You Say Yes, I Say No (Hello, Goodbye Dubai)

The standoff between Congress and the President over the Dubai Ports World (aka, DPW) takover of Peninsular and Oriental Steam Navigation Co. (aka, P&O) ended yesterday with DPW announcing in a vague statement that it would transfer ownership of the ports operations to a US entity. But thanks to this protracted debate, we all learned a little something about our nation's commerce and encroaching globalization:

Because of the Dubai ports flap, the public has learned that the majority of terminals at U.S. ports -- especially big ones such as Los Angeles and Long Beach in California, and New York and New Jersey -- are managed by companies from Singapore, Taiwan, Denmark, South Korea and other countries. And as President Bush pointed out in defending the Dubai Ports World deal, the port-management company targeted for takeover, Peninsular and Oriental Steam Navigation Co., is British.

In this highly globalized business, crews typically come from Southeast Asia or Eastern Europe, flags are often Liberian or Panamanian, and few large container ships are owned by U.S. interests.
[...]
There is an important reason why terminals are usually managed by foreigners: The shipping companies themselves are largely foreign, and they have generally sought to control terminals so that they can be certain of having the most reliable, efficient facilities possible for loading and unloading their vessels quickly to reduce costly time in port. That arrangement has suited local port authorities; they want to ensure that their ports will draw enough traffic to generate revenue and employment.

And here's the first repercussion:

The United States and United Arab Emirate have postponed free trade talks set for next week, the U.S. Trade Representative's office said on Friday.

Much hay was made over the security angle of this debate, with worries over infiltration of the state-run DPW by al Qaeda terrorists (as Dubai was the home state of a few 9/11 hijackers and has been known to be rather Casablanca-like in its open market for all sorts of shady characters, from al Qaeda to Pakistan's nuclear father, A.Q. Khan). But today's LATimes editorial makes this counterpoint:

One has to wonder where this will end. Should a Saudi-owned airline be denied landing rights in the United States because most of the 9/11 hijackers were Saudis? That's the logic used by opponents of the Dubai Ports World deal, who fret that two of the hijackers came from the UAE and that its government supported the Taliban before the invasion of Afghanistan. Never mind that the UAE is a key ally and a hub for U.S. military operations in the Middle East.

And the Economist notes we have more to fear than a terrorist infiltration of our ports from within a management company:

This stance seems to be popular with the American public, which has had all its fears about terrorism and its protectionist instincts aroused by the prospect of the deal. To be fair, America’s ports remain one of the biggest holes in its security. Two billion tonnes of cargo move through them every year, tucked inside opaque containers that might just as easily contain a “dirty bomb” as Chinese electronics. Only around 5% of these containers are inspected, a higher proportion than before the September 11th attacks of 2001, but still odds that a terrorist might favour.

The NYTimes editorial from today continues this security thread, looking at how security is being handled (and improved, bit by bit) along the supply chain--from factories to shipping ports to American receiving ports. It's a worthwhile read for all the nuances, but it concludes:

The time is long past for the administration to put as much effort into seaport security as it has expended on airport and airline security. Every container needs to be scanned before it is loaded on inbound ships, and scanned again before it is trucked out of the American port. The long-delayed plans to conduct background checks on transportation workers who enter the ports and to issue them identification cards need to be accelerated. National standards for port security should be issued. Security guards may need to be federalized. Electronic monitoring should be used to track containers and determine whether they have been tampered with in transit.

The other elephantine issue that's staring at the US from overseas is the feeling that DPW's undoing was caused by a racist/Islamaphobic/xenophobic public. Again, back to the Economist:

[O]pposition to the DP takeover comes across as racist to much of the Muslim world. It seems unlikely that the American lawmakers would have kicked up a fuss had Temasek, a state-controlled group from Singapore, beaten DP World in the bidding war for P&O. On Friday, trade officials announced that the UAE and America had postponed talks on a free-trade agreement, scheduled for next week, presumably in reaction to the unfriendly noises coming from both sides. Nor is the perception of racism limited to foreigners. General John Abizaid, the commander of American forces in the Middle East, spoke out publicly against those who opposed the deal, saying it “really comes down to Arab- and Muslim-bashing that was totally unnecessary.”

Piqued Middle Eastern governments may now turn away from America as they look for places to stash their petro-profits. This could be a problem for the world’s largest economy, dependent as it is on a flood of foreign investment to finance its trade deficit, which stood at $68.5 billion in January alone. America may also find that the unsavoury episode has tarnished its credibility as an advocate free trade, at a time when it is trying to salvage the stalled Doha round of world-trade negotiations. And the damage to America’s image abroad will not help its quest to stabilise Iraq and fight Islamist terrorism.

Today's WaPo editorial piles on:

But our brave new Congress has achieved more than the irrational spiking of one business deal. It has also sent a clear message to the Arab world: No matter how far you move along the path of modernization and cooperation, Americans may be unable to distinguish you from al-Qaeda. Dubai welcomes hundreds of ship visits every year from the U.S. Navy and allied ships. It has worked with U.S. agents to stop terrorist financing and nuclear cooperation. But none of that mattered to the craven members of Congress -- neither to the Democrats who first sensed a delicious political opportunity nor to the Republicans who then fled in unseemly panic. As to long-term damage to the United States' security, economy and alliances? Not of concern to the great deliberative body.

No one should underestimate the potential damage. Any government in a Muslim-majority country will have to ask itself: Why take the risk of friendship? If governments find no good answer to that question, the fight against radical Islamic terrorism will suffer.

Living in a port city, I have many concerns about security, and I'm thankful that our state's senior Senator, Patty Murray, has been consistently vocal in her calls for improving security at our ports. But I'm just not that fussed over the foreign ownership of the management of ports. I agree that there are many questions that needed to be answered about how all this came about, and how seemingly little oversight was given to the deal by the BushCo administration (which nicely dovetails into the meme that these guys/gals just can't deal with basic governance of our nation's interests). But I feel the Democrats should have focused more on the overall security needs of ports rather than the foreign ownership angle.