DP World is DOA in DC

March 10, 2006

After Dubai Ports World announced yesterday afternoon that it would transfer operations of six ports to “a United States entity,” there was a general sigh of relief among congressional Republicans. Sen. John McCain (R-Ariz.) said the decision “probably defuses the issue, and now we can move forward.” I think the key word there is “probably.”

Reading over the multiple accounts of yesterday’s announcement, I can’t help but notice that the descriptions are a little vague about exactly what the company has done and what the transfer of operations will mean. Will the UAE company sell off its investment? Create a domestic subsidiary?

The company, DP World, said that at the direction of Dubai’s ruler it would “transfer” to a still-unnamed American company the leases to manage some of the busiest terminals in the United States, including some in New York, Newark, Baltimore and Miami.

Under questioning, the company declined to say whether it planned to sell the American operations or had some other transaction in mind.

Unfortunately, some of those details matter. Indeed, Roll Call reported last night that DP World’s decision “has so far failed to quiet Senate Democrats, who insisted on pressing ahead with a vote this afternoon to kill the company’s acquisition of several U.S. ports.”

Sen. Charles Schumer (D-N.Y.) said there are still too many questions for Senate Democrats to be comfortable with the deal, adding that “there must be a total break” between the foreign entity and U.S. control of the six ports in order for the agreement to be acceptable.

He later asked of the deal: “How is it separate? How thick is the wall?”

And who’s on the other side of the wall? AEI scholar Norm Ornstein said on PBS last night that Halliburton may be the “entity” that might picks up port management. The WaPo noted that the Carlyle Group may also be a potential investor.

Politically, however, some of the air seems to have been let out of the balloon.

The Wall Street Journal reported that yesterday’s announcement “offered a lifeline” to the White House that had largely run out of options. GOP leaders met with Bush yesterday and reportedly told him, in no uncertain terms, that the deal would inevitably be killed — bi-partisan opposition was just too strong.

In this sense, yesterday didn’t solve Bush’s problems, but it did stop the bleeding. Had the president been forced to veto, only to see it overridden, it would have been humiliating for the White House. As it stands, the port controversy has been a political disaster — it pushed his poll numbers lower, it helped Dems on national security, and it further deteriorated the relationship between Republicans on both ends of Pennsylvania Avenue.

After all of the years that Bush and Rove have cravenly attacked the patriotism of Democrats its hard not to enjoy seeing them get a dose of their own medicine. But are Democrats to become the party of protectionsm and isolation. I hope not.

  • Watch for KBR. In the Middle East, KBR partners with Inchcape Shipping Services (ISS). ISS has a $50m contract to be the ‘husbanding agent’ for naval vessels at middle east ports. What are the chances that Haliburton/KBR will get the inside track on the ‘new’ ports deal? (When do they not?) Will they in turn contract out to ISS? It’s worth watching. Why? ISS is owned by…wait for it…

    The UAE!

  • Hm, so I guess the move was a dodge to further their own interests, rather than simply a favor to Bush- DP World did a little head fake!

    Notice how well the Republicans played defense, here. They knew that it would be politically terrible for them if the Democrats could make this they’re issue, so, they all fell in line against the president, making this they’re issue! As I said before, this whole thing was a perfect opportunity for the Dems.

    Comment number 1, above, is not helpful. Of course the Democrats are not going to become “the party of protectionism and isolationism.”

  • Ok, so maybe the thing to do now is to start spreading the word around that we want congress to make sure that this isn’t going to be a fake, empty gesture. We want Schumer to know, we want the papers to start looking into it, and we want everyone to know that Dems are watching Republicans to make sure that Republicans aren’t going to try to get away with passing off some bullshit. Remember, in politics, quick reaction is often key: delay is very hurtful.

    As soon as we know what’s happening, we want to be ready to react if it turns out that DP World’s offer to withdraw was an emoty gesture. But before then, we want to try to get people awake to the possibility that the oligarchs might be ready to pull off some deception on us here, and that they should be alert to it.

  • If I could wish for an imaginary liberal pundit, she would make two points:

    1.) The DPW deal, before and now, illustrates clearly that Michael Moore was right: Bush is animated and motivated by his family’s and his class’s business interests, in oil, and in alliances with Arab monarchies (a nice word for dictatorships), than he is with the interests of the People of the United States. Halliburton? Carlyle Group? Just more of the same.

    2.) A lot of non-imaginary pundits have pooh-poohed the whole controversy, without acknowledging that, in its details, the ports deal was genuinely cavalier regarding U.S. security.

  • Swan – I don’t think fears about the Dems moving towards protectionism and isolation are unfounded. Shortly after I wrote that comment I read similar words in Broder’s column. This Dubai deal has opened a chink in the national security advantage of the Republican party. Dems are using it. Furthermore, for Hillary a clear path to the Whitehouse is to be to the right of Bush on Iran, Korea and homeland security. I don’t want a campaign to see who can be the most jingoistic on the issues.

    Over the next century international trade relations will be determining factor in our relative prosperity and strength. We should not only be engaged, we should lead this. Bush’s political, military and economic policies have isolated and weakened the US. He is wrong on so many things, but on this he is right (even if it may be for the wrong reasons, i.e. he has a history of being personally bailed out by oil interests). The idea that Dubai ownership of an american port substantially increases our risk to terrorism is ridiculous. Wouldn’t control of security at the ports where the packages are shipped be much more important? Can we coontrol all ports? And anyways does anyone believe that it is difficult to smuggle contraband into the US?

  • IT IS A SHAM TRANSACTION!

    DUBAI AND THE BUSHIE CRONIES ARE GIVING UP NOTHING!

    That’s why it’s all vague!

  • AEI scholar Norm Ornstein said on PBS last night that Halliburton may be the “entity” that might picks up port management.

    time for a little self-congratulation. See this.

    I promise I’ll try not to be insufferable. ;->

  • David Ignatius, David Broder, Eugene Robinson and the WaPo Editorial page all seem to be making the same complaint:

    How can Democrats be so nativist/racist/anti-Arab?

    Gosh, could it be that after being trashed for two elections by filthy lies from the Republicans about how Democrats care more about civil rights then national security, it is only fair to turnabout on the Bush administration when they put foreign investment before national security.

    And despite what all these liberal pundits say, I still believe Dubai Ports World represents an increased and unnecessary national security risk.

  • What are the chances that Dubai Ports World came to this “decision” by themselves? The timing would suggest that BushCo, behind the scenes, has been negotiating with DPW, frantically trying to come up with a revised deal that would (in typical BushCo fashion) give the appearance of accomplishing something while changing very little (i.e., giving up the operations of the ports, without necessarily the ownership of them).

    Has anyone seen James Baker lately?

  • Again, I point to this item from yesterday, Thurs. March 9th:

    The Web site of Britain’s Financial Times newspaper (www.ft.com) had reported that private equity groups had approached DP World about buying its U.S. operations.

    DP World’s Sharaf told the newspaper in an interview published on Thursday that his company would not consider selling its U.S. operations.

    One source in Washington said Dubai Ports had no plans to sell its newly-acquired U.S. operations.

    “DP World has received lots of approaches but is not considering any such options,” the source, close to the firm, said.

    I don’t see how Sharaf (the CEO) changed his position virtually overnight. Unless he was promised that he would somehow still profit from whatever deal he cut with the White House.

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