A state-owned company in the United Arab Emirates volunteered late Thursday to delay part of its $6.8 billion takeover of most operations at six U.S. ports to give President Bush more time to convince skeptical members of Congress that the disputed deal poses no security risks.
The surprise announcement relieves some pressure from a standoff between President Bush a Congress controlled by his own party that had threatened to try to block the deal over concerns about the UAE’s purported ties to terrorism.
Under the offer coordinated with the White House, Dubai Ports World said it will agree not to exercise control or influence the management over U.S. ports pending further talks with the Bush administration and Congress. It did not indicate how long it will wait for these discussions to take place.
The company said it will move forward with other parts of the deal affecting the rest of the world.
“It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed,” Dubai Ports said in a statement.
“The reaction in the United States has occurred in no other country in the world,” the company’s chief operating officer, Ted Bilkey, said in a statement. “We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties. Security is everybody’s business.”
Earlier in the day, as Democrats attacked the Bush administration over whether the company should be allowed to oversee operations at the ports, President Bush's top adviser said Thursday that the president would be willing to accept a slight delay in the deal.
When asked in an interview on Fox News radio whether Bush would accept a postponement, White House senior adviser Karl Rove said: “Yes. Look, 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."
“There’s no requirement that it close, you know, immediately after that,” he said on “The Tony Snow Show.”
“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,” he said.
On the program, Rove sought to allay fears concerning the Dubai deal.
“I think the more information that people get about this proposed transaction and the more they come to understand that the security of America's port terminals remains under the direction of the United States Coast Guard and Customs, the more comfortable people are becoming with it,” he said.
Democrat cites legal concerns The senior Democrat on the Senate Armed Services Committee angrily accused the Bush administration of ignoring the law in considering the port deal.
The accusation by Sen. Carl Levin came as administration officials tried to calm the uproar, saying they spent three months reviewing the deal and that it would not threaten U.S. security.
“Is there not one agency in this government that believes this takeover could affect the national security of the United States?” the Michigan Democrat asked.
“We’re not aware of a single national security concern raised recently that was not part of [the review]," Deputy Treasury Secretary Robert Kimmitt told a committee briefing.
Levin insisted that the law that established the multiagency panel specifically said that any such review should be lengthened by 45 days if it could have an impact on national security.
Levin, raising his voice, told Kimmitt, “If you want the law changed, come to Congress and change it but don’t ignore it.”
Kimmitt responded, “We didn’t ignore the law. Concerns were raised. They were resolved.”
Sen. Clinton notes ‘red flags’ Sen. Hillary Rodham Clinton, D-N.Y., also was critical, citing “red flags” that should have slowed down the approval. She also called the approval process “a failure of judgment” because officials “did not alert the president, the secretary of the treasury and the secretary of defense” that several of our critical ports would be turned over to foreign country.
Chairman John Warner, R-Va., in a very unusual procedure on Capitol Hill, allowed reporters to question the administration witnesses.
Warner sided with the administration, emphasizing the U.A.E.’s cooperation in the war on terrorism, including allowing a large number of port calls by U.S. military and commercial ships and making its airfields available to the U.S. military.
President’s new pledge
Bush, talking to reporters at the conclusion of a Cabinet meeting earlier Thursday, said that “people don’t need to worry about security.”
Under secret conditions of the agreement with the administration, the Dubai company promised to cooperate with any U.S. investigations as a condition of the $6.8 billion deal, according to documents obtained by The Associated Press.
The U.S. government chose not to impose other routine restrictions.
“The more people learn about the transaction that has been scrutinized and approved by my government,” Bush said, “the more they’ll be comforted that our ports will be secure.”
The president said he was struck by the fact that people were not concerned about port security when a British company was running the port operation, but they felt differently about an Arab company at the helm. He said the United Arab Emirates was a valuable partner in the war in terror.
