Friday, February 24, 2006

UAE Company Agrees to Delay U.S. Port Deal

Yahoo! News
UAE Company Agrees to Delay U.S. Port Deal
By LIZ SIDOTI, Associated Press Writer

A United Arab Emirates company offered Thursday to delay its takeover of most operations at six U.S. ports to give the Bush administration more time to convince skeptical lawmakers the deal poses no security risks.

The surprise announcement relieves some pressure from a standoff between President Bush and the Republican-controlled Congress, where some lawmakers have threatened to block the deal because of concerns over the UAE's purported ties to terrorism. Immediate reaction on Capitol Hill was mixed.

Under the offer coordinated with the White House, Dubai Ports World said it will agree not to exercise control or influence the management over U.S. ports pending further talks with the Bush administration, Congress and local port authorities. It did not indicate how long it will wait for these discussions to take place.

The Dubai-based state-owned company said it will move forward with other parts of the deal affecting the rest of the world.

"It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed," Dubai Ports said in a statement.

"The reaction in the United States has occurred in no other country in the world," the company's chief operating officer, Ted Bilkey, said in a statement. "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties. Security is everybody's business."

The announcement came as bipartisan political furor persisted over the deal — supposed to be completed in early March — because of national security concerns. Republicans and Democrats alike are crafting legislation blocking or delaying the deal with an Arab country tied to some of the hijackers from Sept. 11, 2001. Bush had pledged earlier to veto such a measure.

The company's announcement did not appease some of the deal's harshest Democratic critics.

"If the president were to voluntarily institute the review and delay the contract that would obviate the need for our legislation, but a simple cooling-off period will not allay our concerns," said Sen. Charles Schumer (news, bio, voting record), D-N.Y.

However, one prominent Republican who had questioned the deal appeared optimistic.

"This is definitely a positive step," said Rep. Peter King (news, bio, voting record) of New York, chairman of the House Homeland Security Committee. "We'll need more details as to the nature of the discussions that will be held and the extent of the investigation into Dubai Ports."

The company said U.S. operations affected by the deal account for roughly 10 percent of its overall value, noting that its purchase of London-based Peninsular & Oriental Steam Navigation Co. covers 30 terminals in 18 countries, ferries and properties. It stressed that the sale overall would not be delayed, and British shareholders will be paid as previously planned.

Earlier Thursday, Democrats pushed for a new 45-day investigation into the deal and accused the administration of failing to thoroughly investigate whether it would threaten national security.

For its part, the administration sought to quell the controversy.

"People don't need to worry about security," Bush told reporters after a morning Cabinet meeting at the White House. "This wouldn't be going forward if we weren't certain that our ports would be secure. The more people learn about the transaction that has been scrutinized and approved by my government, the more they'll be comforted that our ports will be secure."

Meantime, Karl Rove, the president's chief political adviser, said Bush was willing to accept a slight delay in Dubai Ports World's purchase of terminal leases and other operations at the U.S. ports from a British company. "What is important is that members of Congress have the time to get fully briefed on this," Rove said on Fox Radio's "Tony Snow Show."

On Capitol Hill, administration officials who approved the transaction told the Senate Armed Services Committee that their 90-day review did not turn up a single national security concern to justify blocking it and they said no one raised an issue that would have prompted the need for a further, 45-day investigation.

"We're not aware of a single national security concern raised recently that was not part of" a three-month review before the deal was approved, Deputy Treasury Secretary Robert Kimmitt told the lawmakers.

Democratic committee members accused officials of failing to take into account issues raised about the Arab country in the final report of the special commission that investigated the Sept. 11, 2001 terrorist attacks.

Sen. Carl Levin (news, bio, voting record) of Michigan, the top Democrat on the committee, derided the administration's "casual approach" in approving a deal involving a country "with an uneven record of battling terrorism."

Levin at one point noted that the Sept. 11 commission found "a persistent counterterrorism problem represented by the United Arab Emirates."

"Just raise your hand if anybody (at the witness table) talked to the 9-11 commission," commanded Levin. There was no response from the administration's representatives.

White House Homeland Security adviser Frances Fragos Townsend said the UAE's cooperation in the fight against terrorism has changed since 2001.

"They have been critical allies in Afghanistan," she told reporters at a news conference on a separate matter. "They have been critical allies in fighting the financial war against terror. They've been critical allies in terms of our military-to-military relationship."

Levin and Sen. Hillary Rodham Clinton, D-N.Y., accused the administration of ignoring a law that requires a longer review — an additional 45 days — if a proposed business deal could affect national security.

Kimmitt responded: "We didn't ignore the law. Concerns were raised. They were resolved."

Following the company's announcement, Clinton's spokesman, Philippe Reines, said the senator "welcomes the news that the investigation that she and others have called for will have a chance to proceed. The administration should now use this delay to conduct the investigation that the law requires."

Sen. John Warner (news, bio, voting record), R-Va., and chairman of the Senate Armed Services Committee, said he would ask Attorney General Alberto Gonzales to prepare a memorandum on the administration's interpretation of the law to see if it deviates from Congress' intent.

Elsewhere, New Jersey sued in federal court to block the UAE company from taking over operations at the Port Newark container terminal until the federal government investigates possible security risks. The owner of the busy shipping center, the Port Authority of New York and New Jersey, said it also has security concerns about the takeover and plans to file a lawsuit Friday to terminate the firm's lease at the port.

Also Thursday, administration officials said that weeks before Dubai Ports World sought U.S. approval for the deal, the UAE contributed $100 million to help victims of Hurricane Katrina.

The administration said there was no connection between the request for U.S. approval of the ports deal and the UAE's contribution.

The White House, which so far has gotten a total of $126 million in international donations, said the UAE's contribution shows the close relationship between the two governments.


Associated Press writers Devlin Barrett in Washington, Jeffrey Gold in Trenton, N.J., Michael Rubinkam in Allentown, Pa., and Anne Gearan in Beirut, Lebanon, contributed to this report.