FOX-AP: Dubai Company to Give Up Stake in U.S. Ports Deal
Thursday, March 09, 2006
By Liza Porteus
WASHINGTON — A United Arab Emirates-owned company said Thursday it
would give up its management stake in a controversial ports deal that
has taken Washington by storm and has caused massive upheaval in the
president's own party.
The Thursday announcement came just hours after Republican leaders
warned President Bush that the House and Senate appeared ready to
block Dubai Ports World from taking over some terminal operations at
six U.S. ports.
"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," DP World's chief operating
officer, Edward H. Bilkey, said in a statement, read on the Senate
floor by Sen. John Warner, R-Va.
The company said its decision was "based on an understanding that DP
World will have time to affect the transfer in an orderly fashion and
that DP World will not suffer economic loss."
The announcement was somewhat of a blow for Democrats, who were
pushing for a Senate vote on an amendment that would halt the deal.
The Senate later voted 51-47 to ignore GOP requests to wait until a
45-day review of the deal is completed before they try to stop it.
Republican leaders needed 67 votes to stop debate on the measure.
"This should make the whole issue go away," said Senate Majority
Leader Bill Frist, holding up a copy of the DP World press release
that announced the U.S. ports concession. "The [review] process is
underway ... we should not have to interrupt it on the floor of the
United States Senate."
Democrats are pushing an amendment to lobbying reform legislation to
ensure that no UAE-related company has any control over U.S. port
operations, particularly since so few details of the latest DP World
plan is known. The amendment, sponsored by Sen. Charles Schumer, would
not only block the Dubai deal, but also other U.S. ports deal with any
company wholly owned or controlled by any foreign government that
recognized the Taliban in Afghanistan from 1996-2001.
If they succeeded in forcing a vote on the amendment, Democrats could
then claim a big election year win in the area of national security —
an area Republicans generally have a stronger track record on.
"The bottom line is, security has to come first. We know that this
deal would not bring security," Schumer, D-N.Y., told reporters
Thursday. "We had to force this vote, it's unfortunate that we did but
now the handwriting is on the wall and that is that the UAE will not
operate ports in the United States of America, plain and simple."
The political firestorm erupted after the administration approved a
plan to hand over some terminal currently operated by the British
company, Peninsular & Oriental Steam navigation Co., to the UAE-owned
DP World.
DP World finalized its $6.8 billion purchase earlier Thursday of P&O,
which through a U.S. subsidiary runs important 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.
The deal in question, however, focused primarily on lucrative Asian
markets. DP World valued its rival's American operations at less than
10 percent of the nearly $7 billion total purchase.
A senior Frist aide told FOX News that the Senate majority leader and
his staff informed DP World and UAE government officials Wednesday
night to pull the plug on the deal. When asked what prompted this
action from Frist, the aide said the House action Wednesday night
created a "destabilized coalition among House and Senate GOP."
Just one night before, GOP-led House Appropriations Committee passed a
bill blocking the deal. Bush has vowed to veto any measure halting the
deal.
By attaching it to a larger must-pass $91 billion spending bill,
lawmakers are challenging Bush: If he follows through on his veto
threat, he would also be vetoing the entire package.
Earlier Thursday, the White House said Bush was open to compromise but
expressed concern that the House GOP tactic could "slow down passage
of vital funds and resources" and said Bush's veto threat still stood.
"Our focus is on continuing to work with Congress to move forward on
this issue," said White House spokesman Scott McClellan. "The lines of
communication are open. There are members who have concerns. We
believe it's important to work with Congress to address those
concerns, and find a way forward."
The administration has repeatedly argued that port security would not
be outsourced as part of the deal and that the UAE is a strong ally in
the War on Terror since the Sept. 11, 2001, attacks. The White House
even reluctantly agreed to conduct a broader investigation into
potential security risks of DP World's plans, but that has not been
enough.
'The Devil's in the Details'
With the latest DP World news, many members of Congress who thus far
have been critical of the deal may be much more positive toward it.
"It resolves all of the security issues involved," Rep. Peter King,
chairman of the House Homeland Security Committee and a lead critic of
the deal, told FOX News. "It's a very positive step and now we can go
forward on overall legislation dealing with the ports."
But many lawmakers, particularly Democrats, are still cautious,
arguing that DP World has to let go of all control over any firm that
may take over the port operations.
"The devil's in the details," Schumer said. "Those of us who feel
strongly about this issue believe that the U.S. part of the British
company should have no connection to the United Arab Emirates or DP
World."
On the Senate floor Thursday, Sen. Frank Lautenberg, D-N.J., argued
that with Dubai's record of failing to recognize Israel, among other
things, it's "crazy" to do business of any great magnitude with a
UAE-owned firm.
"We ought to play showdown here, to use the expression, and vote
whether or not we want this deal to go through," Lautenberg said.
"It's not political, just do it."
Senate GOP leaders had been hoping to prevent any votes until the
conclusion of a 45-day review of the deal, being conducted by the U.S.
Committee on Foreign Investment in the United States (CFIUS).
"The right thing to do right now is not to vote on this [Schumer]
amendment," Sen. Tom Coburn, R-Okla., said Thursday on the Senate
floor. "The amendment attempting to be offered is a political stunt,
not based on knowledge of what is and isn't the facts. ... We can beat
up on the president but the fact is, he's operating under the law. He
has not broken law. Now maybe the law needs to be changed ... [but]
we've got 45 days. And if true that this should not go through, then
we'll stop it ... but it will be on the basis of fact, not politics."
Frist tried to argue that the lobbying reform bill should be dealt
with before the ports issue; before Schumer's actions Wednesday,
Senate Democrats had earlier said they would not try to attach ports
bills to the lobbying measure. But Democrats were demanding that a
specific time and date be set to debate and vote on the hot-button
topic. Instead of giving them a date, Frist on Thursday ended debate
on the lobby bill altogether and moved on to a budget bill.
"This issue should not be tangled up on the debate over whether or not
to strengthen our lobbying disclosure laws," said Sen. Susan Collins,
R-Maine, who has been a leader on both issues.
The House committee-passed amendment was attached to a $91 billion
emergency supplemental funding measure for hurricane recovery and wars
in Iraq and Afghanistan on Wednesday. The committee vote in favor of
the deal-blocker package was 62-2.
The underlying $91.1 billion spending bill provides $67.6 billion to
fund the wars in Iraq and Afghanistan and $19.1 billion in new money
for hurricane relief and rebuilding along the Gulf Coast. The full
House could consider the measure as early as next week.
But Democrats charge that the administration should be prevented not
only from going through with this deal involving the United Arab
Emirates-owned company, but also from future deals allowing
foreign-government owned companies from controlling U.S. assets.
"The Republican proposal only stops President Bush's current backroom
Dubai ports deal. It does not prohibit future ill-advised Bush
administration agreements that will let other firms controlled by
foreign governments operate in U.S. ports, nor does it address the
lack of U.S. cargo security, which poses an even larger threat," said
House Democratic Leader Nancy Pelosi of California.
But House Republicans feared that if they did not move to block the
deal now, Democrats would beat them to it.
"There's no way that we should or will, leave the national security
issue to the Democrats," Senate Banking Committee Chairman Richard
Shelby, R-Ala., told FOX News on Thursday. "We could pay a price in
the fall [elections] and we cannot afford not to do this."
FOX News' Major Garrett, Molly Hooper and Trish Turner and The
Associated Press contributed to this story.