HOW TO LOSE AND THINK WE'VE WON

As our state undertakes plans to create a megaport near Southport this may be timely in several ways.

For perhaps the first time in our new century the Age of Terrorism has met the Age of Globalization. Terrorism has won, at least this round. The Dubai Ports World deal has generated enormous controversy, large volumes of newsprint and blogging, and endless grandstanding by feckless politicians of both parties.

First let me offer some modest credentials. I spent 30 years in the international liner shipping industry, 20 of which were with Sea-Land Service, the last and largest of the major U.S. Flag container operators (Maersk Lines of Denmark bought Sea-Land about 6 years ago). This industry by its very nature is the most globalized in the world. I traveled extensively in the Middle East, and was involved in the mid-80's when Sea-Land was contracted by the UAE to consult on the UAE's once-fledgling port operation, the Dubai Ports Authority. The UAE, unlike any other Middle Eastern nation, was then and is now embarked on building a non-oil dependent service economy fully integrated into international commerce. As Muslim nations go the UAE is highly secular and fully understands that its' progress and growth are dependent on a friendly U.S.

Second, the rhetoric on the Dubai Ports World issue has been successful in truly distorting not only the material facts of the transaction, but also generating a visceral public backlash that will rebound to America's detriment around the world, and especially in the Middle East. President Bush, though correct on the issue itself, absolutely failed to explain these facts. Read on.

DPW, by purchasing the global assets of P & O, was to assume the leases under which several (a few, not all) terminals would be operated by DPW. It's management would largely consist of the same personnel currently in place. DPW, like all other terminal operators, would be under the same security thumb of Customs, the Coast Guard and Homeland Security as its predecessor. The same longshoremen, clerks and checkers would load and unload the ships. DPW, the terminal operator, would have no knowledge of the contents of containers and would not open them. From a security standpoint nothing would have changed. Repeat, nothing would have changed. But something very positive for our security would have changed if the deal had in fact been permitted. DPW in its worldwide operations has terminals in many megaports such as Hong Kong and Dubai. DPW, under agreement with our government, voluntarily agreed to establish U.S. port security standards and practices in these offshore locations, in effect pushing our security screen thousands of miles out where we are most vulnerable - those overseas ports loading tens of thousands of containers each day bound for our country. Now off the table, how have we helped our security? That's Win #1 for Terrorism.

Some may be aware of the UAE's high level of cooperation with our military in Dubai. We have access to airstrips there for our Middle East umbrella. More US Navy ships dock and are serviced in Dubai than at any foreign port in the world. Our Navy would be hard-pressed to find a substitute port with Dubai's strategic capabilities anywhere else in the region. Until now our presence has been welcome. That may now change, or mellow. Win #2 for Terrorism.

By the shrill and ill-considered rhetoric many commentators and politicians have in fact announced that America is no longer "open for business" to substantial and legitimate investors. We'll "pick" who we allow in using xenophobic criteria. And in our arrogance we will be shocked when foreign doors are closed to American firms whose lifeblood is the ability to freely trade and invest internationally. Did anyone notice that just last week a long-planned government-to-government negotiation with the UAE, designed to improve our access to their markets and trade facilitation, was "postponed" by the UAE? Loss #1 for Globalization.

And by poking our finger in Dubai's eye we also struck at our critical allies against terrorism like Pakistan, Indonesia and the Philippines. Is it not reasonable for them to wonder just how steadfast America can be in the future? Our foreign policy has been wounded in this regard. Win #3 for Terrorism.

Equally frightening are the economic ramifications going forward. America's thirst for low-cost imported goods will not abate. We pay for those goods from China, Korea, wherever, in U.S. dollars. The foreign receivers of those dollars have tended, historically, to hold those dollars. By doing so foreign holders are the single biggest financer of America's debt. Were decisions taken in Rome and Dubai and Hong Kong and Tokyo to convert those dollars into yen or euros, our national "checking account" would evaporate and the dollar's drop would at the least trigger a recession and certainly inflation. The Carter years would look good by contrast. If the U.S. even begins to hint at isolationism the rest of the world will certainly follow. Global economic dislocation would be Win #4 for Terrorism, and Loss #2 for Globalization.

It is ironic and tragi-comedic to hear Senator Boxer and others ask "why are there not American firms who can run the ports?" Well, there are several and they are capable, if smaller. The larger American firms who used to perform this work were formerly subsidiaries of the great American flag carriers like Sea-Land and American President Lines. But those have been sold to foreign operators. Why? Because American flag carriers were so hamstrung by U.S. regulations and draconian tax laws that even the best were unable to prosper financially. So, Senators Boxer and Schumer and Reps. King and Myrick, look in the mirror if you want to assign blame for America's decline in liner shipping.

Abject ignorance, willful distortion of facts, a desire to "get Bush" (who, by the way, gets an F for his handling of this), and pure malice have resulted in a calamity that will rebound to America's detriment in many opaque ways. The self-absorbed crowing by our politicians has had the net effect of harming our security, our foreign policy and our global economic interests. Some trifecta. Could the terrorist maniacs have planned it any better?

Unlike you and our President, the rest of the country and I intended this aborted deal to make a statement that our political leaders seem afraid to make...That being that Islam and Muslims are a serious threat to American security. Our enemy is not nameless and faceless and the peaceful Muslims among the adherents of Islam refuse to do anything to stop the extremism in their midst...indeed seem to encourage it. This company is a company that is owned by a theocratic Muslim country. It would imprudent to allow them access to even the possibility of mischief

And this is not racist, as Bush has charged. I would feel the same about Jews or protestant extremists if they were to declare jihad against the U.S. and Western civilization.

Because American flag carriers were so hamstrung by U.S. regulations and draconian tax laws that even the best were unable to prosper financially.

I remember something that I saw during the recovery operations after the Challenger tragedy. TV news showed a brief glimpse of one ship taking part in that effort. Ships are marked with their names and ports of registry. The name of this ship was STENNA WORKHORSE, and its home port was GEORGETOWN C.I.. A glance at an atlas confirmed that C.I. stood for Cayman Islands. It seemed to me that this was important, but it seems the reporter never noticed it.

In an earlier post the Wall Street Journal expressed the hope that the "U.S. entity" which takes over the port facilities from DPW would turn out be Halliburton. I hope so too. But another point worries me more. Can any U.S. entity be found willing to buy or operate the facilities, except on terms which will cause DPW to suffer a heavy loss? If not, will not DPW and the government of Dubai be right to consider that fact a deal breaker? And if DPW is not allowed to operate the facilities, in spite of having acquired the rights in accordance with the law, will they not have a clear case that their property has been taken without compensation?

"Equally frightening are the economic ramifications going forward. America's thirst for low-cost imported goods will not abate."

Mr. Wiggenhorn need to learn about capitalism. We can produce products here so long as they are protected from those produced through subsidized manufacturing in communist nations. It the long run, it is the only way to go.

He spent 30 years in the international liner shipping industry, 20 of which were with Sea-Land, but you know more about capitalism tha he does.

Do you want Hillary's regulators "protecting" your products?

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.