updated 2/22/2006 11:57:19 AM ET 2006-02-22T16:57:19

Guests: Ileana Ros-Lehtinen, Martin O‘Malley, Robert Menendez, Tom Ridge

CHRIS MATTHEWS, HOST:  President Bush says this ship of state is his to captain.  Like it or not, America will lease its ports to an Arab company.  Is he right.  Let‘s play HARDBALL.

Good evening, I‘m Chris Matthews and welcome to this 30 minute HARDBALL special report.  How safe are America‘s harbors.  President Bush today backed up a decision to let an Arab company control American ports. 

Critics from both parties have complained loudly since the 9/11 attacks that not enough is being done to screen the tens of thousands of cargo containers that arrive in major coastal cities every day.

Today in addition to asking how much screening there is, there are new questions about who should be allowed to do the screening.  The Bush administration‘s decision to allow a company controlled by the government of the United Arab Emirates to take control of six major American shipping ports has Washington up in arms.

Now the Republican governors of Maryland and New York are threatening potential legal action to stop the deal. 

Should the U.S. government be responsible for it all?  Should foreign countries, particularly Arab countries, be allowed to control American ports?  In a moment I‘ll ask New Jersey Senator Bob Menendez, Florida Congresswoman Ileana Ros-Lehtinen and the mayor of Baltimore, Marty O‘Malley.

And later in this show, we‘ll hear from Tom Ridge, the former Homeland Security Secretary and two term Pennsylvania governor.

But first, HARDBALL‘s David Shuster has this report.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  On board Air Force One today, President Bush said the deal to put U.S. port facilities under the ownership of a company run by an Arab government is legitimate and should go forward.

The president added that if Congress tries to block the transaction, quote, “I‘ll deal with it with a veto.”  That veto would be the president‘s first since taking office.

Every day nearly 26,000 shipping containers arrive in U.S. ports, and with the U.S. government inspecting only one out of 20 containers, the responsibility for screening the rest belongs to the company that owns and runs the port‘s terminal operation. 

Robert Menendez is the new senator from New Jersey. 

SEN. ROBERT MENENDEZ, (D) NEW JERSEY:  These are critical assets of the United States, both for its security and its economy, and it should not be run by foreign government. 

SHUSTER:  The fear is that a terror organization will slip in a nuclear weapon and destroy an American city.  So how did the sale of the ports get approved and who approved it?  The U.S. government reviews these purchases through what is known as the Committee on Foreign Investment in the United States. 

The committee is chaired by Treasury Department Secretary John Snow, and it includes senior officials from the departments of Defense, Justice, Commerce, State, and Homeland Security.  The $6.8 billion deal approved by the panel covers the ports of New York, Newark, Philadelphia, Baltimore, New Orleans and Miami.  The operations in these ports are already being run by a British company, Peninsular and Oriental Steam Navigation Company, known as P & O. 

P & O was bought last week by Dubai Ports World, a business owned and operated by the government of United Arab Emirates.  The Bush administration considers the U.A.E. an ally in the war on terror, but the 9/11 Commission found that some of the money for the terror attacks went through banks located in the Arab Emirates and two of the hijackers were, for what it‘s worth, from the U.A.E. 

Peter Gadiel lost a son on 9/11. 

PETER GADIEL, SON DIED IN 9/11 ATTACK:  It‘s simply beyond belief that the president would tolerate this kind of insanity. 

SHUSTER:  And on top of the issue of terrorism, a State Department report declares, quote, “The United Arab Emirates is believes to be a transshipment point for traffickers moving illegal drugs from the major drug producing countries, especially Afghanistan, westward. Frequent reports of seizures of illegal drugs in the UAE during the past year underscore this conclusion.”

President Bush‘s spokesman is defending the port deal, noting the number of government agencies involved in reviewing it. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  Department of Homeland Security, the Department of Defense, the Justice, among others, and there is a rigorous review that goes on for proposed foreign investments of national security concerns. 

SHUSTER:  And Michael Chertoff, Homeland Security Secretary, is assuring Americans there are safeguards in place.  Though he won‘t reveal what they are, because they‘re secret. 

MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY:  Without getting into classified information, what we typically do if there are concerns is we build in certain conditions or requirements that the company has to agree to make sure we address the national security concerns. 

