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Critics Unload on Port Deal

They say an Arab firm's push to oversee U.S. cargo terminals raises security and trade concerns. But experts see no cause for alarm.

February 23, 2006|Evelyn Iritani, Nicole Gaouette and Ronald D. White | Times Staff Writers

An Arab company's bid to take over management of cargo terminals at half a dozen U.S. ports has become a rallying point for critics seeking tougher port security and greater scrutiny of foreign investment.

But trade and security experts said criticism of the deal involving government-owned Dubai Ports World was misguided because the U.S. government, not terminal operators, was responsible for security at the ports. In addition, they said, foreign companies already control a large share of the U.S. cargohandling business.

The target of congressional critics is Dubai Ports World's $6.8-billion deal to purchase Britain's Peninsular & Oriental Steam Navigation Co., which runs cargo operations in New York; Newark, N.J.; Philadelphia; Baltimore; Miami; and New Orleans. They said the Bush administration failed to investigate the deal and should have reported its findings to Congress.

Detractors say the government of Dubai, one of the seven emirates that make up the United Arab Emirates, deserves greater scrutiny because of its connections to some of the terrorists involved in the Sept. 11 attacks. Dubai Ports World will be the third-largest port operator in the world if its purchase of Peninsular & Oriental Steam Navigation Co. is completed.

For The Record
Los Angeles Times Friday February 24, 2006 Home Edition Main News Part A Page 2 National Desk 2 inches; 97 words Type of Material: Correction
Port security -- An article in Thursday's Section A on security fears raised by Dubai Ports World's bid to buy Peninsular & Oriental Steam Navigation Co. incorrectly said the Arab company would be taking over the operation of cargo terminals at six U.S. ports. The Port of New York and New Jersey was incorrectly listed as two separate ports. At the Port of New York and New Jersey, P&O operates a cargo terminal in Newark, N.J., and a cruise ship terminal in Manhattan. P&O operates cargo terminals at four other ports on the East and Gulf coasts.

But trade and security specialists said U.S. criticism was unjustified, given Dubai's support for the Bush administration's anti-terrorism campaign and its close connections to the U.S. military. Dubai is a primary staging base for the U.S. Navy in the Persian Gulf.

They emphasized that the globalized nature of the shipping industry meant that it was dominated by foreign companies that would play an essential role in helping the U.S. secure shipping containers and ports, particularly overseas, where the U.S. has minimal oversight.

"The fear-mongering is that a bunch of Middle Easterners are going to come over and work on the docks, and nothing is farther than the truth," said Robert Bonner, a former commissioner of U.S. Customs and Border Protection.

President Bush has threatened to veto any attempts to block Dubai Ports World's acquisition, which was approved by a panel of U.S. officials charged with reviewing whether transactions by foreign companies might compromise national security. At a White House briefing Wednesday, administration spokesman Scott McClellan said the transaction wouldn't raise the terrorism threat in any way.

"This transaction, if blocked, would not change security at ports one iota," he said.

Before getting the approval of the Committee on Foreign Investments in the United States, Dubai Ports World agreed to enforce the existing security standards at U.S. ports, maintain personnel and share operational information such as security measures and employee backgrounds with the U.S. government, U.S. Trade Representative Rob Portman said during a news briefing. But the interagency panel didn't impose other routine restrictions, including requiring the company to keep copies of business records on U.S. soil, Associated Press reported Wednesday.

Foreigners are already major operators in U.S. ports. Thirteen of 14 container terminal operators at the Los Angeles-Long Beach port complex are foreign-owned, including companies from China, Japan, Taiwan, Singapore and Denmark.

Ports pose a security concern because only a portion of the more than 14 million containers that arrive in the U.S. every year are inspected. Many fear that the containers could easily be used to smuggle weapons, such as so-called dirty bombs, into the country. Efforts to install U.S. inspectors in foreign ports are just beginning and funding for port security, which has increased 700% since the Sept. 11 attacks, lags behind aviation security funding.

P.J. Crowley, domestic security expert at the Center for American Progress in Washington, said that insufficient security at America's ports was the nation's "greatest single vulnerability," and the federal government had provided insufficient resources to prevent the "nightmare scenario" of a nuclear device being smuggled into the U.S. in a shipping container.

But Crowley and other security experts didn't see the Dubai Ports World purchase as a threat because of the way U.S. ports operated. The transaction wouldn't alter security procedures or the makeup of the unionized workforce on the ground.

Dubai Ports World has a reputation as an efficient port operator with a good security record, including early participation in the U.S. Container Security Initiative, which places U.S. customs agents overseas to screen and secure cargo. Dubai Ports World's chief operating officer, Edward H. Bilkey, is an American, and the Bush administration recently nominated a former Dubai Ports World executive, David Sanborn, to be the U.S. maritime administrator.

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