Zeev's Turnips Talk Politics (ZTTP)

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Arab Firm Offers to Delay Deal On Seaports
Senators Challenge Legality of Approval

By Jonathan Weisman
Washington Post Staff Writer
Friday, February 24, 2006; A01

Facing unrelenting political and national security concerns, an Arab maritime company offered late last night to delay part of its $6.8 billion deal to take over significant operations at six U.S. ports, after White House aide Karl Rove suggested that President Bush could accept some delay of the deal.

The surprise announcement should give Bush extra time to try to convince lawmakers from both parties that the port deal does not present an avenue for terrorists to exploit the nation's vulnerable and heavily populated seaports. Earlier in the day, Republican and Democratic senators questioned whether the Bush administration followed federal law when it approved Dubai Ports World's purchase of London-based Peninsular and Oriental Steam Navigation Co., also known as P&O. That purchase will give the Dubai-owned firm managerial control over operations at six ports, including those of New York and New Orleans.

Ten administration officials faced a barrage of questions from members of the Senate Armed Services Committee as they defended their decision to forgo a national security review of the deal. Deputy Treasury Secretary Robert M. Kimmitt said the decision last month to ratify the deal will be reconsidered only if officials find that officers of Dubai Ports World gave the government false, inaccurate or misleading information. But facing a bipartisan revolt over the deal, Rove told Fox News's "Tony Snow Show" that the White House could accept a delay in the transfer of port management, which is set for March 2.

"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," Rove said. "There's no requirement that it close, you know, immediately after that. 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."

In an accord coordinated with the White House, Dubai Ports World agreed not to exercise control or influence the management of the U.S. ports while the administration talks with Congress. Other parts of the deal with P&O will go forward.

"It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed," Dubai Ports World said in a statement.

It is not at all clear whether the offer will placate lawmakers, who have vowed to block the deal as soon as Congress reconvenes Monday. The imbroglio over the port decision has tarnished the administration's image of political strength on national security matters and called into question why Cabinet members and other high-ranking officials failed to consult with the president and members of Congress before approving the sensitive transaction.

With the White House saying the president did not learn about the sale until last weekend -- when lawmakers began complaining about it -- Bush has signaled that opposition to the port purchase smacks of anti-Arab bias that is undermining Washington's efforts to improve relations in the Middle East. To critics, the White House has put its free-trade economic agenda above concerns that go to the heart of fears in the post-Sept. 11, 2001, world: that underprotected ports could be the scene of a deadly terrorist strike, possibly with nuclear weapons.

The Port Authority of New York and New Jersey announced yesterday that it will sue to block the sale.

Dubai Ports World, owned by the government of Dubai, is set to take over next week management of 24 of 829 terminals at the ports of Baltimore, New York, New Jersey, Philadelphia, Miami and New Orleans.

"This wouldn't be going forward if we were not certain that our ports would be secure," Bush said at a meeting of his Cabinet.

Despite the entreaties of the administration, Sen. Hillary Rodham Clinton (D-N.Y.) said bipartisan legislation will be introduced next week to scuttle the deal, or at least to force a 45-day investigation into the deal's national security implications.

The administration's refusal to conduct such an investigation was at the center of a debate yesterday during the first public briefing on the deal since it was approved Jan. 17. Under a 1992 amendment to the law that created the interagency Committee on Foreign Investment in the United States, the CFIUS panel "shall" conduct such an investigation if a company operating in the United States is purchased by a firm controlled by a foreign government, and if anyone in that company could affect national security.

Kimmitt said the Bush administration believes the law gives it the discretion to decide whether such a review takes place. Deputy Defense Secretary Gordon England said that, in a review that was "definitely not cursory," no national security concerns were raised by the Army, the Navy, the Air Force, the Defense Intelligence Agency, the National Security Agency or the U.S. Transportation Command that would have triggered further investigation.

The administration's interpretation of the CFIUS law was met with skepticism during yesterday's briefing, attended by four Democratic senators and only one Republican.

"Ambiguity has been found in a statute that is unambiguous," said Sen. Carl M. Levin (Mich.), the ranking Democrat on the Senate Armed Services Committee.

Committee Chairman John W. Warner (R-Va.) asked Attorney General Alberto R. Gonzales for a memorandum on how the review of the ports deal was consistent with the law, and he requested a separate review by the Senate's legal counsel.

The hearing presented two very different views of the United Arab Emirates, of which Dubai is a part. The country is seen by the administration as a stalwart and indispensable ally in the terrorism fight and by Senate Democrats as a base for terrorism and nuclear proliferation.

Citing the report of the bipartisan commission that investigated the Sept. 11, 2001, attacks, Levin asked whether any CFIUS member had questioned former White House counterterrorism official Richard A. Clarke about his 1999 contacts with UAE officials, when he queried inquired about possible associations with Osama bin Laden. None had.

Levin asked whether any CFIUS member had discussed with the commissioners their conclusion that the United Arab Emirates had become both a valued counterterrorism ally and a persistent counterterrorism problem. None had.

And Levin asked whether any CFIUS member had talked to Clinton administration officials about their unsuccessful efforts to press the United Arab Emirates to cut its ties with the Taliban regime in Afghanistan and end flights into Dubai that provided a key transit point for Taliban officials and their terrorist clients. None had.

"Is there not one agency in this government that believes this takeover could affect the national security of the United States?" Levin asked.

http://www.washingtonpost.com/wp-dyn/content/article/2006/02/23/AR2006022300182_pf.html