SHUSTER:  But lawmakers are asking the Bush administration to spell out those conditions and concerns and explain why the deal is not a security risk.  Two members of the Bush administration have dealt before with the U.A.E. company Dubai Ports World.  Treasury Secretary John Snow was formerly the chairman of the CSX rail firm.  After Snow left CSX, Dubai Ports World bought the rail firm‘s international port operations for more than a billion dollars. 

David Sanborn was picked last month by the president to head the U.S.  Maritime Administration, before that, Sanborn worked for Dubai Ports World, running their operations in Europe and Latin America. 

(on camera):  The ports that are part of this deal are responsible for 40 percent of the U.S. Army‘s equipment being shipped overseas, including to places like Iraq.  It‘s another reason members of Congress, including Republicans, are drafting legislation to block this deal and stop all foreign ownership of U.S. ports.

Even longtime supporters of President Bush are publicly pleading with him to change course before his formal approval of this transaction goes into effect next week.  I‘m David Shuster for HARDBALL in Washington. 

MATTHEWS:  Thank you, David Shuster.  I‘m joined right now by Baltimore Mayor Marty O‘Malley who governs a major port and also Republican Congresswoman Ileana Ros-Lehtinen of Florida whose district contains the port of Miami.  Thank you for joining us Congresswoman.  It‘s been a while. 

Do you have an objection to letting this Dubai company run your port? 

REP. ILEANA ROS-LEHTINEN ® FLORIDA:  Absolutely.  We‘re very worried about it here in South Florida, because of many reasons.  First of all, Dubai, yes, is now a strong ally of the United States, but there has been strong 9/11 connections with Dubai. 

Secondly, this is not going to be a private company.  This is state run and state operated.  So this would be not just a foreign company being involved, because we have the Brits there now without any trouble but there‘s a lot of difference between a British company that‘s a strong ally of the United States and Dubai, that‘s been now a Johnny come lately friend of the U.S.

And also, I would be against this whether it were a Venezuelan company or a Russian government entity, so there‘s a big difference between companies and governments running this and I‘m not saying that it‘s going to be controlled by a foreign government, no, but they‘re going to have a financial stake at our major seaports and as we know, as you‘ve pointed out in your report, very few of that cargo now gets inspected and we‘ll have a foreign entity get 50 percent of the port of Miami and a certain terminal today.  What will it be tomorrow, what will it be five years from now and it‘s a secret committee, Chris?  That‘s what worries me the most.  The negotiations are done in secret with no Congressional oversight. 

MATTHEWS:  Let me go to Mayor O‘Malley of Baltimore.  Do you have a concern about this deal that allows the country, the company called Dubai Ports World, from the United Arab Emirates, operating our ports including Baltimore? 

MAYOR MARTIN O‘MALLEY, BALTIMORE, MD:  Yes, Chris.  We sure do.  And there‘s growing opposition in the Baltimore area that is bipartisan.  We should not be turning over important critical American assets like our ports or the Port of Baltimore, which all experts agree are already vulnerable due to a lack of investment over these last few years in port security. 

We should not be turning these over to any foreign government.  What we should be doing is investing in the things that allow us to inspect more cargo, to better track cargo and ships.  We should not be turning over any American port to a foreign government.

MATTHEWS:  But, we already had it under the control right now of the Brits, what‘s wrong with that? 

O‘MALLEY:  Actually it‘s not.  It‘s under control of a privately owned company that happens to have a headquarters based in Britain.  This is different.  This is a company that is wholly owned by a foreign government.  How sad that we have to depend upon the insurances of a foreign ambassador about security measures that he will take at our ports that President Bush has failed to take for these last three to four years. 

MATTHEWS:  Let‘s go to Senator Bob Menendez, the new senator, congratulations, Senator, on being a United States Senator.  It‘s an amazing honor.  You have the port of Newark in your constituency.  Where are you on this? 

SEN. ROBERT MENENDEZ, (D) NEW JERSEY:  Well, I‘m with Mayor O‘Malley and I even think my colleague Ileana Ros-Lehtinen.  The reality is that I‘ve represented this port first in the House and now in the senate for the last 14 years.  I know what goes on here, and we‘re talking about a foreign-owned entity, that is owned by a foreign government, not just a foreign company. 

