Talk about bad timing. As part of the Bush administration's efforts to promote democracy and economic freedom in the Middle East, U.S. officials have been trying to negotiate a trade pact that would lower tariffs and open the doors wider for U.S. investors.
Congress, citing security concerns, is threatening to torpedo a bid by Dubai Ports World to take over port operations in six U.S. cities. DP World, owned by the government of Dubai, which is a member of the United Arab Emirates, offered late Thursday to delay taking control of any U.S. port facilities as it works to quell the controversy.
This tug of war reflects the escalating tensions between America's push for economic openness and concerns about national security.
Critics of the deal contend that the Bush administration failed to thoroughly investigate the ramifications of allowing a Middle Eastern country, with ties to the Sept. 11 hijackers, to control vulnerable U.S. ports. They said officials let their free-market agenda and America's dependence on imported oil and money cloud their judgment.
The United Arab Emirates "is a government that has been ambivalent about supporting American values from a part of the world that engenders terrorism," said Peter Morici, a University of Maryland business professor.
Defenders of the $6.8-billion deal, who include President Bush, business groups and trade experts, say the escalating controversy will further strain relations with the Middle East and scare off badly needed foreign investment. Before a meeting Thursday with UAE officials, Secretary of State Condoleezza Rice called the transaction "a thoroughly vetted deal" by a multi-agency panel that "does not presume that a country in the Middle East should not be capable of doing a deal like this."
The controversy stems from DP World's acquisition of Peninsular & Oriental Steam Navigation Co., a British company that manages cargo terminals in New Jersey, Philadelphia, Baltimore, Miami and New Orleans and a cruise ship terminal in Manhattan. The port fracas comes months after Congress helped derail a bid by a state-owned Chinese oil company to purchase El Segundo-based Unocal Corp.
"On the one hand, we're saying we strongly want the UAE and other countries to provide a free flow of goods, services, capital and ideas across borders," said David Hamod, president of the National U.S.-Arab Chamber of Commerce. "And yet, when it comes to the United States, we've raised this protectionist issue in the ugliest possible way."
