Who's Behind the Dubai Company in U.S. Harbors?

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Dubai's port has a reputation for being one of the best run in the Middle East, but some U.S. legislators fear a security threat if it takes over management of American ports

The claim that six U.S. port facilities are being "sold" to a company owned by the United Arab Emirates may be grist to the election-year mill for politicians from both parties, but the resulting furor may obscure the challenges of port security. The transaction in question is the $6.8 billion acquisition by Dubai Ports World of the British P&O shipping company, to become the world's third largest port-operator. Among P&O's numerous worldwide operations are contracts to operate port facilities in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. The transaction was approved by the Bush administration after a routine evaluation by the Committee on Foreign Investment in the United States, an inter-agency body that assesses the security implications of foreign acquisitions of major U.S. infrastructure assets. U.S. officials say that both P&O and Dubai Ports World have solid security records.

Still, the deal has been opposed by a Miami-based port operator, Continental Stevedoring & Terminals Inc., which has gone to court to challenge the measure on security grounds. And politicians from both parties have amplified that complaint, despite the assurances by the Bush administration that the company's record checks out, and that the UAE is an ally in good standing in the war on terror.

New York Republican Congressman Peter King has insisted the administration revisit its approval of the transfer of control of U.S. ports to "a company coming out of a country where al Qaeda has such a strong presence," and which could be easily infiltrated by the terrorist network. Democratic Senators Hillary Clinton of New York and Bob Menendez of New Jersey plan to hold hearings on the issue next week, and are seeking legislation banning companies controlled by foreign governments from buying U.S. port facilities. Menendez alleged that the UAE has a "serious and dubious history... as a transit point for terrorism." And in response to Homeland Security secretary Michael Chertoff's insistence that the administration made a rigorous check — without disclosing details — of the security implications of the deal, California Democratic Senator Barbara Boxer said "It's ridiculous to say you're taking secret steps to make sure that it's okay for a nation that has ties to 9/11 to take over part of our port operations."

But to call the United Arab Emirates a country "tied to 9/11" by virtue of the fact that one of the hijackers was born there and others transited through it is akin to attaching the same label to Britain (where shoe-bomber Richard Reid was born) or Germany (where a number of the 9/11 conspirators were based for a time). Dubai's port has a reputation for being one of the best run in the Middle East, says Stephen Flynn, a maritime security expert at the Council on Foreign Relations. And Dubai Ports World, which is a relatively new venture launched by the government of Dubai in 1999, has a number of Americans well known in the shipping industry in its senior leadership. It operates port facilities from Australia through China, Korea and Malaysia to India, Germany and Venezuela. (The acquisition of P&O would give them control over container shipping ports in Vancouver, Buenos Aires and a number of locations in Britain, France and a number of Asian countries.) "It's not exactly a shadow organization for al-Qaeda," says Flynn. Dubai, in fact, was one of the first Middle Eastern countries to join the U.S. Container Security Initiative, which places U.S. customs agents in overseas ports to begin the screening process from a U.S.-bound cargo's point of departure.

Dubai Ports World has been taken by surprise over the furor, and is reportedly sending its Chief Operating Officer, the widely respected American shipping executive Edward "Ted" H. Bilkey, to Washington for talks. Indeed, the Bush administration needn't wait for Bilkey to arrive; it could get a good assessment of the workings of Dubai Ports World from its own current nominee for the post of U.S. Maritime Administrator — Dave Sanborn, previously a top executive at Dubai Ports World.

In the talk-show furor over the transfer of P&O to Dubai Ports World, there has been little reference to the mechanics of port management in the U.S. Over 80 percent of the terminals in the Port of Los Angeles, for example — the biggest in the U.S. — are run by foreign-owned companies. U.S. ports are owned by state authorities, and the workers who actually offload the ships that dock there are the same unionized Americans who belong to the International Longshoremen's Association, regardless of which company hires them. Dubai Ports will not "own" the U.S. facilities, but will inherit the P&O's contracts to run them, with no changes in the dockside personnel or the U.S. government security operations that currently apply to them.

"It shouldn't matter whether the company is from Des Moines or Dubai, do you have confidence that they are essentially doing things that safeguard our security interest?" says Flynn. And the main weakness he sees in security arrangements at ports throughout the U.S. is that they're largely the responsibility of private companies who are expected to police themselves.

Dubai Ports World's acquisition of P&O is unlikely to affect the security situation at the six U.S. ports in question. As Flynn points out, the relevant question is not who owns the port, but what security arrangements are in place to prevent it being used as a point of entry for hostile elements. And right now on that front, U.S. ports across the board could use some work.