In this case, the particular government is one which we should have a real concern, as it relates to security issues.  This is the country where two of the 9/11 hijackers came from, this is a country, one of only three in the world, that recognized the Taliban and that gave Osama bin Laden sanctuary to plot and plan and kill our citizens.  This is the government that the 9/11 Commission says, in fact, was a source in terms of, through not the government itself, but through the country, a source for al Qaeda financing.  And lastly, as we consider port operations, it‘s through this government, the United Arab Emirates, that in fact, critical nuclear components were shipped out by A.Q. Kahn, the Pakistani scientist to Iran, Libya, North Korea.

If they can‘t create a security regime in their own country to prevent that, why should we give them the operations of the ports in our country?

MATTHEWS:  Senator, name an Arab country you would trust to run the port of Baltimore.

MENENDEZ:  It‘s not an Arab country.

MATTHEWS:  Well, name anyone.

MENENDEZ:  I don‘t believe that foreign governments, this one or any other, should be operating the critical infrastructure of the ports of the United States.  That should be run by either governmental entities or by non-governmental entities of the United States.

MATTHEWS:  So you have no problem in principle with an Arab company that‘s independent of a government from running that port?  You have no problem with that?

MENENDEZ:  If they meet all of the other security concerns, but the reality is, you know, not only is it the port operation in its commercial context, we put 145 million tons of cargo through here, but sometimes we also use the commercial ports to use the forward promotion of supplies necessary for our troops abroad.

Imagine if you end up in a dispute with a foreign country that happens to be operating your port and they close down the port own.  I mean, we have to think outside of the box on September 11th.

MATTHEWS:  Let me go to Congresswoman Ros-Lehtinen about the president‘s position—I want you to get to that.  Where do you stand with the president, who supports this deal with the company from the United Arab Emirates to run the port of Miami?

ROS-LEHTINEN:  Well, I think the president is wrong on this.  I work with President Bush and I enjoy that positive working relationship.  I hope that it continues.

But on this issue, I stand with the Speaker Hastert, I stand with Senator Frist, the majority leader of the Senate, who say let‘s hold off, what‘s the rush?  If this is all in the up and up, then how could a congressional oversight hearing hurt?  Let‘s have a series of House hearings, let‘s have a series of Senate hearings. 

And if this is no problem, this is a no-problem deal, then let‘s bring some sunshine, some transparency and some accountability into the process.  And even if we can‘t stop this deal from going through, I hope that we can open up the CFIUS program so that we can have accountability and congressional oversight.  These secret deals without the public light of day are not good for the American public.

MATTHEWS:  Are you against any Arab company doing this, any government-controlled company than an Arab country?  What‘s your standard here? 

ROS-LEHTINEN:  I am against any foreign government having anything to do with the ports.  I‘m not against foreign companies being involved.  We already have this operation in the port of Miami right next to me, with a British company.  That‘s not a problem.  Once we go through all the safeguards, but I‘m against the secret deals, and I‘m against foreign governments and that has nothing to do with Arab racial profiling.

MATTHEWS:  OK, you have no problem with an Arab company doing business and running the port of Miami.

ROS-LEHTINEN:  As long as there‘s oversight, transparency and accountability, and we‘ve gotten all the national security safeguards.

MATTHEWS: OK, we‘ll be right back.

ROS-LEHTINEN:  Every company should be treated the same.

MATTHEWS:  OK, thank you very much.  We‘ll be right back with everybody, Senator Bob Menendez of New Jersey, Congresswoman Ileana Ros-Lehtinen of Florida and Miami‘s Mayor Marty O‘Malley of Baltimore.  And later, the former secretary of Homeland Security, Tom Ridge will be joining us here on HARDBALL.  You‘re watching a HARDBALL SPECIAL REPORT on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to this HARDBALL SPECIAL REPORT.  We‘re here with Senator Bob Menendez, Robert Menendez of New Jersey.  Congresswoman Ileana Ros-Lehtinen of Florida, of Miami.  And Mayor Marty O‘Malley  of Baltimore.

