[Mb-civic] Arab Firm Offers to Delay Deal On Seaports - Washington Post

[William Swiggard]

Arab Firm Offers to Delay Deal On Seaports
Senators Challenge Legality of Approval

By Jonathan Weisman
Washington Post Staff Writer
Friday, February 24, 2006; A01

Facing unrelenting political and national security concerns, an Arab 
maritime company offered late last night to delay part of its $6.8 
billion deal to take over significant operations at six U.S. ports, 
after White House aide Karl Rove suggested that President Bush could 
accept some delay of the deal.

The surprise announcement should give Bush extra time to try to convince 
lawmakers from both parties that the port deal does not present an 
avenue for terrorists to exploit the nation's vulnerable and heavily 
populated seaports. Earlier in the day, Republican and Democratic 
senators questioned whether the Bush administration followed federal law 
when it approved Dubai Ports World's purchase of London-based Peninsular 
and Oriental Steam Navigation Co., also known as P&O. That purchase will 
give the Dubai-owned firm managerial control over operations at six 
ports, including those of New York and New Orleans.

Ten administration officials faced a barrage of questions from members 
of the Senate Armed Services Committee as they defended their decision 
to forgo a national security review of the deal. Deputy Treasury 
Secretary Robert M. Kimmitt said the decision last month to ratify the 
deal will be reconsidered only if officials find that officers of Dubai 
Ports World gave the government false, inaccurate or misleading 
information. But facing a bipartisan revolt over the deal, Rove told Fox 
News's "Tony Snow Show" that the White House could accept a delay in the 
transfer of port management, which is set for March 2.

"There are some hurdles, regulatory hurdles, that this still needs to go 
through on the British side, as well, that are going to be concluded 
next week," Rove said. "There's no requirement that it close, you know, 
immediately after that. But our interest is in making certain the 
members of Congress have full information about it, and that, we're 
convinced, will give them a level of comfort with this."

In an accord coordinated with the White House, Dubai Ports World agreed 
not to exercise control or influence the management of the U.S. ports 
while the administration talks with Congress. Other parts of the deal 
with P&O will go forward.

"It is not only unreasonable but also impractical to suggest that the 
closing of this entire global transaction should be delayed," Dubai 
Ports World said in a statement.

It is not at all clear whether the offer will placate lawmakers, who 
have vowed to block the deal as soon as Congress reconvenes Monday. The 
imbroglio over the port decision has tarnished the administration's 
image of political strength on national security matters and called into 
question why Cabinet members and other high-ranking officials failed to 
consult with the president and members of Congress before approving the 
sensitive transaction.

With the White House saying the president did not learn about the sale 
until last weekend -- when lawmakers began complaining about it -- Bush 
has signaled that opposition to the port purchase smacks of anti-Arab 
bias that is undermining Washington's efforts to improve relations in 
the Middle East. To critics, the White House has put its free-trade 
economic agenda above concerns that go to the heart of fears in the 
post-Sept. 11, 2001, world: that underprotected ports could be the scene 
of a deadly terrorist strike, possibly with nuclear weapons.

The Port Authority of New York and New Jersey announced yesterday that 
it will sue to block the sale.

Dubai Ports World, owned by the government of Dubai, is set to take over 
next week management of 24 of 829 terminals at the ports of Baltimore, 
New York, New Jersey, Philadelphia, Miami and New Orleans.

"This wouldn't be going forward if we were not certain that our ports 
would be secure," Bush said at a meeting of his Cabinet.

Despite the entreaties of the administration, Sen. Hillary Rodham 
Clinton (D-N.Y.) said bipartisan legislation will be introduced next 
week to scuttle the deal, or at least to force a 45-day investigation 
into the deal's national security implications.

The administration's refusal to conduct such an investigation was at the 
center of a debate yesterday during the first public briefing on the 
deal since it was approved Jan. 17. Under a 1992 amendment to the law 
that created the interagency Committee on Foreign Investment in the 
United States, the CFIUS panel "shall" conduct such an investigation if 
a company operating in the United States is purchased by a firm 
controlled by a foreign government, and if anyone in that company could 
affect national security.

Kimmitt said the Bush administration believes the law gives it the 
discretion to decide whether such a review takes place. Deputy Defense 
Secretary Gordon England said that, in a review that was "definitely not 
cursory," no national security concerns were raised by the Army, the 
Navy, the Air Force, the Defense Intelligence Agency, the National 
Security Agency or the U.S. Transportation Command that would have 
triggered further investigation.

The administration's interpretation of the CFIUS law was met with 
skepticism during yesterday's briefing, attended by four Democratic 
senators and only one Republican.

"Ambiguity has been found in a statute that is unambiguous," said Sen. 
Carl M. Levin (Mich.), the ranking Democrat on the Senate Armed Services 
Committee.

Committee Chairman John W. Warner (R-Va.) asked Attorney General Alberto 
R. Gonzales for a memorandum on how the review of the ports deal was 
consistent with the law, and he requested a separate review by the 
Senate's legal counsel.

The hearing presented two very different views of the United Arab 
Emirates, of which Dubai is a part. The country is seen by the 
administration as a stalwart and indispensable ally in the terrorism 
fight and by Senate Democrats as a base for terrorism and nuclear 
proliferation.

Citing the report of the bipartisan commission that investigated the 
Sept. 11, 2001, attacks, Levin asked whether any CFIUS member had 
questioned former White House counterterrorism official Richard A. 
Clarke about his 1999 contacts with UAE officials, when he queried 
inquired about possible associations with Osama bin Laden. None had.

Levin asked whether any CFIUS member had discussed with the 
commissioners their conclusion that the United Arab Emirates had become 
both a valued counterterrorism ally and a persistent counterterrorism 
problem. None had.

And Levin asked whether any CFIUS member had talked to Clinton 
administration officials about their unsuccessful efforts to press the 
United Arab Emirates to cut its ties with the Taliban regime in 
Afghanistan and end flights into Dubai that provided a key transit point 
for Taliban officials and their terrorist clients. None had.

"Is there not one agency in this government that believes this takeover 
could affect the national security of the United States?" Levin asked.

http://www.washingtonpost.com/wp-dyn/content/article/2006/02/23/AR2006022300182.html
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