Thursday, March 09, 2006

Wheeling, Dealing, Reeling 

We have been meaning to do a quick update on the Dubai Port World situation, but news breaks here, and then news breaks there, and before we know it our head is spinning like little Linda Blair's just before the advent of the green pea soup:

1.) Congress Ready to Block Ports Deal:
Republican congressional leaders told President Bush Thursday the House and Senate both appear ready to block a Dubai-owned company from taking over operations at several U.S. ports, GOP officials said.

The leadership delivered the assessment in a private meeting at virtually the same time White House spokesman Scott McClellan reiterated Bush's vow to veto any legislation interfering with the deal.

The developments came one day after a GOP-controlled House committee voted 62-2 to block the transfer, which has prompted an election-year Republican congressional revolt against the administration — made all the more striking because it is related to the war on terrorism.
2.) State Dept. Trashes UAE Rights Record:
The State Department's human rights report ripping the United Arab Emirates landed with near-perfect bad timing for the White House yesterday in the middle of the ports sale debate.

Rep. Peter King (R-L.I.), who raised the initial alarms that have now been taken up by the GOP House leadership, said the report knocked down the White House's argument that the UAE was a reform-minded nation . . . .

The section on the UAE in the State Department's annual survey of human rights worldwide cited UAE abuses ranging from the flogging of prisoners to international trafficking in prostitutes and in young boys used as jockeys in camel races. The report also charged, "There are no democratically elected institutions or political parties. There are no general elections."
3.) US-UAE Trade at Risk from Ports Deal:
Trade worth more than $8 billion between the United States and the United Arab Emirates could be jeopardized if a Dubai ports deal is blocked, an American business group said on Wednesday . . . .

[T]he American Business Group of Abu Dhabi (ABG), in the United Arab Emirates (UAE), said blocking the deal could make Arabs hesitate before putting money in the United States . . . .

"If the deal is blocked on terms that aren't consistent with a due diligence process, that sends a loud and clear message to our friends that maybe they should rethink investments in the U.S.," said Kim Childs, ABG executive vice president.

"We deeply regret what appears to have been an uninformed rush to judgment by some opponents of the transaction, as well as inflammatory language that some have adopted," she told reporters in the UAE capital Abu Dhabi.

Among the potential deals that could be threatened is a bid by a U.S. company for a $1 billion contract for an early warning system in the UAE, ABG members said. They did not name the company.
4.) UAE Firm to Transfer Port Operations to U.S. 'Entity':
United Arab Emirates-owned DP World said Thursday it would transfer its operations of American ports to a U.S. "entity" after congressional leaders reportedly told President Bush that the firm's takeover deal was essentially dead on Capitol Hill.

"Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship ... DP World will transfer fully the U.S. operations of P&O Operations North America to a United States entity," Edward H. Bilkey, DP World's chief operating officer, said in a statement.

The announcement did not specify which U.S. company would be involved . . . .

A source involved in talks between the White House, Congress and DP World told CNN the exact meaning of the UAE firm's statement is unclear, in part because the details of the transaction have not been worked out.

"The next steps are very hard to predict at this point, either in terms of who they'll actually sell to and in terms of what it means for U.S. relations in the region," the source said.

A source told CNN that the White House believes DP World's American assets would be sold to a U.S. firm.

Due to the lack of details about the transaction, Senate Democrats reacted cautiously to the company's announcement and continued to press for a Senate vote that would kill the deal.

"If the U.S. operations are fully independent in every way, that could, in deed, be promising," said Sen. Charles Schumer of New York. "If, on the other hand, there is still ultimate control exercised by DP World, I don't think our goals would be accomplished, and obviously we'll need to study this agreement carefully."

The Senate rejected a procedural move by Majority Leader Bill Frist, a Tennessee Republican, to prevent a vote on an amendment offered by Schumer that would block the deal.
A quick peek at the map [right] will show you one reason why President Bush has been almost suicidally intent on making nice with Dubai, regardless of the political consequences: you can't take on Iran without the help of the UAE.

(Thanks to Zemblan patriots M.F. and J.D. and our indefatigable colleagues at Cursor for various links.)

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