Let me go to Mayor O‘Malley.  The secretary of defense, Donald Rumsfeld, is one of the toughest guys in the country, and he says he‘s running military equipment through these ports that are going to be run by this Emirate company and it doesn‘t bother him a bit.  Why do you think he‘s wrong?

O‘MALLEY:  Well there‘s lots of things that don‘t bother the Bush

administration very much, including their total failure to invest in

security at our ports.rMD+IN_rMDNM_

Look, Chris, if we‘re not ready to turn over the operations of our airports and air security to a foreign government, why are we willing to turn over more vulnerable assets like our ports to a foreign government?  Makes no sense.  These guys are trying to do Homeland Security on the cheap, they haven‘t invested in port security and now want to turn it over to a foreign government.  American people aren‘t going to stand for it and Baltimore is not going to be surrendered to a foreign government.

MATTHEWS:  Congresswoman, you trust President Bush to run foreign policy, don‘t you?

ROS-LEHTINEN:  Well I do, I do.

MATTHEWS:  Well why don‘t you trust him here closer to home, to make the right decisions?

ROS-LEHTINEN:  Well as Ronald Reagan said, trust but verify.  We trust him, but open up the books, open up the liberations, let us know what went into this deal.  That‘s all we‘re looking for, oversight.

MATTHEWS:  Is there anything that might convince you that the president is right?

ROS-LEHTINEN:  I don‘t think that we should let a foreign government take over any aspect of the port or the airport or anything like that.  Absolutely not.  It‘s just wrong.  It‘s wrong to do it now after 9/11, we know too much to go backward in time now.

MATTHEWS:  Senator Menendez, don‘t you think bin Laden is going to love to hear we‘ve killed this deal because it once again divides East from West and tells the positive pro-Western governments like the Emirates, “You‘re stupid to do business with the Americans, they don‘t like you, they‘re going to screw you in the end?”

MENENDEZ:  This is about security.  There‘s plenty of other relationships we can have with the United Arab Emirates, both diplomatically, commercially and on trade.  But this is about the security of the United States and it‘s not about just simply the United Arab Emirates. 

It‘s about keeping the ports of the United States, a major security risk already for the United States, a major part of our economy in different parts of the nation, and a major part of ensuring that in a post-September 11th world, we are as secure as we can be.

The president‘s thinking in a pre-September 11th world, not a post-September 11th world on this one, so it has nothing to do with that message.  It has everything to do that we should not be allowing the ports of the United States to go to a foreign government.

MATTHEWS:  God, you‘re stealing Karl Rove‘s lines there, Senator.  Thank you, Senator Bob Menendez, Congresswoman Ileana Ros-Lehtinen and Mayor Marty O‘Malley of Baltimore.  When we return, the former secretary of Homeland Security, Tom Ridge will join us here at HARDBALL.  You‘re watching a HARDBALL SPECIAL REPORT on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Earlier today, I spoke about port security with Tom Ridge, who was secretary of homeland security during President Bush‘s first term.

(BEGIN VIDEOTAPE)

MATTHEWS:  It seems like so much of this is symbolism, but is there not a real concern here?  Remember the case a year or two ago where the Egyptian pilot, I think it was—a copilot on an airplane heading out into the Atlantic when all of us are a little tricky when we get up in that plane.  God, we‘re going over the Atlantic Ocean for the next several hours.  And this guy just put that plane into dive for religious or whatever reasons.  You don‘t think there‘s a concern, just from people‘s background, that should be looked at here?

TOM RIDGE, FMR. HOMELAND SECURITY SECRETARY:  Well, I think there is a legitimate concern and a lot of it has to do with proximity to a country that, although it has been a staunch ally in the war, there are traceable lines of support, as casual as they may be, to a single terrorist or to a little financing.

MATTHEWS:  Right.

RIDGE:  And I think there‘s legitimate concern.  I think the concern goes away, or at least is substantially abated, if they go from perceived concern to the process of how we really make this decision.  There‘s a big difference between how they perceive it and what really happens.

MATTHEWS:  Yes, but this pilot was given a job.

RIDGE:  Well, you know ...

MATTHEWS:  That airline hired this guy thinking he was OK, and it turned out he was definitely not OK.

