Fight Over Ports Clouds Efforts to Open Middle East Markets

Unless America takes steps to address the growing tensions between open economic borders and national security, trade experts predict that there will be more of these conflicts, given the emergence of new players from the Middle East and China and the growing internationalization of the U.S. economy. And that could be dangerous for a country that needs roughly $4 billion a day in foreign capital to cover its budget and trade deficits.

"We're not competing for jobs; we're competing for paychecks, and that means capital," said John Rutledge, chairman of Rutledge Capital, a private investment company. "Whoever gets their mitts on the capital wins the game."

Congressional critics want to stop the transaction so that it could be investigated more thoroughly, and Sen. Hillary Clinton (D-N.Y.) said she would introduce a bill that would outlaw foreign control of U.S. port operations. Lawsuits have been filed in New Jersey and Florida to block the takeover of port operations.

USC professor James E. Moore II said a ban on foreign port ownership was unlikely. Foreigners already control a large share of the U.S. port business, including seven of the eight container terminals at the Port of Los Angeles.

"There is nothing inherently dangerous about doing business with Arab countries, any more than with Chinese and Brazilian countries," said Moore, with USC's Center for Risk and Economic Analysis of Terrorism Events. "We cannot allow our reactions to extremists to dictate our business choices."

The UAE has been a strong U.S. ally and has a close relationship with the U.S. Navy, whose aircraft carriers dock at the deep-water port in Dubai. But critics point out that two of the 9/11 hijackers came from the UAE and that banks in the region were used to funnel funds.

Bush, who has threatened to veto any congressional action to halt the Dubai deal, warned that such a move against a key U.S. ally in the Middle East could have far-reaching consequences. Bush administration officials fear their campaign to help restore America's battered image in the Islamic world could suffer.

U.S. Trade Representative Rob Portman warned Wednesday that "canceling this port deal would be contrary" to the U.S. belief that fighting terrorism means promoting policies that create "opportunities for people to improve their lives and the lives of their families."