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Bill Targets Foreign Role at U.S. Sites

Legislation would seek to kill a plan to transfer port control to an Arab firm, and could affect other deals on national security grounds.

March 03, 2006|Joel Havemann and Richard Simon | Times Staff Writers

WASHINGTON — House Armed Services Committee chairman Duncan Hunter (R-El Cajon), seeking to derail a government-owned Arab company's plans to manage port facilities in six American cities, said Thursday he would introduce legislation not only to kill that deal but also to prevent foreign companies from controlling facilities determined to be critical to U.S. national security.

Hunter's legislation could affect the Los Angeles-Long Beach port complex, where 13 of the 14 container terminal operations are foreign-owned. "It makes sense in this new age of terrorism that critical infrastructure be owned by Americans," Hunter said in an interview. He said his proposal could apply not only to ports but also to power plants and "other infrastructure that is critical to the nation."

Hunter's plans put him on a collision course with President Bush, who has vowed that he would use such a bill to deliver the first veto of his presidency.

The furor has also proved awkward for former President Clinton and his wife, Sen. Hillary Rodham Clinton (D-N.Y.). Facilities at the port of New York are included in the sale, which she has strongly opposed. Her husband, meanwhile, had apparently talked with leaders of the company about a public relations strategy to rescue the deal. The company, Dubai Ports World, is owned by the government of Dubai, one of the sheikdoms that make up the United Arab Emirates.

Hunter led a hearing at which Republicans and Democrats took turns bashing first the company's corporate leadership and then representatives of the executive branch committee that approved Dubai Ports World's purchase of Peninsular & Oriental Steam Navigation Co., a privately owned British firm that operates container terminals worldwide. Among the assets included in the sale are operations in Philadelphia, Baltimore, Miami, New Orleans, New York and Newark, N.J.

A British court Thursday denied a legal challenge to the takeover, which, if appeals fail, will become final next week. But the company has separately agreed to postpone taking over management of the U.S. terminals for 45 days to give the Committee on Foreign Investment in the United States time to subject the takeover to greater scrutiny. That committee, made up of 12 government representatives, determines whether national security might be compromised when foreign companies seek to buy American industry or invest in it.

Legislators castigated members of the foreign investment committee for initially approving the purchase at a relatively low level of the bureaucracy, with no involvement of Congress, Bush or his Cabinet.

"You'd have to be a turtle with your head in the ground" not to realize the political firestorm that would follow a decision to allow an Arab company any role in U.S. ports, said Rep. Curt Weldon (R-Pa.).

Eric S. Edelman, who as undersecretary of Defense for policy ranked too high to have participated in the initial approval of the sale, said the United Arab Emirates had been a model economic partner of the United States and had supported the wars in Iraq and Afghanistan.

But Armed Services Committee members of both parties castigated the Arab nation for harboring terrorists and allowing them to use its banks to launder money.

Dubai Ports World officials were on the defensive during several hours of questioning. "Dubai can't be trusted," Hunter said.

The company's chief operating officer, Edward Bilkey, responded to the attacks, saying, "We are not a security risk."

The United Arab Emirates' role in maintaining the Arab boycott of Israel has also fostered opposition to the deal, but the chairman of Israel's largest shipping line came to Dubai Ports World's defense in a letter to Sen. Clinton.

Idan Ofer, chairman of Zim Integrated Shipping Services, urged her to drop her opposition, saying, "I sincerely hope this unnecessary political storm will cease."

Dubai Ports World officials, meanwhile, said that Bill Clinton had suggested they hire his former spokesman, Joe Lockhart, to assist in their public relations campaign. Lockhart decided against doing so.

"We seem to be our own worst enemies," Hunter said at Thursday's hearing. "We should require critical U.S. infrastructure to remain in U.S. hands."

Hunter said he would introduce his legislation next week. It would require foreign companies to divest themselves of any operations determined to be "critical U.S. infrastructure" by the Defense and Homeland Security departments.

Hunter's legislation would go further than what has been introduced in the House so far -- a bipartisan measure backed by at least 90 House members that would give Congress the right to kill the Dubai ports deal once the new security review was complete.

Manny Aschemeyer, executive director of the Marine Exchange of Southern California, which tracks vessel movements at the ports, said that any effort to bar foreign companies from operating port terminals would "shut most of the major container ports down in the United States, including Los Angeles-Long Beach.... That would be an absolute disaster."

The foreign investment committee is concurrently investigating two other corporate takeovers for their national security implications.

Dubai International Capital is paying $1.2 billion to buy Britain's Doncasters Group, a manufacturer of precision components that go into military aircraft and tanks. It has plants in Georgia and Connecticut.

And Israel's Check Point Software Technologies, a world leader in online security, has agreed to buy Sourcefire, a Maryland-based company with a similar mission.

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