Strife Deepens over Port Security ; from Lawmakers to Mayors, Concerns Are Rising over a Deal with an Arab Port-Management Firm

Article excerpt

It started out as a straightforward business deal between two international companies owned by American allies - the Dubai Ports World acquisition of Peninsular and Oriental Steam Navigation Co. (P&O). In one short week, it has erupted into a political firestorm that could have far-reaching diplomatic implications for United States relations with the Arab world.

The deal was little noticed outside of the elite international business world until port officials learned that a company owned by the United Arab Emirates would be in control of certain operations at major American ports in New York, New Jersey, Philadelphia, Baltimore, Miami, and New Orleans.

With the memory of 9/11 still fresh and continuing concerns about a lack of adequate security at US ports, alarms sounded from New York to New Orleans. Mayor Michael Bloomberg talked of canceling New York's contract with the company. Gary LaGrange, president and CEO of the Port of New Orleans, said he didn't "feel real warm and fuzzy about it." On Monday, the governors of New York and Maryland threatened legal action to try to stop the deal. And this week, Congress is stepping in. Senate majority leader Bill Frist said "the decision to finalize this deal should be put on hold until the administration conducts a more extensive review of this matter."

Sen. Charles Schumer (D) and Rep. Peter King (R), both of New York, also introduced emergency legislation Tuesday to "suspend the handover" of certain port operations. "Approving this contract in the dark of night and ignoring all of the many questions asked about this takeover is an affront to anybody who cares about our nation's security," Senator Schumer said in a statement Tuesday.

The Bush administration, which approved the sale, says it thoroughly reviewed all the national security implications. Homeland Security Secretary Michael Chertoff made the rounds of TV talk shows Sunday morning, trying to assure skeptics that the administration had put proper security precautions into place. But he said that information was classified.

Despite the administration's efforts, the controversy continues.

"What we're seeing is a very unfortunate knee-jerk reaction in terms of the Muslim world," says Lester Lave, an economist at Carnegie Mellon University's Tepper School of Business in Pittsburgh, noting the United Arab Emirates is a key US ally in the Muslim world. "If you treat your strong allies this way - this is like a poke in the eye - then what in the world should people who are not our strong allies expect from us?"

In past two years, the US has been negotiating a free-trade agreement with the UAE. …