Posted on 03/09/2006 9:02:17 AM PST by prairiebreeze
Dubai is threatening retaliation against American strategic and commercial interests if Washington blocks its $6.8 billion takeover of operations at several U.S. ports.
As the House Appropriations Committee yesterday marked up legislation to kill Dubai Ports World’s acquisition of Britain’s Peninsular and Oriental Steam Navigation (P&O), the emirate let it be known that it is preparing to hit back hard if necessary.
A source close to the deal said members of Dubai’s royal family are furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal.
“They’re saying, ‘All we’ve done for you guys, all our purchases, we’ll stop it, we’ll just yank it,’” the source said.
Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the United Arab Emirates (UAE), the source added.
It is not clear how much of Dubai’s behind-the-scenes anger would be followed up by action, but Boeing has been made aware of the threat and is already reportedly lobbying to save the ports deal.
The Emirates Group airline will decide later this year whether it will buy Boeing’s new 787 Dreamliner or its competitor, Airbus A350. The airline last fall placed an order worth $9.7 billion for 42 Boeing 777 aircraft, making Dubai Boeing’s largest 777 customer.
Dubai in mid-February also established the Dubai Aerospace Enterprise, a $15 billion investment to create a company that will lease planes, develop airports and make aircraft parts to tap into growing demand for air travel in the Middle East and Asia.
The family-ruled sheikhdom may buy as many as 50 wide-body aircraft from Boeing and Airbus during the next four years, according to Aerospace Enterprise officials.
The UAE military also bought Boeing’s Apache helicopters. Meanwhile, Boeing has been in talks with the emirates to try to sell its AWACS planes.
An industry official with knowledge of Boeing’s contracts with Dubai said that the company has been involved in the emirate and that it would take a lot “to knock” those relationships.
“Nothing about the [ports] controversy diminishes our commitment to the region,” said John Dern, Boeing’s corporate spokesman. He added that at this point the company has no indication that there is or will be an impact on the company.
Any repercussion to Boeing could put House Speaker Dennis Hastert (R-Ill.) in a delicate position. Boeing’s decision to move its headquarters to Chicago has been seen as calculated to facilitate a close relationship with Hastert. He is against the ports deal, and his office did not return calls by press time.
Several businesses have expressed concern that the controversy over the $6.8 billion ports deal could damage trade with the UAE. Dubai is one of the seven emirates. The United States and the UAE are meeting next week for a fourth round of talks to sign a free-trade agreement. The American Business Group of Abu Dhabi, which has no affiliation with the U.S. government, said that Arabs may hesitate to invest into the United States, according to a report by Reuters.
A Republican trade lobbyist said that because the ports deal is a national-security issue blocking it would not be in violation of World Trade Agreement rules.
“In terms of them retaliating legally against the U.S. … I don’t think there are many options there,” the lobbyist said.
But when it comes to the emirates’ cooperation in the war on terrorism and in intelligence gathering, there is concern that some help may be pulled.
“If we reject the company in terms of doing the [ports] work, they are going to lose a lot of face. In the Arab culture, losing face is a big deal,” a former government official said. “We risk losing that help. It is not an empty threat.”
Dubai is a critical logistics hub for the U.S. Navy and a popular relaxation destination for troops fighting in the Middle East. On many occasions since the ports story erupted, the Pentagon has stressed the importance of the U.S-UAE relationship.
Last year, the U.S. Navy docked 590 supply vessels in Dubai, plus 56 warships, Gordon England, deputy secretary of defense, said in a Senate hearing last month. About 77,000 military personnel went on leave in the UAE last year, he added.
During the hearing, he warned about the implications of a negative decision on the ports deal: “So obviously it would have some effect on us, and I’d not care to quantify that, because I don’t have the facts to quantify it. It would certainly have an effect on us.”
Although owned by the Dubai government, the company at the heart of this controversy, Dubai Ports World, is trying to distance itself from any kinds of threats, said a lobbyist closely tracking the deal.
Another lobbyist monitoring the controversy said K Street still believes there will be a compromise that allows the Dubai deal to go through while meeting congressional security concerns, even though a bill aimed at that result, put forward by House Homeland Security Committee Chairman Peter King (R-N.Y.), was widely repudiated amongst lawmakers Tuesday.
Senate leaders have indicated that they would wait to take action until the new 45-day Committee on Foreign Investment in the United States (CFIUS) review is completed.
Meanwhile, in London, DP World cleared the last hurdle for its take over of P&O. The Court of Appeal in London refused Miami-based Eller & Co., which opposed the deal, permission to appeal against clearances for the legal and financial measures necessary to implement the takeover.
P&O said it expects to file the requisite court orders, making the takeover terms binding on DP World, according to the Financial Times.
Elana Schor contributed to this report.
I agree with you, living in Texas and having lived in Southern California.
You know, this DPW move was smart on their part. It could have been handled better here, that's for sure. However, I think it's reasonable for them to have whatever negative reaction they will have. It's a disappointment to them, to put it mildly. If they are going to act up on a grand scale because of this small(in the context of their global operations) deal, then perhaps their motives were not as clean as was being presented. So what they lose 9 ports in the US? In the grand scheme of things, this does not seem that huge. Let them threaten, they have the right to. The bottom line is, it's business, if you listen to how it's portrayed. They don't need the ports here and they aren't going to suffer tragically if they don't get them. Let them do what they will. These are consequences I can live with.
Of course, in this post-nationalist era, the value of an American life doesn't mean much anymore. It's all about what "racists" and "xenophobes" we are to ask our employees to enforce the nation's laws.
You have ignored all the historical data on isolationism and the results of it.
You can try to paint it what ever color you like, but in the end the isolationist ideals wreak havoc to any country that employs these policies.
Putting nationalistic lipstick on that pig does not change the smell.
I don't hate America. I love America. It's the idiots in Congress I don't have much patience with.
Foreign country, has it own laws, not beholding to the US Constitution, the list of differences is endless.
I just love it when articles quote an anonymous source like- "A source close to the deal said members of Dubai’s royal family are furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal."
puhleeez
And I fail to see how the egregiously incompetent manner in which we've handled homeland security up to this point justifies a maneuver that-at best-does not improve it and-at worst-potentially emperils it at some time in the near or remote future.
Yes I did. They are only divesting themselves of the American portions of the deal. It won't amount to multiple billions.
You can always learn something on FR. You may not agree with it, though.
Old labels are irrelevent. The proper terms now are "Rational" and "Irrational"
You are astute. ;)
I'm not sure I follow you. Why would I think we are bullet proof and how does that relate to the trade deficit? I'm not being a wise guy, I simply don't follow...could just be me.
:)
This should really be seen as a serious issue in its own regard. Part of the Bush legacy will be the fact that in order to come to his defense, his followers were forced to start attacking conservatives who oppose illegal immigration and who oppose the ports deal as racists. I think that from this point forward we will see them use the race card whenever possible. It's a sleazy leftist tactic, but hey-----it often works.
Wrong. It's actually the conservatives, as opposed to the "Bush always knows best"-types who raised the uproar over this. The Dems may be piling on because they're political opportunists, but it's the conservative grass-roots who have driven this issue.
You'll have to pardon me, as I have been here seven years longer than you have.
I know who is against what and why they're against it.
Doesn't matter how you dress it up, that's what it's about.
And there will be NO meaningful immigration legislation -- why, you ask?
Because the public doesn't want it.
See how that works?
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.