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Coast Guard was unable to analyze port risks

Citing gaps in U.S. intelligence, the Coast Guard cautioned the Bush administration weeks ago that it could not determine whether a Dubai-based company seeking a stake in U.S. port operations might support terrorists.
/ Source: The Associated Press

Citing broad gaps in U.S. intelligence, the Coast Guard cautioned the Bush administration weeks ago that it could not determine whether a United Arab Emirates-based company seeking a stake in some U.S. port operations might support terrorist operations.

The disclosure came during a hearing Monday on Dubai-owned DP World’s plans to take over significant operations at six leading U.S. ports.

The Bush administration said the Coast Guard’s concerns were raised during its review of the deal, which it approved Jan. 17, and that all those questions were resolved.

The port operations are now handled by London-based Peninsular & Oriental Steam Navigation Co.

“There are many intelligence gaps, concerning the potential for DPW or P&O assets to support terrorist operations, that precludes an overall threat assessment” of the potential merger, the unclassified Coast Guard intelligence assessment said.

“The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities,” the assessment said.

The Coast Guard said the concerns reflected in the document ultimately were addressed. In a statement, the Coast Guard said other U.S. intelligence agencies were able to provide answers to the questions it raised.

Concerns addressed
“The Coast Guard, the intelligence community and the entire CFIUS (Committee on Foreign Investments in the United States) panel believed this transaction received the proper review, and national security concerns were, in fact, addressed,” the Coast Guard said.

That multi-agency government panel reviews foreign purchases of vital U.S. assets.

The report raised questions about the security of the companies’ operations, the backgrounds of people working for the companies, and whether other foreign countries influenced operations that affect security.

Sen. Susan Collins, chairman of the Senate Homeland Security Committee, released an unclassified version of the document at a briefing Monday. The Bush administration agreed Sunday to DP World’s request for a second review of the potential security risks related to the deal.

Congressional leaders who brokered the arrangement for a second review hoped it would defuse a bipartisan political uproar over port security and scuttle any push for legislation this week that would force such an investigation and could embarrass President Bush.

Senators introduced several bills Monday anyway, even though Senate Majority Leader Bill Frist, R-Tenn., told reporters in Detroit, “I don’t think it’s necessary to legislate.”

Criticism persisted from both Republicans and Democrats.

“This report suggests there were significant and troubling intelligence gaps,” said Collins, R-Maine. “That language is very troubling to me.”

Officials: No review needed
Appearing before the Collins committee, administration officials defended their decision not to trigger a 45-day review of national security implications of the business transaction following their initial review.

“In this case, the concerns that you’re citing were addressed and resolved,” Clay Lowery, the Treasury Department’s assistant secretary for international affairs, told Collins. “There were no national security concerns that were not addressed.”

The Coast Guard indicated to The Associated Press that it did not have serious reservations about the ports deal on Feb. 10, when the news organization first inquired about potential security concerns.

“Any time there’s a new operator in a port our concern would be that that operator has complied with the (International Ship and Port Facility Security) ISPS code overseas and we just want to take a look at their track record,” Cmdr. Jeff Carter, Coast Guard spokesman, said at the time. “And then we would look forward to working with them in the future ensuring they complied with all applicable regulations and international agreements,” he added.

Paragraph 'speaks for itself'?
Stewart Baker, an assistant secretary for the Homeland Security Department, told lawmakers that the report was an internal Coast Guard document that the interagency panel that reviews foreign investment deals did not see. However, Baker said, he was aware of the Coast Guard concerns.

“I think it’s a little unfair to judge this report by one paragraph that happens not to be classified,” Baker said. “This paragraph is not really representative of the entire report.”

“I think the paragraph speaks for itself,” Collins responded before adjourning the public hearing for a closed session to explore the issue further.

Also Monday, a bipartisan group of senators introduced a bill that would delay the deal and give Congress an opportunity to block the takeover. The group did not plan to push for a vote yet.

“We’re in a position now of watchful waiting,” said Sen. Charles Schumer, D-N.Y. “If we feel the need, we will get a vote.”

Other Democrats introduced legislation to ban companies owned by foreign governments from controlling operations at U.S. ports. At the White House, governors from across the country met privately with Bush, and several participants said the ports issue was brought up.

The Justice Department said the Bush administration’s decision to investigate potential security risks in the DP World deal renders irrelevant the state of New Jersey’s federal lawsuit aimed at blocking the company from assuming operations at the Port Newark container terminal.