Government ownership an issue
Even before Thursday’s hearing, congressional critics had noted that the London-based Peninsular and Oriental Steam Navigation Co., which previously operated at those ports, is a publicly traded company while Dubai Ports World is effectively controlled by the government in Abu Dhabi. Sens. Robert Menendez, D-N.J., and Clinton have said they will introduce legislation to prohibit companies owned or controlled by foreign governments from running port operations in the United States.
The vast majority of U.S. ports are owned by foreign companies, and security is handled separately by the U.S. government. According to Stephen Flynn, a senior fellow at the Council on Foreign Relations, ownership is not the main reason for vulnerability. Regardless of who owns the ports, the volume of goods flowing through them is so massive that providing security oversight for incoming containers is a daunting task, Flynn says.
Bush said his administration would continue talks with members of Congress — Republicans and Democrats alike — who have rebelled against the takeover. He said the briefings were “bringing a sense of calm to this issue.”
“This wouldn’t be going forward if we weren’t certain our ports would be secure,” Bush said Tuesday.
In Lebanon, Secretary of State Condoleezza Rice said Thursday that the agreement was thoroughly vetted in a review process that took approximately three months. “This is supposed to be a process that raises security concerns, if they are there, but does not presume that a country in the Middle East should not be capable of doing a deal like this.” She described the United Arab Emirates as “a very good ally” and said “if more details need to be made available then I’m sure they will be.”
What U.S. required
In approving the purchase, the administration chose not to require Dubai Ports to keep copies of its business records on U.S. soil, where they would be subject to orders by American courts. It also did not require the company to designate an American citizen to accommodate requests by the government.
Outside legal experts said such obligations are routinely attached to U.S. approvals of foreign sales in other industries.
Dubai Ports agreed to give up records on demand about “foreign operational direction” of its business at the U.S. ports, according to the documents. Those records broadly include details about the design, maintenance or operation of ports and equipment. It also pledged to continue participating in programs to stop smuggling and detect illegal shipments of nuclear materials.
“They’re not lax but they’re not draconian,” James Lewis, a former U.S. official who worked on such agreements, said of the contractual stipulations. If White House officials negotiating the deal had predicted the firestorm of criticism over it, “they might have made them sound harder.”
The conditions over the sale were detailed in U.S. documents marked “confidential.” Such records are regularly guarded as trade secrets, and it is highly unusual for them to be made public.
Rep. Peter King of New York, the Republican chairman of the House Homeland Security Committee, said Wednesday that the conditions are evidence the administration was concerned about security. “There is a very serious question as to why the records are not going to be maintained on American soil subject to American jurisdiction,” King said.
Another critic, Sen. Charles Schumer, D-N.Y., added: “These new revelations ask more questions than they answer.”
Dole, Albright lobby for deal
Dubai Ports is lining up powerful supporters to persuade skeptical lawmakers the deal is a good idea. Even before the controversy erupted, the company had hired Bob Dole’s law and lobbying firm, Alston & Bird LLC, to win approval for the deal. The Albright Group, led by former Secretary of State Madeline Albright, also has been trying to speak with members of Congress on behalf of the company.
Dubai Port’s top American executive, chief operating officer Edward Bilkey, said he will work in Washington to persuade skeptical lawmakers they should endorse the deal.
“We’re disappointed,” Bilkey told the AP. “We’re going to do our best to persuade them that they jumped the gun. The U.A.E. is a very solid friend, as President Bush has said.”
The disclosure of the negotiated conditions came as the White House acknowledged that Bush was unaware of the pending sale until the deal had been already approved by his administration.
Bush has pledged to veto any bill Congress might approve to block the agreement, but some lawmakers said they still were determined to capsize it.
Bush faces a potential rebellion over the sale from leaders of his own party, as well as a fight from Democrats. It puts Dubai Ports in charge of major terminal operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
The White House said Bush did not know about the agreement until recently. The AP first reported U.S. approval of the sale to Dubai Ports on Feb. 11, and many members of Congress have said they learned about it from the AP.
“I think somebody dropped the ball,” said Rep. Vito Fossella, R-N.Y. “Information should have flowed more freely and more quickly up into the White House. I think it has been mishandled in terms of coming forward with adequate information.”