The political firestorm that erupted over the deal that would have seen a company owned by the United Arab Emirates taking over the operation of six American ports is over. It started this morning when the Republican Congressional leadership let it be known that it had sufficient votes to block the deal and override a threatened Bush veto, and ended this afternoon when Dubai Ports World announced that it would divest itself of any interest in the operation of any American assets.
So, the opponents of the deal will get what they want, but what does that accomplish ? Foreign management of American ports is, quite honestly, nothing new. In the end, though, this was less about foreign ownership per se than it was about Democrats and Republicans who want to distance themselves from the Bush Administration using the fact that the company in question is owned by Arabs to gain political points.
Throughout this political fiasco, the opponents of the deal were able to get away with misrepresentations and outright lies, largely because the Bush Administration handled this matter in a completely inept manner. To hear the opponents talk, DPW was going to be in charge of security at the ports. This was a lie — security, as at all ports and terminals, would have been in the hands of the Coast Guard and Customs Service. To hear the opponents talk, the UAE was just itching to help al Qaeda smuggle nuclear weapons into the Port of Newark. In reality, the UAE has been one of America’s closest Arab allies in the War on Terror — for obvious reasons, the UAE is, at heart, a nation of businessmen, and terrorism is bad for business.
It would have been an interesting symbol to the rest of the Arab world — to have an Arab-owned company playing such an important role in American commerce. Instead, the deal is dead now. And what are we left with ?
Well, as noted in this post at Outside the Beltway, it seems that the UAE is rather upset at the way the opponents of the deal have portrayed them over the past month.
A source close to the deal said members of Dubai?s royal family are furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal.
?They?re saying, ?All we?ve done for you guys, all our purchases, we?ll stop it, we?ll just yank it,?? the source said.
Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the United Arab Emirates (UAE), the source added.
And what’s at stake ?
The Emirates Group airline will decide later this year whether it will buy Boeing?s new 787 Dreamliner or its competitor, Airbus A350. The airline last fall placed an order worth $9.7 billion for 42 Boeing 777 aircraft, making Dubai Boeing?s largest 777 customer.
Dubai in mid-February also established the Dubai Aerospace Enterprise, a $15 billion investment to create a company that will lease planes, develop airports and make aircraft parts to tap into growing demand for air travel in the Middle East and Asia.
The family-ruled sheikhdom may buy as many as 50 wide-body aircraft from Boeing and Airbus during the next four years, according to Aerospace Enterprise officials.
Its unclear if killing the port deal by itself would be enough to get the Emirates serious about retaliation, but the anti-free trade and anti-foreign investment displayed by Congress over the past several weeks can only come to no good. In fact, it looks like this is just starting to become an issue:
WASHINGTON — Resistance to foreign ownership of U.S. port operations spilled over into the aviation arena when a congressional committee told the Bush administration to postpone a plan to allow more foreign control of domestic airlines.
The House Appropriations Committee on Wednesday passed a resolution directing the Transportation Department to hold off for 120 days on its proposal to give foreign investors in U.S. airlines more latitude to influence management decisions.
It looks like the campaign against them-damn-foreigners will continue well into the November elections. And if it does, it looks like we’ve got a lot of ports to worry about
[F]oreign firms remain deeply embedded in nearly every major port in the country. And transferring ownership of those operations to U.S. companies could cause serious problems in an industry in which nearly all of the shipping is controlled by foreign interests. An immense amount of capital from those foreigners will be required to expand the nation’s port system in coming years as global commerce continues to burgeon.
As with other industries, foreign investment in American ports is in everyone’s interest.
Finally, an editoral note. When I first heard about the ports deal, I will admit that my reaction was cautious and leaning toward negative, as reflected in the two posts I wrote about the issue here and here. The more I learned about the deal, the less concerned I became, and the more I realized that the controversy was, quite literally, much ado about nothing. The deal should have been allowed to go forward and the fact that politics was allowed to destroy it does not bode well for the future of foreign investment in this country.
Alexandra at All Things Beautiful has a different view of this fiasco, and links to a ton of bloggers writing about it.
Technorati Tags: Ports, Terrorism, Security, Bush
