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Dubai Firm Backs Out of U.S. Ports Deal

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  • Greg Cannon
    In case you hadn t already heard: http://news.yahoo.com/s/ap/ports_security;_ylt=ArfppXt2xZrkgOSmPVd0W5qs0NUE;_ylu=X3oDMTA2Z2szazkxBHNlYwN0bQ-- Dubai Firm
    Message 1 of 1 , Mar 9, 2006
      In case you hadn't already heard:


      Dubai Firm Backs Out of U.S. Ports Deal

      By LIZ SIDOTI, Associated Press Writer 52 minutes ago

      WASHINGTON - A Dubai-owned company abruptly abandoned
      its plan for managing operations at six U.S. ports
      Thursday, defusing an election-year showdown between
      President Bush and the Republican-controlled Congress
      over an issue that had become a political land mine
      for the GOP.

      "DP World will transfer fully the U.S. operations ...
      to a United States entity," H. Edward Bilkey, the
      company's top executive, said in the surprise
      announcement that seemed to spread relief throughout
      the Capitol and the White House. It was unclear which
      American business might get the port operations.

      Just hours earlier, Republican House and Senate
      leaders privately told the president that Congress was
      all but certain to block DP World's plan. Under
      pressure from a disapproving public, a House committee
      overwhelmingly voted against it Wednesday. The leaders
      told Bush the Senate would inevitably do the same,
      despite his threats to veto any legislation killing
      the deal.

      The company's announcement gave Bush an out. He now
      doesn't have to back down from his staunch support of
      the United Arab Emirates-based company or further
      divide his party on a terrorism-related issue with a

      The White House expressed satisfaction with the
      company's decision.

      "It does provide a way forward and resolve the
      matter," said Scott McClellan, the White House press
      secretary "We have a strong relationship with the UAE
      and a good partnership in the global war on terrorism,
      and I think their decision reflects the importance of
      our broader relationship."

      Administration officials expressed surprise at the
      outcome. White House officials said the decision was
      the result of conversations between Congress and the
      company, and that senior administration officials were
      not directly involved in the talks.

      Sen. John Warner (news, bio, voting record), R-Va.,
      said "upper levels of both governments" worked toward
      the result, including Sheik Mohammed Bin Rashid Al
      Maktoum, prime minister of the United Arab Emirates
      and emir of Dubai, who "advised the company ... that
      this action is the appropriate course to take." DP
      World's statement indicated that Sheik Mohammed made
      the decision.

      After weeks of controversy the end came unexpectedly
      and quickly.

      Hours after congressional leaders delivered their
      warning, Warner, chairman of the Senate Armed Services
      Committee, read the company's announcement on the
      Senate floor.

      It was unclear how the company would manage its
      planned divestiture, and Bilkey's statement said its
      announcement was "based on an understanding that DP
      World will not suffer economic loss."

      Even critics of the deal expressed cautious optimism
      that DP World's move would quell the controversy
      surrounding that company's plan to take over some
      terminal leases at six major U.S. ports held by the
      London-based company it was purchasing.

      Congress, typically a slow-moving operation, moved at
      lightning speed to try to block the deal, underscoring
      the deep concern over it and the anger about the White
      House's unwillingness to listen.

      "This should make the issue go away," said Senate
      Majority Leader Bill Frist, R-Tenn. Added Warner: "To
      me, that statement put an end to all of this."

      The two senior senators backed the Bush administration
      on the issue and they had been privately urging the
      company to give up its quest, Republican officials
      said on condition of anonymity.

      "The devil is in the details," said Senate Minority
      Leader Harry Reid, D-Nev., echoing other lawmakers in

      Rep. Peter King (news, bio, voting record) applauded
      the decision but said he and others would wait to see
      the fine print. "It would have to be an American
      company with no links to DP World, and that would be a
      tremendous victory and very gratifying," said the New
      York Republican, chairman of the House
      Homeland Security Committee.

      The company on Thursday finalized its $6.8 billion
      purchase of Peninsular & Oriental Steam Navigation
      Co., the British firm that through a U.S. subsidiary
      runs important port operations in New York, New
      Jersey, Baltimore, New Orleans, Miami and
      Philadelphia. It also plays a lesser role in dockside
      activities at 16 other American ports.

      The plan was disclosed last month, setting off a
      political storm in the United States even though the
      company's U.S. operations were only a small part of
      the global transaction. DP World valued its rival's
      American operations at less than 10 percent of the
      nearly $7 billion total purchase.

      Republicans denounced the plan, furious that they
      learned of it from news reports instead of the
      administration. They cited concerns over a company run
      by a foreign government overseeing operations at U.S.
      ports already vulnerable to terrorist attacks.

      Democrats also pledged to halt the takeover and
      clamored for a vote in the Senate. They sought
      political advantage from the issue by trying to narrow
      a polling gap with the GOP on issues of national

      After the company's announcement, the Senate
      indefinitely postponed a vote on a Democratic move to
      block the deal.

      Bush defended the deal, calling the United Arab
      Emirates a strong ally in the war on terror and
      pledging to cast the first veto of his presidency if
      Congress voted to interfere.

      Senate Republicans initially tried to fend off a vote,
      and the administration agreed to a 45-day review of
      the transaction. That strategy collapsed on Wednesday
      with the 62-2 vote in the House Appropriations
      Committee to thwart the sale.
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