White House Defends Port Sale to Arab Co.

By DEVLIN BARRETT and TED BRIDIS, Associated Press Writers
Fri Feb 17, 4:49 AM ET

WASHINGTON - The Bush administration is defending approval of a $6.8 billion sale that gives a company in the United Arab Emirates control over operations at six major American ports, even as one senator sought a new ban on companies owned by governments overseas in some U.S. shipping operations
Sen. Robert Menendez, D-N.J., told The Associated Press he will introduce legislation to prohibit companies owned or controlled by foreign governments from running port operations in the United States. Menendez said his proposal would effectively block state-owned Dubai Ports World from realizing gains from its purchase of London-based Peninsular and Oriental Steam Navigation Co.

The British company, the world’s fourth-largest ports company, runs significant commercial operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

"We wouldn’t turn the border patrol or the customs service over to a foreign government, and we can’t afford to turn our ports over to one, either," Menendez said.

The pledge for new legislation was the latest step in a tense dispute in Washington over potential security risks associated with the DP World sale. Lawmakers asked the White House to reconsider its earlier approval, saying the United Arab Emirates is not consistent in its support of U.S. terrorism-fighting efforts.

"The potential threat to our country is not imagined, it is real," Rep. Mark Foley (news, bio, voting record), R-Fla., said Thursday in a House speech.

Sen. Rick Santorum (news, bio, voting record), R-Pa., also objected to the deal. He said Philadelphia has been designated a "strategic port" for the movement of military material, and that he has sent President Bush a letter urging him to prevent the sale.

The administration defended its decision. The sale was "rigorously reviewed" by a U.S. committee that considers security threats when foreign companies seek to buy or invest in American industry, said National Security Council spokesman Frederick Jones.

The Treasury Department’s Committee on Foreign Investment in the United States received an assessment from U.S. intelligence agencies. The committee’s 12 members agreed unanimously the sale did not present any problems, the department said.

"We wanted to look at this one quite closely because it relates to ports," Stewart Baker, an assistant secretary in the Homeland Security Department, told the AP. "It is important to focus on this partner as opposed to just what part of the world they come from. We came to the conclusion that the transaction should not be halted."

Besides Menendez, four senators and three House members pressed the administration to reconsider. They said the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist, Abdul Qadeer Khan. They also said the UAE was one of only three countries to recognize the now-toppled Taliban as Afghanistan’s legitimate government.

Critics also have cited the UAE’s history as an operational and financial base for the hijackers who carried out the attacks of Sept. 11, 2001.

Rep. Vito Fossella (news, bio, voting record), R-N.Y., urged congressional hearings.

"At a time when America is leading the world in the war on terrorism and spending billions of dollars to secure our homeland, we cannot cede control of strategic assets to foreign nations with spotty records on terrorism," Fossella said.

DP World said it had received all required approvals.

"We intend to maintain and, where appropriate, enhance current security arrangements," the company said in a statement. "It is very much business as usual for the P&O terminals" in the United States.

In Dubai, the UAE’s foreign minister described his country as an important U.S. ally but did not respond directly to the concerns expressed in Washington.

"We have worked very closely with the United States on a number of issues relating to the combat of terrorism, prior to and post Sept. 11," Sheik Abdullah Bin Zayed al-Nahyan said.

The Homeland Security Department said it was legally impossible under the committee’s rules to reconsider its approval without evidence that DP World gave false information or withheld vital details from U.S. officials. The 30-day window for the committee to voice objections has ended, the department said.

Separately, the Port Authority of New York and New Jersey said it will conduct its own review of the deal and urged the government to defend its decision.

In a letter to the Treasury Department, Port Authority chairman Anthony Coscia said the independent review by his agency was necessary "to protect its interests."

The lawmakers pressing the White House to reconsider included Sens. Charles Schumer, D-N.Y., Tom Coburn, R-Okla., Frank Lautenberg, D-N.J., and Christopher Dodd, D-Conn., and Reps. Foley, Fossella and Christopher Shays, R-Conn.