Oh, they just might be able to find some other country that could take our place...
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.
There are no friends, only interests.
No, it is just a rational reaction to the politicians who are demonizing their country. They don't need our business.
John Boehner is driving the bus. All aboard!
and you need to brush up on economics. when others are not welcome to spend money earned from us our money will soon be worthless.
Clueless. It is the president who has tried to make Americans appear just a tad more open minded than most people actually are.
We need them as much as they need us. Maybe more!!!!
Well at least I had the sense to see this coming, which apparently was not the case for most of Congress. I hope the reps of all of the businesses that are going to be hurt by this political posturing are burning up the ears of these irresponsible cretins.
guaranteed, but you know, isolationists are NEVER the bad guys....
I mean, after all, Dubai SHOULD bow to us right? /sarcasm
Ya got me...what's a 'Smoot Harley idiot'?
y need us way more than we need them. If they don't have our proection, the radicals could easily end their way of life over there.
It works both ways. I don't see why we have to be blackmailed into letting them run our ports. If we leave them, they will hurt far more than us.
The presence of our Navy in their ports gives them security and stability, in a very dangerous region, that allows them to make billions with their tourism and banking industries.
They should pay us to dock there.
"True "friends" stick with/by you whether they get what they want or not."
No sh*t. That goes both ways, and we're the ones starting the nastiness.
A year or so ago, they placed a GIANT order for Boeing 787s and 777s as well as several Airbus A380s. If we tell them "up yours" to the US portion of the port deal (a tiny portion of the whole deal), seems to me they'd be within their rights to exercise whatever options they have re: flipping plane orders.
They also are the host country to the largest Navy base outside the US, and that port is operated by, yup, DPW. What if they kicked the Fifth Fleet out over this? Wouldn’t blame them either as our actions smack of protectionism, even bigotry. We're closing a base in Spain and moving most of the assets to Italy. Gosh, I wonder why .
Like it or not, the UAE is going to be a major player in aviation (like they already are in port services). They're starting a company, Dubai Aerospace Enterprises, with $15 BILLION in seed money to buy up and/or establish airport operators, MRO facilities, component manufacturing and aircraft leasing. They expect to have 30,000 employees by 2015, and plan to ultimately have an aircraft final completion facility in Dubai. The Asian aircraft market is HUGE and DAE plans to be a major player in the supply chain.
They will be the third largest leasor (sp?) of commercial airliners (following GE Capital). There’s another $15 billion to come in behind that. DAE Capital (the leasing subsidiary) is looking to buy ~50 widebody jets this year. Anyone here think booting them from the port deal WON’T affect their choice as to which manufacturer to buy from?
The people who recoil at the idea of DPW scheduling what forklift goes where at some terminal are going to have a cow over DAE leasing, building parts for and overhauling widebody jetliners.
Oh, they just might be able to find some other country that could take our place...
Republicans have been doing a great job of embarrassing themselves.
Of course not! On January 20, 2001, the presidential veto pen was quietly carted out of the White House and now rests somewhere in the same government warehouse that contains the Ark of the Covenant. :)
-Dan
I say we Giulani them and say keep your money...
Absolutely. Threatening to blackmail the U.S. should be a no deal starter. How about they let the US to take control of their ports for our military ships?
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