the USA are already controlled by foreign owners. While the UAE's past actions regarding funding terrorist organizations (notably Hamas
Hamas
Hamas is the Palestinian Sunni Islamic or Islamist political party that governs the Gaza Strip. Hamas also has a military wing, the Izz ad-Din al-Qassam Brigades...
) and DPW's state-ownership increased discomfort across major party lines in the United States few thought to reflect that significantly more holders of British passports are in Guantanamo Bay than Emirati. There are no UAE nationals in Guantánamo.
Those who expressed opposition to the deal included: The New York Times, Michael Savage
Michael Savage (commentator)
Michael Savage is a conservative American radio host, author, and political commentator. He is the host of The Savage Nation, a nationally syndicated talk show that airs throughout the United States on Talk Radio Network...
, Lindsey Graham
Lindsey Graham
Lindsey Olin Graham is the senior U.S. Senator from South Carolina and a member of the Republican Party. Previously he served as the U.S. Representative for .-Early life, education and career:...
, The New Republic
The New Republic
The magazine has also published two articles concerning income inequality, largely criticizing conservative economists for their attempts to deny the existence or negative effect increasing income inequality is having on the United States...
, The John Birch Society
John Birch Society
The John Birch Society is an American political advocacy group that supports anti-communism, limited government, a Constitutional Republic and personal freedom. It has been described as radical right-wing....
, Sean Hannity
Sean Hannity
Sean Hannity is an American radio and television host, author, and conservative political commentator. He is the host of The Sean Hannity Show, a nationally syndicated talk radio show that airs throughout the United States on Premiere Radio Networks. Hannity also hosts a cable news show, Hannity,...
, Lou Dobbs
Lou Dobbs
Louis Carl "Lou" Dobbs is an American journalist, radio host, television host on the Fox Business Network, and author. He anchored CNN's Lou Dobbs Tonight until November 2009 when he announced on the air that he would leave the 24-hour cable news television network.He was born in Texas and lived...
, Laura Ingraham
Laura Ingraham
Laura Anne Ingraham is an American radio host, author, and conservative political commentator. Her nationally syndicated talk show, The Laura Ingraham Show, airs throughout the United States on Talk Radio Network...
; Bill Frist
Bill Frist
William Harrison "Bill" Frist, Sr. is an American physician, businessman, and politician. He began his career as an heir and major stockholder to the for-profit hospital chain of Hospital Corporation of America. Frist later served two terms as a Republican United States Senator representing...
and Hillary Clinton, prominent politicians from two different parties; Bob Menendez, John Gibson
John Gibson (media host)
John David Gibson is an American radio talk show host. As of September 2008, he hosts the syndicated radio program The John Gibson Show on Fox News Radio. Gibson was formerly the co-host of the weekday edition of The Big Story on the Fox News television channel.-Early career:Gibson earned a BA...
, Jon Corzine
Jon Corzine
Jon Stevens Corzine is the former CEO of Goldman Sachs and of MF Global, and a one time American politician, who served as the 54th Governor of New Jersey from 2006 to 2010. A Democrat, Corzine served five years of a six-year U.S. Senate term representing New Jersey before being elected Governor...
, and Peter King
Peter T. King
Peter T. "Pete" King is the U.S. Representative for , serving since 1993. He is a member of the Republican Party. King's central Long Island district includes parts of Nassau and Suffolk counties....
. Senator Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
stated his opposition to the deal. So did Senators Carl Levin
Carl Levin
Carl Milton Levin is a Jewish-American United States Senator from Michigan, serving since 1979. He is the Chairman of the Senate Committee on Armed Services. He is a member of the Democratic Party....
and John Kerry
John Kerry
John Forbes Kerry is the senior United States Senator from Massachusetts, the 10th most senior U.S. Senator and chairman of the Senate Foreign Relations Committee. He was the presidential nominee of the Democratic Party in the 2004 presidential election, but lost to former President George W...
.
The objections commonly raised in public discourse differ from those lodged by Eller & Company, the Florida firm responsible for bringing national attention to the deal. Eller has two joint ventures with P&O and it feared becoming an "involuntary partner of DP World". For them, business rather than security or concerns over the approval process were the overriding factors driving their lobbying efforts to sink the deal.
