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. …