Port deal off; effect on future unclear

Dubai firm gives in; GOP says issue dead

By Bill Nichols and Andrea Stone
USA TODAY 

WASHINGTON — A decision by an Arab-owned company Thursday to drop its bid to take over some operations at six U.S. ports should douse an election-year political firestorm that has raged over the issue, White House aides and GOP leaders said.

“It does provide a way forward and resolve the matter,” White House spokesman Scott McClellan said. Added Senate Majority Leader Bill Frist, R-Tenn., “This should make the issue go away.”

But effects of the three-week controversy could linger in the form of political consequences in congressional races later this year or a chill in U.S.-Arab economic and diplomatic relations. “It's been a case study in the administration's incompetence,” said Sen. John Kerry, a Massachusetts Democrat.

Rep. Darrell Issa, R-Calif., a Lebanese-American, predicted the damage from the quashed deal “will reverberate in the Arab world. … Dubai was found guilty simply for being an Arab or Muslim nation before any of the facts were known.”

Critics of the $6.8 billion deal welcomed the move by DP World, based in Dubai in the United Arab Emirates, but said they wanted to see details.

The firm's top executive, H. Edward Bilkey, released a statement saying that to preserve the “strong relationship” between Washington and the Emirates, DP World would “transfer fully” its U.S. operations to a United States entity.

It was unclear how the company would handle the transfer. Bilkey's statement said there was an understanding that the company would have “time to effect the transfer in an orderly way” and that it “would not suffer economic loss.”

“If it's a total divestiture, it's a solid victory for the American people,” said Rep. Pete King, R-N.Y., an outspoken opponent of the deal. “It's over. Everything's over, and we can go forward.”

Sen. Charles Schumer, D-N.Y., another prominent critic, said, “We need to make sure that all U.S. operations are totally removed from the United Arab Emirates and Dubai Ports World control.”

Critics of the deal said Dubai was complicit in the 9/11 attacks and the deal presented a security threat to the United States. The Bush administration said Dubai has been a staunch U.S. ally against terrorism.

Sen. John Warner, R.-Va., announced the DP World decision on the Senate floor and said the company called him last weekend to begin discussions about a way to stem the furor. Warner said he did not know whether President Bush was involved in negotiations.

The announcement came hours after Republican congressional leaders told Bush they had the votes to override any veto of legislation blocking Dubai's management of American port operations, according to two congressional aides with knowledge of the meeting. The aides asked not to be quoted due to the sensitivity of the conversation with the president.

Bush had threatened to veto congressional efforts to kill DP World's acquisition of the London-based company P&O Ports North America. P&O has been running operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. Dubai pulled out a day after the House Appropriations Committee voted 62-2 to block the deal. The Senate voted 51-47 Thursday to clear the way for a vote on the deal.