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.
Senator Warner, on the floor of the Senate, just announced that Dubai has agreed to American ownership of US Ports. The issue just disappeared.
Some ally.
Breaking: The CEO of DPW just made a statement reported by CNBC that DP will transfer the US ports to American cnntrol.
Aack, an unpleasant visual....
Enjoy the new enemy you've created, Congress. All of you ought to be ashamed.
For what it is worth, I just got off the phone with Dr. Tom Coburn's office and they say that he is wanting to wait for the 45 day review (even though it may not happen)before making up his mind but at this point is highly skeptical. And believe me when I say that Dr. Coburn has no financial stake in this in any way, shape, or form. I only say this because I suspect many people in government from D. to R.'s stand to make money off this deal. Dr. Coburn will do what is right for America first.
You said -- "Boeing should be glad to be rid of them because, no doubt, down the line they'd sue Boeing for some glitch in the manufacturing of the airliners and want all their money back."
Believe me, Boeing is not going to be happy to be rid of them. They're going to be fighting hard to keep the deal by lobbying for the port deal, too. That just put Boeing and all its employees on the side of the port deal.
Regards,
Star Traveler
Yeah, WE were some ally weren't we. Comparing them to terrorists.
I guess one of these days we'll be out of jobs and industries to outsource. Then at least, threads like these won't be an issue.
freepmail to you bwteim
Time for us to reciprocate with other "ALLIES" in the region. Two can play that game.
The "nuke em all" crowd proves this.
Well at least they mean what they say. Now do we stand up and so "go ahead" or go crying and begging forgiveness.
Pretty soon you guys will be saying we deserve to get bombed for trying to protect our interests.
We are now the laughing stock of the world.
Payback however will be satisfying...:-)
But our efforts now in the Middle East have been severely hampered and this has only begun to play out.
We have insulted our best strategic ally in the area and it will be very costly....
Just heard on El Rushbo that UAE has responded by telling US that it will divest itself of ALL US interests.El Rushbo quite correctly characterized this as;"Dubai Has Just Given Us The Middle Finger"!!
Put it this way, then: What if the UAE did, in fact, have control of security operations at these ports? How much would you trust the UAE in that case?
Because the port deal was cancelled, we'll all be out of jobs? What?
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