Dubai Ports Deal to Get Security Review

DP World, the Dubai-based company embroiled in a controversy over its purchase of a contract to administer six U.S. ports, has agreed to a more extensive security review of the deal.

The Bush administration will conduct a highly unusual second review of potential security risks in a business deal it previously approved for a United Arab Emirates-based company to take over significant operations at six leading U.S. ports. The new, 45-day investigation is aimed at averting an impending political showdown as Congress returned to Washington on Monday from a weeklong break. Senate Majority Leader Bill Frist, who helped negotiate the plan, quickly recommended that lawmakers wait for the outcome before acting on legislation to delay or block the deal. Frist, R-Tenn., said he expects oversight hearings to continue this week.

In six pages of legal documents sent Sunday to the White House, Dubai-based DP World offered to submit to a second, broader investigation of its plans to run shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. The Treasury Department, which governs the U.S. review panel, said it would accept DP World’s extraordinary offer once the company formally filed its request for one. It said the same government panel will reconsider the deal that it earlier had agreed unanimously posed no national security concerns.

Some senators, led by Charles Schumer, D-N.Y., said they still intend to introduce legislation Monday to block the deal pending a 45-day review and to require congressional approval before DP World can conduct business in the United States. Under existing law, Congress effectively has no role considering deals.

Still, the administration’s announcement means the White House likely won’t face a broader revolt this week by fellow Republicans. A united GOP can assert that its leaders — in Congress and at the White House — have taken additional steps to protect national security.

DP World’s offer was highly unusual. The secretive U.S. committee that considers security risks of foreign companies buying or investing in American industry has conducted such full-blown investigations only about two dozen times among the more than 1,500 international deals it has reviewed. The company said that during the renewed scrutiny, or until May 1, a London-based executive who is a British citizen would have authority over DP World’s U.S. operations. It pledged that Dubai executives would not control or influence company business in the U.S., but said it was entitled to all profits during the period. It also said it will appoint an American to be its chief security officer in the United States. “We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States,” said Edward H. Bilkey, the company’s chief operating officer.

This is a smart political move on part of both DP World and the Bush administration to quell the controversy. Still, I am quite surprised to see the latter bow to congressional pressure over something clearly within the purview of executive authority, given how much they push the envelope on presidential authority on security issues.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Dave Schuler says:

    An extended security review of the deal is certainly a good thing. Perhaps a similar review of COSCO, the Chinese shipping company, and other port terminal operators in the United States may be undertaken as well.

  2. Eneils Bailey says:

    “Ooo, I’m just sittin’ on the dock of the bay
    Wastin’ time” (Thanks to Otis.)

    “This is a smart political move on part of both DP World and the Bush administration to quell the controversy.”

    And Bush needs to resolve the security issue quickly if he wants to gain support.

  3. legion says:

    This may technically be a “highly unusual second review”, but it’s becoming increasingly obvious that the first review was pure whitewash – nobody in the administration (at least nobody in any decision-making capacity) took it seriously.

    As to why they caved in, I think even the main wheels of the GOP/Bush spin machine realized how grotesquely incompetent this looks… They can push Congress around a lot, but there’s significantly less they can do to state governors threatening to sue to stop the process…

  4. Steve says:

    It’s only within the purview of the administration because Congress delegated this reponsibility to the President. In other words, this is not a case of Congress usurping an executive power. It’s a highly unusual “take back”, but not a constitutional dispute.

    The NSA flap is an example of the more traditional dispute between the executive and legislative branches.

    My suspicion is that both sides need some cover to give ground. The President was foolish to make his veto threat. And the heated rhetoric coming out of Congress sounds childish, bigotted and alarmist. It’s a shame, because they have a good case (I don’t agree, but they have good arugments and their reasoning is sound) and they can make it without all the hysteria.

    I think this higher level of scrutiny is going to lead to some changes that will save face for both sides.

    1. Increased security measures. Maybe in the form of more reporting and reviews.

    2. The creation of a wholly owned US subisidiary that is more “American” than not. Still owned and controlled by DPW but with less foreign control. DPW becoming more like an investor than an operating owner.*

    3. Everyone on both sides will declare victory.

    * Michael Ledeen has already suggested this and it just makes too much sense.

  5. legion says:

    Another annoying point about all this is the knee-jerk reaction in certain circles of calling ‘racism’ for caring more about the UAE running the ports than a UK company. That’s crap.

    If I say all blondes are untrustworthy & should be locked up, I’m a bigot. If I say that blond is untrustworthy & should be locked up because the bitch broke in my house and stole my stereo, it’s just common sense. Likewise, I don’t hae a problem with a Middle Eastern country doing what a UK company currently does, but considering the cozy relationship the UAE & its royal family have with bin Laden, expecting thes administration to perform an actual security review, instead of a simple hand-wave, is pretty damn reasonable.

  6. Herb says:

    I can’t think of one thing that Congress has got involved in that ended up good for anything or anyone in the entire country. Congress has a long standing history of screwing up everything it touches and yet they still insist they should be the “last word” on everything. This deal is probably good for everyone concerned, but when Congress gets through messing it up, everyone involved will end up having some very bad feeling about each other. After it happens, Who will accept and take responsibility for the bungeled deal. Not Congress, you can be sure.

  7. G A Phillips says:

    I am with Dave, lets review all of them, its Only fair. But why let congress do it, why dude why? Did you know that a rhino and a donkey are in the same species family, Dang’ I think you monkey-worshipers are finally on to something.

  8. Derrick says:

    I don’t think that its all so surprising. Part of the cover that the Bush Administration has used is that as long as we are taking the strongest position towards national security, almost no matter what they do will look better than their opponents.

    This is one of the first clear cases, where almost all of their opponents outflank them to the right. They know from their electoral wins over the last 4 years, that this is a losing proposition. And one that if not played just right will leave the Republican Party losing their one clear advantage on national security.

  9. MattG says:

    Capitalism? I grew up in the cold war and none of this socialism/communism crap is sitting well with me. IÂ’m clearly in the minority; but it is so scary we have become so accepting of socialistic principals. I don’t like state owned entities controlling any part of America. I visit this site often … and kind of get a feeling your trying to bury the story.