Several additional arguments have circulated among critics of the deal, including:
- Review and approval of the acquisition by CFIUSCommittee on Foreign Investment in the United StatesThe Committee on Foreign Investment in the United States is an inter-agency committee of the United States Government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS includes representatives...
was not sufficiently transparent and thorough, and never reached the proper level within the administration. - Personal ties between the Bush administration and DP World, such as the appointment of David C. SanbornDavid C. SanbornDavid C. Sanborn has had a career in maritime operations and administration. He worked for Dubai Ports World, a large port management firm owned by the government of the United Arab Emirates, as Director of Operations for Europe and Latin America. On 24 January 2006, Dubai Ports World announced...
to the Transportation DepartmentUnited States Department of TransportationThe United States Department of Transportation is a federal Cabinet department of the United States government concerned with transportation. It was established by an act of Congress on October 15, 1966, and began operation on April 1, 1967...
's Maritime Administration portray a conflict of interest. - Joining the debate, the Anti-Defamation LeagueAnti-Defamation LeagueThe Anti-Defamation League is an international non-governmental organization based in the United States. Describing itself as "the nation's premier civil rights/human relations agency", the ADL states that it "fights anti-Semitism and all forms of bigotry, defends democratic ideals and protects...
has protested the deal, stating that "The UAE's boycott of Israel alone should torpedo this deal"
The contracts under consideration are for the management of numerous American ports. Critics of the deal claim that this is tantamount to “outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
” national security, given the vulnerability of ports for terror attacks or as an entry point for Al-Qaeda
Al-Qaeda
Al-Qaeda is a global broad-based militant Islamist terrorist organization founded by Osama bin Laden sometime between August 1988 and late 1989. It operates as a network comprising both a multinational, stateless army and a radical Sunni Muslim movement calling for global Jihad...
operatives. This outsourcing argument revolves around concerns with foreign owners past relationship with terrorism and divided loyalties.
Support for the deal
Editorial support for the deal came from publications including the Financial TimesFinancial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
, The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
, the Los Angeles Times
Los Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....
, The Washington Post
The Washington Post
The Washington Post is Washington, D.C.'s largest newspaper and its oldest still-existing paper, founded in 1877. Located in the capital of the United States, The Post has a particular emphasis on national politics. D.C., Maryland, and Virginia editions are printed for daily circulation...
, The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
and commentators including Tony Snow
Tony Snow
Robert Anthony "Tony" Snow was an American journalist, political commentator, television news anchor, syndicated columnist, radio host, musician, and the third White House Press Secretary under President George W. Bush. Snow also worked for President George H. W. Bush as chief speechwriter and...
, Thomas Friedman
Thomas Friedman
Thomas Lauren Friedman is an American journalist, columnist and author. He writes a twice-weekly column for The New York Times. He has written extensively on foreign affairs including global trade, the Middle East, and environmental issues and has won the Pulitzer Prize three times.-Personal...
, Rush Limbaugh
Rush Limbaugh
Rush Hudson Limbaugh III is an American radio talk show host, conservative political commentator, and an opinion leader in American conservatism. He hosts The Rush Limbaugh Show which is aired throughout the U.S. on Premiere Radio Networks and is the highest-rated talk-radio program in the United...
, former president Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
, John Warner
John Warner
John William Warner, KBE is an American Republican politician who served as Secretary of the Navy from 1972 to 1974 and as a five-term United States Senator from Virginia from January 2, 1979, to January 3, 2009...
, and Bill O'Reilly
Bill O'Reilly (commentator)
William James "Bill" O'Reilly, Jr. is an American television host, author, syndicated columnist and political commentator. He is the host of the political commentary program The O'Reilly Factor on the Fox News Channel, which is the most watched cable news television program on American television...
. In addition Senator John McCain
John McCain
John Sidney McCain III is the senior United States Senator from Arizona. He was the Republican nominee for president in the 2008 United States election....
stated he believed Americans "should trust the President on this issue."
Former President Bill Clinton advised top United Arab Emirates officials on how to address growing U.S. concerns over the acquisition, but later stated "He told them that he didn't know the details about the deal". In a press conference his spokesman Jay Carson stated Clinton "felt that any ports deal should be subject to the full scrutiny process and should also take steps to make ports safer, not maintain the status quo". However, his wife Senator Clinton was publicly opposed to the deal. Clarified in the same interview: "Like Senator Clinton and many others, he is concerned about foreign state ownership of our ports, and, to this end, he is supportive of her legislation," Carson told CNN.
