From NY Times:

Panel Saw No Security Issue in Port Contract, Officials Say

By ELISABETH BUMILLER and CARL HULSE

WASHINGTON, Feb. 22 — The Bush administration decided last month that a deal to hand over operations at major American ports to a government-owned company in Dubai did not involve national security and so did not require a more lengthy review, administration officials said Wednesday.

The decision was made by an interagency committee led by Deputy Treasury Secretary Robert M. Kimmitt. The group included officials from 12 departments and agencies, including the Departments of Defense, Justice, State and Homeland Security, as well as the National Security Council and the National Economic Council.

In a telephone interview on Wednesday, Mr. Kimmitt said that the company, Dubai Ports World, had been thoroughly investigated by the administration, including by intelligence agencies, and that on Jan. 17 the panel members unanimously approved the transfer.

"None of them objected to the deal proceeding on national security grounds," he said.

Mr. Kimmitt made his comments as the political furor over the ports dominated Washington, where Republicans in Congress remained in open rebellion against President Bush and the White House spent the day trying to tamp down the uprising.

An objection from any member of the interagency committee would have started, as required by law, an additional 45-day review. Such a review is being urged by governors and members of Congress.

Mr. Bush and his top aides are strongly resisting that. Even before the transfer became known, the administration's review of foreign business deals had come under criticism for not being sufficiently sensitive to national security.

In September, the Government Accountability Office, an investigative arm of Congress, said the Treasury Department, as head of the interagency committee that reviews such deals, had used an overly narrow definition of national security threats because it wanted to encourage foreign investment.

The department disputed those findings, saying that the committee had used an adequate definition and that decisions had been reached by consensuses of agencies with differing interests.

The review began in mid-October. The chief operating officer of Dubai Ports World, Edward H. Bilkey, said he and other executives met in December with Mr. Kimmitt's committee and then had numerous additional meetings before the final decision.

"There is no big deal about it," Mr. Bilkey said in an interview. "We complied with what the requirements were, and there was no problem."

Scott McClellan, the president's spokesman, said Mr. Bush became aware over the weekend of the deal, for some of the facilities in several major ports, including New York, Baltimore and Miami.

"One thing the president did, and even after all this press coverage of this transaction, was go back to every cabinet member whose department is involved in this process and ask them, 'Are you comfortable with this deal going forward?' " Mr. McClellan said. "And each and every one expressed that they were comfortable with this transaction going forward."

In a rare admission of error and in an indication that the White House might be seeking a deal with Capitol Hill to halt the furor, Mr. McClellan also said, "We probably should have briefed Congress about it sooner."

Republicans said an agreement by the White House to delay the transfer would help.

"If the president announces between now and next Monday or Tuesday that he is going to hold it for 45 days, have an investigation and consult with Congress, I think that would at least buy time," said Representative Peter T. King, a New York Republican who is a leading opponent of the new port management.

He said Speaker J. Dennis Hastert of Illinois had assured him that they "were on the same page" on halting the sale.

The White House dispatched aides to brief advisers to the Republican leadership on the rationale for the deal, and the port company retained high-powered help to deal with Capitol Hill, including former Senator Bob Dole and the lobbying firm of former Secretary of State Madeleine K. Albright.

Mr. Bush threatened on Tuesday to veto any bills to block a deal for the company to run the ports.

Lawmakers and aides said the nearly united Republican resistance in Congress was a new atmosphere for a White House accustomed to strong public support for its policies and the willingness to settle any disagreements privately. But it was not seen as a permanent break.

"Over the past five years, the president has made the right call over and over again," said Eric Ueland, chief of staff for Senator Bill Frist of Tennessee, the majority leader. "This is one time. Nobody wants to come to a giant battle over this. We want homeland security. He wants homeland security."

Democrats who joined in the call to scuttle the port transfer said they considered Congressional Republicans newcomers on port security. They began circulating voting records to show that Republicans had rejected increases in spending on port safety.

"All of the sudden, they want to act really tough," said Representative Rahm Emanuel of Illinois, chairman of the Democratic Congressional Campaign Committee. "But when it came to strengthening port security and implementing the 9/11 commission recommendations, they were nowhere to be found."

Before the administration approved the transfer from a British company, P&O Ports, Dubai Ports World had to agree to cooperate with future United States investigations, said an administration official who spoke only if granted anonymity because of the confidentiality of the agreement.

The official, confirming details first reported by the Associated Press, said the company agreed to disclose on demand records about "foreign operational direction" of its United States ports, including details on equipment, design and operations. The company does not have to keep copies of business records on American soil, where they would be subject to court orders, the official said. The report by the General Accountability Office in September included sharp criticism of the review process carried out by the Committee on Foreign Investment in the United States, the committee created in 1975 to review foreign investments that could affect national security. The report said the committee, under the Clinton and Bush administrations, had often construed national security too narrowly, looking only at such factors as the control over technology exports, classified contracts and specific derogatory information about a company.

For that reason, the report said, the committee had too rarely subjected investments to intensive scrutiny. In addition, the report said Treasury officials believed that "being the subject of an investigation may have negative connotations for a company." Since 1997, the government has investigated 8 out of 470 notifications of pending contracts.