A 'cooling off' delays ports deal

Pressured by Congress, a Persian Gulf company agrees to hold off on contract to take over harbors

BY GLENN THRUSH
WASHINGTON BUREAU

February 24, 2006

WASHINGTON -- The White House has pressured a state-owned company from the United Arab Emirates into delaying its contract to run six East Coast ports in order to buy time needed to quell a Republican revolt against the $6.8 billion deal.

Dubai Ports World, which was to take over the terminals in March, offered lawmakers a "cooling off" period late yesterday after Congressional leaders demanded more time to investigate claims UAE leaders haven't done enough to fight terrorism in their country.

It came on a day when White House political guru Karl Rove signaled he's open to delaying handover of Port New York / Newark and five other harbors to the company.

Yesterday, as Bush administration officials were grilled during a hastily arranged Senate briefing, Rove hinted that "procedural hurdles" might delay the contract until the end of next week. More time could also be granted to allay legislators' fears that terrorists could infiltrate DPW, he told Fox News.

"There are some hurdles, regulatory hurdles, that this still needs to go through ... that are going to be concluded next week," he told Fox News. "There's no requirement that it close, you know, immediately after that. But our interest is in making certain the members of Congress have full information about it, and that, we're convinced, will give them a level of comfort with this."

With some in Dubai claiming that opposition to the port deal smacks of racism, Secretary of State Condoleezza Rice visited UAE yesterday, telling officials, "We have a really strong ally in the UAE."

Back home, Bush struck a similar tone, telling reporters in Washington, "People don't need to worry about security."

Still, Department of Homeland Security officials were so concerned about security threats, they raised a red flag during discussions about the DPW contract earlier this year. They gave approval when the company assured U.S. officials they would beef up security measures and improve access to employee personnel records and other documents, according to a source familiar with the process.

Democrats and Republicans have accused the administration of ignoring legal requirements that require a 45-day investigation into deals with foreign companies if such contracts could have an impact on national security. GOP leaders in both houses have said they'll pass bills requiring the review if Bush doesn't derail the ports deal himself.

The Port Authority of New York and New Jersey, which is responsible for shipping terminals, joined that chorus yesterday, threatening to sue to stop implementation of the Dubai deal.

House Homeland Security chairman Rep. Peter King (R-Seaford), co-sponsor of a bill that would require a full 45-day review of the contract, called Rove's statements "promising" but vowed to push ahead with his legislation.

"I don't believe the White House wants this to come to a legislative fight on the floor of the House or the Senate," said King, who said he hasn't seen such bipartisan, bicameral hostility to the White House since the 1993 "Black Hawk Down" firefight in Mogadishu raised questions about the Clinton administration's military policy.

Homeland security, treasury and State Department officials tried to allay those concerns during a highly unusual briefing before four members of the Senate Armed Services Committee yesterday.

The hearing took place while most senators were back in their districts. It ended with a rare news conference in the committee room where reporters were allowed to quiz administration officials.

Committee Chairman John Warner (R-Va.) questioned the Jan. 17 approval of the contract by a Bush-appointed panel, arguing that he should have been consulted as the Senate's point man on national defense.

Sen. Hillary Rodham Clinton also attacked the contract, saying the administration flouted federal law requiring a 45-day investigation on contracts that could affect national security.

The process was "a failure of judgment" because officials "did not alert the president, the secretary of the treasury and the secretary of defense" about potential threats, she said.

But Deputy Defense Secretary Gordon England defended the contract, saying, "This review was definitely not casual or cursory."

A DPW spokesman didn't return calls for comment.

Copyright 2006 Newsday Inc.