Video: Bush: Backlash over ports deal troubling

NBC News and news services
updated 3/10/2006 8:20:13 PM ET 2006-03-11T01:20:13

President Bush said Friday he was troubled by the political storm that forced the reversal of a deal allowing a company in the United Arab Emirates to take over take over operations of six American ports, saying it sent a bad message to U.S. allies in the Middle East.

Bush said the United States needs moderate allies in the Arab world, like the United Arab Emirates, to win the global war on terrorism.

The president said he had been satisfied that security would be sound at the ports if the Dubai deal had taken effect. “Nevertheless, Congress was still very much opposed to it,” Bush said. He made his remarks to a conference of the National Newspaper Association, which represents owners, publishers and editors of community newspapers.

“I’m concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East,” the president said. “In order to win the war on terror we have got to strengthen our friendships and relationships with moderate Arab countries in the Middle East.”

“UAE is a committed ally in the war on terror,” Bush added. “They are a key partner for our military in a critical region, and outside of our own country, Dubai services more of our military, military ships, than any country in the world.

“They’re sharing intelligence so we can hunt down the terrorists,” Bush added. “They helped us shut down a world wide proliferation network run by A.Q. Khan” — the Pakistani scientist who sold nuclear technology to Iran, North Korea and Libya, he said.

“UAE is a valued and strategic partner.”

Talking to reporters later Friday, Secretary of State Condoleezza Rice echoed that concern.

"It means that we are going to have to work and double our efforts to send a strong message that we value our allies, our moderate allies, in the Middle East, that they are critical in the effort to winning the war on terrorism, that this is a long-term struggle in which we all find ourselves," she said.

Plan to transfer operations
On Thursday, the Dubai-based company signaled surrender.

“DP World will transfer fully the U.S. operations ... to a United States entity,” the firm’s top executive, H. Edward Bilkey, said in an announcement that capped weeks of controversy.

Relieved Republicans in Congress said the firm had pledged full divestiture.

The announcement appeared to indicate an end to a politically tinged controversy that brought Bush and Republicans in Congress to the brink of an election-year veto battle on a terrorism-related issue.

“It does provide a way forward and resolve the matter so we can continue working on other important priorities,” said White House spokesman Scott McClellan.

'Strong relationship'
“We have a strong relationship with the UAE and a good partnership in the global war on terrorism and I think their decision reflects the importance of our broader relationship,” he said.

A leading congressional critic of the ports deal, Rep. Peter King, applauded the decision but said he and others would wait to see the details. “It would have to be an American company with no links to DP World, and that would be a tremendous victory and very gratifying,” said the New York Republican, chairman of the House Homeland Security Committee.

It was Sen. John Warner, chairman of the Armed Services Committee and a member of the Senate committee on Homeland Security and Governmental Affairs, who took the Senate floor to read to colleagues a press release from Dubai Ports World disclosing its new stance.

“Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship, DP World has decided to transfer fully the U.S. operation of P&O Operations North America to a United States entity,” he read from a statement by Bilkey, DP World’s chief operating officer. The announcement did not specify which American company would be involved.

Video: Blow to Bush? Warner said that Sheik Mohammed Al Maktoum, prime minister of the United Arab Emirates, “advised the company ... that this action is the appropriate course to take.” Dubai is in the Emirates.

“This should make the issue go away,” said Senate Majority Leader Bill Frist. The Tennessee Republican was one of several GOP leaders to tell President Bush earlier in the day that Congress was ready to ignore his veto threat and scuttle the deal.

Several Republican officials, speaking on condition of anonymity, said Frist and Sen. John Warner, R-Va., chairman of the Armed Services Committee, had been privately urging the firm to give up its plans.

Sudden turnaround
After weeks of controversy — and White House veto threats that McClellan renewed at midmorning Thursday — the end came unexpectedly.

The House Appropriations Committee voted 62-2 on Wednesday to block the deal, and GOP congressional leaders privately informed the president Thursday morning that the Senate would inevitably follow suit. Senate Democrats clamored for a vote, increasing pressure on Senate Republicans to abandon the president.

“Our goal is to make sure that the security of our ports is in America’s hands and I look forward to learning more about this recent development,” House Appropriations Chairman Rep. Jerry Lewis, R-Calif., told NBC News.

It was unclear how DP would manage the planned divestiture, and Bilkey’s statement said its announcement was “based on an understanding that DP World will not suffer economic loss.”

The firm finalized its $6.8 billion purchase Thursday of Peninsular & Oriental Steam Navigation Co., the British firm that through a U.S. subsidiary runs important port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. It also plays a lesser role in dockside activities at 16 other American ports.

Despite the furor, the company’s U.S. operations were never the most prized part of the global transaction. DP World valued its rival’s American operations at less than 10 percent of the nearly $7 billion total purchase.

Election year angst
Senate Republican GOP leaders had been hoping to prevent any votes until the conclusion of a 45-day review of the deal. At the same time, administration officials were using the time to try and ease the concerns of lawmakers.

That strategy collapsed in dramatic fashion on Wednesday, when the House Appropriations Committee overwhelmingly signaled its opposition to the deal.

Increasingly, it appeared the controversy was headed in one of two directions — a veto confrontation between Bush and Congress, or the decision by the company to shed its plans. The company had arranged to hold the rights as part of its takeover of Peninsular & Oriental Steam Navigation Co., a British company that holds contracts at several U.S. ports.

Bush has defended the deal, on grounds of open, free trade, and, he says, because the United Arab Emirates has been a strong ally in the war on terror.

By a 62-2 margin, the House Appropriations Committee on Wednesday attached the ports legislation to a $91 billion bill providing funds for hurricane recovery and wars in Iraq and Afghanistan.

Developments in the legislature underscored the political concern among congressional Republicans in the run-up to midterm elections. The GOP has long held an advantage over Democrats on issues relating to national security and the war on terrorism, but pollsters from both parties agree the gap has narrowed significantly in the past few weeks.

At the same time, individual Republicans have said their constituents are calling and writing to express overwhelming opposition to the port arrangement.

The Associated Press and NBC News contributed to this report.

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