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.
Absolute nonsense. Who is threatening the UAE?
oh yeah....
I hope they enjoy being aligned with Chuck Schumer.
If the shoe were on the other foot, the same morons would be pissed.
I hope they don't turn to Iran, but my guess is that they will.
Hate to say it, we deserve it. We've demonized them for no good reason, we've called into question their integrity for no good reason, and now we are renegging on a business deal, which is a big no-no in the Arab world anyway. So now they are telling us where to go.
We deserve it. We've acted like a bunch of 5 yr olds or LIBERALS. After all, idiots like Michael Weiner is taking his marching orders from Schumer and Peter King and all of the others that ONLY STAND TO GAIN BY EMBARRASSING THE PRESIDENT.
freakin idiots.
Well, so much for the bunch of geniuses who stated that there would be no repercussions.
"It seems to me this is a win/win for the Democrats. They get to damage the economy, alienate an ally in the war on terror, and make Bush look bad, all while posturing as defenders of our national security. What a coup, and credit must be given to their useful idiots on the Republican side who went along."
Applause! Finally a voice or reason. They're running with this one all the way to November! The Democrats finally got some BS to stick to the proverbial wall.
God help us. We have to listen to Chuck Schumer, Dingy Harry and all the rest for the next six months.
Thanks Senators... thanks for all you've done to secure the Democrat Party as the Party of Homeland Security!
If Boeing had a manufacturing facility in New York, jack@sses like Peter King and Chuck Schumer would not only be ardent supporters of the UAE port deal . . . they'd be giving "Lewinskys" to every member of the UAE royal families on a daily basis, too.
they will do just fine without us.
They have no natural enemies.
The Iranians are on the other side of the gulf.
we've screwed ourselves and I REALLY hope you enjoy having one fewer ally in the Middle East. One fewer base for our troops to get RNR, one fewer logistics point, one fewer ship port.
Enjoy.
Are you suggesting we now give in to Arab threats? That's pathetic. If the UAE's "loyalty" is this fragile, and they feel the need now to threaten us, SCREW THEM. They were nothing more than fairweather friends to begin with.
their money. And cut out the stupid euphemisms. Besides this is all for show. The President understands and will veto the show vote. We are in the business of including these people, not excluding. Will it be our undoing? Perhaps. Will economic/military/social isolationism be our undoing? Without a doubt.
I am more concerned for our country than at any time before or since 9/11. Humiliating the UAE this way is going to hurt us. Big time. In ways we can't even imagine right now.
The president mishandled this from a PR standpoint and the Republicans have just abdicated responsibility to the Democrats.
pretty much.
Hope these idiots enjoy it.
I can't believe that there has never been a thought about the ramifications of blocking the deal. The UAE is a close to being a Europeanazed country as there is in the Middle East. THEY are the ones who are taking a huge risk with their relationship with the US. The more that relationship is publicized, the more risk there is that terrorists will start targeting them. Given that they have spent billions to attract foreign capital and tourism, we thank them for their risk taking by kicking them in the teeth.
what if 100 high ranking and rank and file military folks stood up and said you are wrong. what would you say then?
I will not argue with you here michigander. I've acknowleged that anonymous sources are used, but also that Rush and the blogosphere is picking it up.
Believe it or not, I couldn't care less. The damage has been done.
Bush did not set up Saddam in Iraq. LOL
What a liar you are.
The public would have reacted better if they had been given the facts. The part of the public that relies on MSM did not get the facts--and unfortunately, that's a big chunk of the public.
As for the legislators that pushed for the blockage, on the 'Rat side they were just trying to slap the Bush admin; on the (so-called) Republican side, they were mostly grandstanding for the upcoming election.
A pox on all of them.
Bad Dhimmis!! How can they dare think the UAE doesn't have their best interests at the center of their loving Islamic hearts.
Seems the facts depend on which position you take.
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