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Port Deal Revisited

Recently, someone asked me to explain the DPW-P&O deal to them and why it failed so I decided to write a short 500-word essay on it. In no uncertain terms do I disagree with the contention that it was a bad deal. Corrupt? Maybe. But not bad for America. What's bad for America is treating our allies like second-class citizens. I look forward to any discussion.

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A subject of local and international interest is the failure of Dubai Ports World (DPW) to take over P&O, a British-owned firm that operates shipping terminals at six American port cities along the Atlantic Coast, including here in New York, and the Gulf of Mexico. After winning a closely contested bidding war, DPW seemed poised to make the deal. Politics, however, provided the perfect storm that sank the deal. In the end, political victories by some in the United States at the expense of a vital Middle Eastern ally send the wrong signal not only to American allies but to American enemies.

Last month, DPW, a ports operator owned by the Ports & Customs Free Zone Company (PCFC) and the government of Dubai in the United Arab Emirates, won a bidding war against Ports of Singapore International (PSA) when it offered $6.8 billion for the purchase of P&O. Shortly thereafter, the Committee on Foreign Investment in the United States, which is made up of representatives from various departments including Homeland Security, approved the deal. The governments were in accord on the takeover. The politicians, however, were not.

American politicians from both parties raised questions regarding the deal based on fears that American ports if operated by foreign governments would be more susceptible to terrorist attack. New York senator Chuck Schumer and New York congressman Peter King were two particularly vocal critics of the deal who threatened to advance legislation making it illegal for foreign governments to operate American ports. The political pressure caused President Bush to re-think his promise of a veto and just a few weeks ago, DPW acquiesced and backed off the deal.

With midterm elections occurring this November, politicians used the port deal to shore up support within their constituencies to show that they were tough on security. Moreover, Democrats perceived a weakness in what has been a stronghold of Republican policy: national security - and they took advantage. With a majority of Americans against the deal, Democrats felt they couldn't lose. They may not have but maybe the country did.

Lost in all the political rhetoric was the fact that the UAE is a close ally with the United States in the war on terror so much so that the United States Navy and Air Force both have bases in Dubai. Moreover, the UAE is a member of America's Container Security Initiative, which insists that American customs agents inspect all cargo prior to shipping. The security question surrounding American ports is an important one but the larger question has to center around whether or not this issue has reified the terrorists' message.

By publicly eschewing a strategic ally in the war on terror, American politicians have hand delivered al-Qaeda and other terrorist networks as well as state sponsors of terror like Iran a public relations weapon. American enemies can point to the UAE and cogently profess that even the lackeys of the West are mistrusted because they are Muslim. In the war on terror, a war largely fought over the interpretation and symbols of religion, a win at home may have been a loss abroad.

by Lee Guarnella, Friday, Mar. 31 | Permalink



You are absolutely right. What gets me is that so many people are blinded to the facts in the matter. Collective stupidity is an amazing phenomenon.

by Nikhil Bhat , Saturday, Apr. 1

Posted by Nikhil Bhat
Saturday, Apr. 1 - 6:47 PM




What also got overlooked was what the deal did to the current structure of how our ports are operated. All it did was pretty much change the name on the checking account when the shoremen were paid or expenses were paid.

The shoremen's union was the same and there was not going to be an overhall of staff.
The ports were still going to have the Coast Guard, police and other security measures in place. When a cargo ship approaches American ports, the US Coast Guard investigates the ships where-a-bouts. What is the vessel carrying? where was it last inspected? Has every measure been taken before this ship reaches port? If something happened to have been overlooked, there is a more than likely chance that a ship will be boarded before it ever reaches the port!

by Daniel Peterson , Saturday, Apr. 8

Posted by Daniel Peterson
Saturday, Apr. 8 - 9:37 AM




I completely agree.

The attacks were entirely disingenuous. Not only, as you mention, did the United States create ill will with an ally and simultaneously strengthen the hand of those opposed to alliance with the US, but the United States remains vulnerable to port attacks.

Ironically, Dubai followed American protocol for port security, while Singapore (the competing bidder for P&O) created a system of its own that is allegedly far more thorough than the American security system. We burned an ally that practices our methods, and simultaneously lost an opportunity to upgrade port security.

by Charles Chuman , Tuesday, Apr. 11

Posted by Charles Chuman
Tuesday, Apr. 11 - 9:58 AM