Arab Port Deal Grows In Controversy

Latest:: More Questions about the UAE Port Deal
Update 7 - 9.35 pm Pacific
Media are underreporting the scale of a $6.8 billion Adminstration-backed deal that would allow a United Arab Emirates company to manage major US ports. The outsourcing deal is drawing increasing bi-partisan cricitism (from lawmakers and bloggers) as well as a lawsuit challenging the sale.

Dubai-headquartered DP World is seeking to purchase UK-based Peninsular and Oriental Steam Navigation Company, the number four port management company in the world. The new firm would be number three, behind Hong Kong's Hutchison Whampoa Ltd and Singapore's PSA International.

The firm intends to borrow the money for the purchase: reportedly DP has contacted Barclays Capital and Deutsche Bank to arrange a "$6.3 billion (syndicated) term loan facility and a $200 million revolving credit facility."

News reports have stated affected ports are in Baltimore, Miami, New Orleans, New York, New Jersey, and Philadelphia. However, information from P&O suggests far more ports are affected. P&O claims to be (emphasis added) "the largest independent stevedore and terminal operator on the US East and Gulf coasts with operations in most ports from Maine to Texas."

For example, P&O Ports North America manages seven facilities in Texas: Beaumont, Corpus Christi, Freeport, Galveston, Houston City Docks and Houston Barbours Cut Terminal, and Port Arthur. No news reports have mentioned Texas ports being part of the deal, perhaps because P&O only lists five locations on its global container operations website.

Sale Moves Forward
On 13 February, shareholders of P&O approved the sale to DP World and the firm expects court approval on 2 March. Neither firm is commenting on the current hoopla in the US, which may be too little, too late, to stop the sale from going through.

US outcry came on the heels of that vote, when news reports last week revealed that the Treasury Department's Committee on Foreign Investment, under Exon-Floria, approved the sale as having no impact on national security. The 12 people making this decision do not provide an independent assessment as all are Bush appointees: the Secretaries of State, the Treasury, Defense, Homeland Security, and Commerce; the United States Trade Representative; the Chairman of the Council of Economic Advisers; the Attorney General; the Director of the Office of Management and Budget; the Director of the Office of Science and Technology Policy; the Assistant to the President for National Security Affairs; and the Assistant to the President for Economic Policy. (pdf).

The review took place quietly in a 30-day window for decision-making; the committee declined its right to extend the review another 45 days. Sen. Richard Shelby (R-AL) has also called for further scrutiny.

Legal Challenge
In Miami, Continental Stevedoring & Terminals Inc. (a subsidiary of Eller & Company Inc.) is challenging the deal due to its forcing the firm to become an "involuntary partner" with the government of United Arab Emirates, which owns the Dubai-based firm. In addition, the lawsuit contends that the sale "may endanger the national security of the United States."

AP reports that "The Port of Miami is among the nation's busiest. It is a hub for the nation's cruise ships, which carry more than 6 million passengers a year, and the seaport services more than 30 ocean carriers, which delivered more than 1 million cargo containers there last year."

Republican Criticism
Sen. Lindsey O. Graham (R-SC), on Fox News Sunday: "It's unbelievably tone deaf politically at this point in our history." Rep. Ileana Ros-Lehtinen, (R-FL) chair of a subcommittee on the Middle East, has called for a ''full investigation. ''

And Peter Gadiel, who heads 9/11 Families for a Secure America, "think[s] the President's gone insane" because two of the 9/11 hijakcers were citizens of Dubai. (tip) Also, "many" of the hijackers traveled through UAE; "after the attacks, U.S.Treasury Department officials complained about a lack of cooperation by the UAE and other Arab countries trying to track Osama bin Laden's bank accounts."

The 9/11 Commission identified US ports as a weakness in the nation's infrastructure. Sen. Chuck Schumer (D-NY) says that only 5 percent of the cargo that enters the US is inspected.

The Houston Conservative writes:

Stop the presses...I find myself agreeing with Boxer and Schumer? Yep believe it or not, I do not believe this is a good idea... it just doesn't FEEL RIGHT to have mission critical facilities under the control of a foreign power, no matter how benevolent and benign we may believe them to be ... This is stupid, it's bad policy and it's bad politics.

Rep. Peter King (R-NY) told the WaPo that US terms approving the sale "don't address the underlying conditions, which is how are they going to guard against things like infiltration by al Qaeda or someone else, how are they going to guard against corruption?"

Homeland Security Secretary Michael Chertoff defended the security review on ABC's Sunday political talk show.

Affected Ports
The scale of these operations appears to be enormous.

Information from the P&O website suggests, for example, that "Philadelphia" is much larger than the city: P&O Ports North America, Inc. is a 50% joint venture partner in Delaware River Stevedores (DRS), which provides stevedoring and terminal services in Philadelphia, PA, Camden, NJ, and Wilmington, DE.

Another link on the P&O website has a list of P&O involvement in far more ports than the six areas mentioned in mainstream media. These links are as they appear on the P&O website.

1. Port of Wilmington (DE)
2. Port of Miami (FL)
3. Port of Miami Terminal Operating Co. (FL)
4. Greater Baton Rouge (LA)
5. Port of Lake Charles (LA)
6. Port of New Orleans (LA)
7. Port of Portland (ME)
8. Maryland Port Administration (MD)
9. Port of Boston (MS)
10. Mississipi State Port at Gulfport (MS)
11. Port Newark Container Terminal (NJ)
12. NY City Passenger Ship Terminal (NY)
13. Port Authority of NY & NJ
14. Philadelphia Regional Port Authority (PA)
15. Delaware River Port Authority of PA & NJ
16. Port of Davisville (RI)
17. Port of Beaumont (TX)
18. Port of Corpus Christi (TX)
19. Port of Freeport (TX)
20. Port of Galveston (TX)
21. Port of Houston (TX)
22. Port of Port Authur (TX)
23. Port of Virginia (VA)

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