Port deal warning

Coast Guard said last year it could not gauge whether Dubai firm would provide platform for terrorists

BY CRAIG GORDON AND GLENN THRUSH
NEWSDAY WASHINGTON BUREAU

February 28, 2006

WASHINGTON - Despite repeated White House assurances that the Dubai ports deal poses no significant threat, the Coast Guard warned last year that it couldn't say whether the company involved would provide a platform for "terrorist operations" at U.S. seaports.

A significant lack of information on Dubai Ports World operations, personnel and "foreign influence" on the company raised "potential unknown threats against a large number of potential vulnerabilities," according to the December Coast Guard report.

"There are many intelligence gaps ... that preclude an overall threat assessment," it added.

The surprising revelation threatened to re-ignite controversy over the deal that the White House, Republican leaders in Congress and the company had hoped to tamp down with a compromise announced Sunday.

DP World agreed to voluntarily submit to a new 45-day security review of its deal to take over a British company's operations at six U.S. ports.

Instead, the fresh information appeared to bolster some congressional critics. Rep. Peter King (R-Seaford) had talked Sunday of holding off on introducing a bill to require Congress to approve of the deal, but now is expected to go forward this week, sources said.

In the Senate, a bipartisan group of 10 senators led by Sen. Charles Schumer (D-N.Y.) introduced a similar bill yesterday.

And Schumer's New York colleague, Sen. Hillary Rodham Clinton, said earlier in the day that she doubted she could ever support a United Arab Emirates-owned company operating U.S. ports, even after a review.

The Coast Guard intelligence report surfaced at a Senate briefing by Bush administration officials on the DP World decision to seek a new review, designed to head off a veto showdown between President George W. Bush and Republicans in Congress this week.

Sen. Susan Collins (R-Maine), a co-sponsor of Schumer's bill, revealed the unclassified assessment, then sharply challenged Coast Guard and Homeland Security department officials to explain it.

"I am more convinced than ever that the process was truly flawed," said Collins, the Senate Homeland Security committee chairwoman. "I can only conclude that there was rush to judgment and that there wasn't the kind of painstaking analysis that needed to be done."

But the Coast Guard said in a statement that the concerns addressed in the report were answered later by other intelligence agencies.

"The Coast Guard, the intelligence community and the entire CFIUS panel believed this transaction received the proper review, and national security concerns were, in fact, addressed," the Coast Guard said. CFIUS is short-hand for the Committee on Foreign Investments in the United States, a multi-agency panel that reviews foreign purchases of vital U.S. assets.

That once-obscure panel has been the center of the controversy, as critics say it sidestepped a legally mandated 45-day review of the DP World deal simply by declaring that the ports deal posed no national security threat.

At the hearing, Stewart Baker, an assistant secretary for homeland security, said the "letter of assurances" specifically addressed the Coast Guard's worries. The letter requires DP World to comply with any U.S. investigation of its operations and open its records to U.S. inspection on demand.

"We now have access to information we didn't have before. ... It's no longer a 'gap.' We can have it anytime we like," Baker said.

After the 45-day review, Bush has a chance to approve or disapprove of the deal. In the King and Schumer bills, Congress is seeking the right to have a veto over the deal.

But it appeared even that wouldn't be enough for some in Congress. Asked whether she would support the Dubai deal if the company was cleared in the probe, Clinton said, "I doubt it."

"I'm worried that they have prejudged the outcome and basically they are just throwing a bone to us," said Clinton, who favors a blanket prohibition on giving port operation contracts to companies owned by foreign countries.

Copyright 2006 Newsday Inc.