RIDGE:  This is a perception that this is a company that‘s going to come in and have operational control and security control of the ports.  They do not own the port.  They will not own the Port of Philadelphia, New Orleans, New York, New Jersey, Miami.  The people in charge of security in these ports will continue to be the Coast Guard, Customs and Border Protection, local and state law enforcement.  Again, there‘s a perceived—the optics aren‘t good.  Let me ...

(CROSSTALK)

RIDGE:  The reality is, is that you had—there‘s several department secretaries, significant people working probably for months, vetting it, doing background checks and saying to themselves we are not going to ever, ever compromise security.  And, in fact, we know that‘s why they recommended it to the president that there will not be compromise.  But they need to explain it.

MATTHEWS:  Are all the—is the M.O. of this company to hire all locals, in this case Americans?

RIDGE:  Listen, the M.O. of the country is they may have operational -

they may have technical, operational control, but the hiring and firing is still done with local authorities.  You‘re still going to have international longshoremen that are going to be offloading it.  So the port in Philadelphia is stayed on (ph).  The longshoremen, they wave that flag as well as any other organization will continue to offload these ships. 

And the Coast Guard and the DHS and others will continue to have primary, exclusive responsibility for security.

MATTHEWS:  When you were head of Homeland Security and you went to bed at night and you were thinking about the things that might go wrong and the doors that might be open that should be shut, was it the ports, or was it the airplanes, or was it the subways in domestic America?  What were the biggest—or movie theaters?  What were you most worried about?

RIDGE:  Well, you worry about all of them.  I mean, you certainly worry about those you have less of an ability to protect, and those are the soft targets.  But from ...

MATTHEWS:  Meaning soft being like a movie theater, a guy can bring

RIDGE:  Like a movie theater, a shopping mall and the like. 

MATTHEWS:  Right.

RIDGE:  But since 9/11, this country, both with the federal engagement in resources that also has state in the level, and from time to time with help from our international partners overseas, have begun to layer in levels of security at airports, in the maritime industry, and elsewhere.  It‘s a continuing process, but the ports today are far safer than they were on 9/11, and they‘ll be far safer in the future as we do more and more to embed other security features. 

And, again, at the end of the day, the question shouldn‘t be asked who is involved in the financial transaction?  The ultimate question is who‘s responsible for security, and that falls on the Coast Guard.  That‘s the mandate from Congress, and they‘ll get the job done.

MATTHEWS:  Do you think the president is on top of these kind of decisions?

RIDGE:  Well, I think ...

MATTHEWS:  President Bush, do you think he‘s aware—do you think he was told that we were going to sell our port facilities, or lease them out to a country in the Arab world?

RIDGE:  Well, ultimately, it gets up to his desk for review.  I‘m not sure that anyone anticipated ...

(CROSSTALK)

MATTHEWS:  Going to the White House when you worked there, do you think someone flagged the president personally and said, Mr. President, here‘s a deal you ought to take a look at?  It‘s going to cause some rile with the radio talk show hosts, a lot of Democrats are going to be freelancing this thing, Republicans too. 

You‘re going to have a lot of heat on this, because we‘re giving supervision of our ports to an Arab company.  This is going to cause—do you think somebody warned him, or is this yet another surprise in this administration where the president is caught without being staffed? 

RIDGE:  Well, I‘m not sure who said what to whom and when they told the president, but it‘s pretty clear at least that someone may have underestimated the political fallout, because of the perception.  Again, we‘re dealing with two worlds.  You and I have dealt in this world for a long time.

MATTHEWS:  Sure.

RIDGE:  There‘s a perceived world, and there‘s a real world, and right now the perception is it‘s a bad idea.  But if you dig down into it, there‘s been a substantial vetting of this.  Cabinet secretaries have vetted it, and the Coast Guard is in charge of security.

MATTHEWS:  Thank you very much.

RIDGE:  You‘re welcome. 

MATTHEWS:  Governor Tom Ridge, that‘s for joining us on HARDBALL.

RIDGE:  Thank you.

(END VIDEOTAPE)

MATTHEWS:  More of my exclusive interview with Tom Ridge coming up in one hour at 7:00 Eastern on a full hour of HARDBALL.  After the break, by the way, it‘s “THE ABRAMS REPORT” with Dan.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END   

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