Former Senate Majority Leader and 1996 Republican presidential candidate Bob Dole
Bob Dole
Robert Joseph "Bob" Dole is an American attorney and politician. Dole represented Kansas in the United States Senate from 1969 to 1996, was Gerald Ford's Vice Presidential running mate in the 1976 presidential election, and was Senate Majority Leader from 1985 to 1987 and in 1995 and 1996...
was a special counsel in the Washington office of the law firm Alston & Bird. DP World hired the firm in 2005 to help shepherd its purchase of the British-based firm Peninsular and Oriental. His wife, North Carolina Republican Senator Elizabeth Dole, has also raised questions about the Dubai-based company. The chairman of the North Carolina Democratic Party, Jerry Meek, publicly called on Sen. Dole to remove herself from "any congressional oversight" of the Dubai port deal and stated "The fact that Dubai is paying her husband to help pass the deal presents both a financial and ethical conflict of interest for Senator Dole".
The Bush administration and other supporters of the deal made the following arguments:
- The U.A.E. has proven itself a strategic partner by allowing the U.S. military access to its land, ports and airspace for basing and operations in IraqIraqIraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
and AfghanistanAfghanistanAfghanistan , officially the Islamic Republic of Afghanistan, is a landlocked country located in the centre of Asia, forming South Asia, Central Asia and the Middle East. With a population of about 29 million, it has an area of , making it the 42nd most populous and 41st largest nation in the world...
; - The U.A.E. has allied with the U.S. in the Global War On TerrorWar on TerrorismThe War on Terror is a term commonly applied to an international military campaign led by the United States and the United Kingdom with the support of other North Atlantic Treaty Organisation as well as non-NATO countries...
; - Blocking the transfer of operating rights held by a BritishGreat BritainGreat Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...
firm to an Arab firm appears discriminatory against Arabs; - Security would remain a government responsibility as always, and performed by the United States Coast GuardUnited States Coast GuardThe United States Coast Guard is a branch of the United States Armed Forces and one of the seven U.S. uniformed services. The Coast Guard is a maritime, military, multi-mission service unique among the military branches for having a maritime law enforcement mission and a federal regulatory agency...
and U.S. Customs and Border ProtectionU.S. Customs and Border ProtectionU.S. Customs and Border Protection is a federal law enforcement agency of the United States Department of Homeland Security charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs and immigration. CBP is the...
.
Israel's largest shipping firm, Zim Integrated Shipping Services
Zim Integrated Shipping Services
Zim Integrated Shipping Services Ltd. , formerly ZIM Israel Navigation Company Ltd. and Zim American Israeli Shipping Inc., is the biggest cargo shipping company in Israel, and 10th largest in the world...
, came out in support of the deal.
- "During our long association with DP World, we have not experienced a single security issue in these ports or in any of the terminals operated by DP World... We are proud to be associated with DP World and look forward to working with them into the future." Zim Integrated Shipping Services CEO, Idan Ofer, February 22, 2006.
The controversy came shortly after the World Trade Organisation's Doha Round
Doha round
The Doha Development Round or Doha Development Agenda is the current trade-negotiation round of the World Trade Organization which commenced in November 2001. Its objective is to lower trade barriers around the world, which will help facilitate the increase of global trade...
of global trade talks. At which many member states called for the U.S. to open up its ports to international competition, in the same way that other industrialized nations have pushed poorer countries into opening up their service sectors (e.g. water, telecoms, etc.).
See also
- List of North American ports
- United States Coast Guard -- Port and Waterways Security
- Supply Chain SecuritySupply chain securitySupply chain security refers to efforts to enhance the security of the supply chain: the transport and logistics system for the world's cargo. It combines traditional practices of supply chain management with the security requirements of the system, which are driven by threats such as terrorism,...
External links
- Security fears about infiltration by terrorists - Bill Gertz, Washington Times, February 22, 2006
- UAE terminal takeover extends to 21 ports - UPI 2/24/2006
- http://www.rasmussenreports.com/2006/February%20Dailies/Dubai%20Ports.htm
- The United States–UAE Bilateral Relationship