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.
And you're the one squawking that over and over like a parrot with Tourette's Syndrome, as though it somehow is a substantive argument, and as though you yourself are not the one siding with Jimmy Carter and Bill Clinton. :)
-Dan
They've purchased plenty of our military hardware to keep themselves safe. If they wanted to, they could buy whatever else they would be lacking. I expected this all along. Both sides lose though, if our alliances fail.
Thanks for the ping, going to try to catch up! But I might have a meeting here in a few... I'll read quick! :P
We really don't need cooperation on the WOT, after all New York and LA are kind of worn out and we could always build new cities where they used to be.
let the UAE retailiate, then let iran have at them.....
the UAE would be begging us to come and protect them...
if the UAE wants to be stupid, I say, "Let them."
Exactly - followed to its logical conclusion = massive global trade war (if not a "shooting" war).
What idiot source did you get that LIE from. Saddam was in power LONG before Bush even sniffed the White HOuse. But apparently any LIE you can come up with is ok some fool might believe it.
We are not handing them the ports! It is a business deal to manage one aspect of port operations via a external company. We can still kick them out if they eff around, since we own the land. They've engaged in a legal and vetted business transaction, and they've been an ally. They are paying a lot of good money for this access, so I don't think "giving" is at all the right term.
I too am disgusted with the people who would give in to mass hysteria and politics instead of informing themselves with the facts and supporting and voting for the right thing. I can't tell you how many people I've talked to about this that are so ignorant that they think Saudi Arabia is the same as the Arab Emirates duh! I think now we are screwed and have created a lot of ill will even if the deal does go through.
However we told them that they are not great friends but rather they are terrorists and we do not trust them to manage some terminals in our ports. Do you expect them to agree with us on this?
"the Republicans can go to hell"
Ditto, I was asked yesterday to serve on my county GOP central committee. I will refuse. I help candidates in my area, but these politicians are starting to make me sick. I will continue to support my friends, but the party has lost my support.
How many of you "so called" conservatives who are jumping on the unmanned train wreck called "kill the deal" and are thumbing their noses at the UAE were encouraging Wal-Mart to pull out of Maryland in response to the attack by the state legislature???
Hypocracy is rampant here . . . .
Nations do not have friends. They have interests.
Do you believe they want out of the dark ages? What is stopping them, then?
What do you THING was to be learned wrt Saudi Arabia? This should be hilarious.
Never.
I don't disagree. I believe the democrats attacking the president on this deal are mostly just being opportunistic, but it doesn't change the fact that what they are saying is right. It's no different than when Hillary Clinton seizes the opportunity to sound like she's tough on illegal immigration when George Bush obviously doesn't care about it. I seriously doubt that Hillary cares if illegals flood the US, but how can you blame her for taking advantage of W's woeful ineptness on the issue?
There are truths and then there are greater truths. What you say is true but the greater truth is that the UAE is the home of many that cheered 911 and would be happy to help bring about another. Giving such people access to our security methods and data is just foolish.
WE already showed that we're not worth having as a friend, we only take and then are stupid enough to think we can continue to take after we've kicked someone in the face.
Do you really think it was risk free for them to allow us to use their ports and landing bases? Do you really think it was free for them to provide security for our troops when they were on R&R?
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