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INITIAL HILL REACTION MUTED TO NEW DUBAI ACQUISITION
by Jacob Freedman
U.S. Senate Committee on Banking, Housing, and Urban Affairs
Apr 28, 2006 - Congressional Quarterly - The White House announced Friday that President Bush has approved another sensitive U.S. acquisition by a Dubai-owned company, but its careful handling of the review appears to have averted the kind of public and congressional backlash that sank the DP World ports transaction.

The acquisition of British Doncasters Group Ltd. by Dubai International Capital was subject to a full 45-day investigation by the Committee on Foreign Investment in the United States (CFIUS). The administration notified several congressional committees when it began the investigation and briefed them on its details.

In contrast, approval of DP World’s acquisition of a British terminal operator with port operations in the United States occurred without a detailed, 45-day security investigation. Congress and senior administration officials were unaware of the deal until it was reported by the news media.

After a public uproar, DP World agreed to sell off its U.S. operations in the face of fierce congressional opposition.

Doncasters has several manufacturing plants in the Georgia, Connecticut and other states that make precision parts for aerospace and other industrial uses, both civilian and military.

“This was a transaction that was thoroughly reviewed and closely scrutinized,” White House Press Secretary Scott McClellan said Friday. “The committee recommended approval of the transaction after closely scrutinizing it and concluding that it would not compromise our national security.”

McClellan said that as part of the deal’s approval, Dubai International Capital signed a binding agreement that it would maintain uninterrupted supplies to the Department of Defense.

A leading critic of the administration’s handling of the DP World acquisition, Sen. Charles E. Schumer, D-N.Y., said in a statement Friday morning that he would not oppose the decision to approve the acquisition unless new information comes out.

“There are two differences between this deal and the Dubai Ports deal. First, this went through the process in a careful, thoughtful way; and second, this is a product, not a service, and the opportunity to infiltrate and sabotage is both more difficult and more detectable,” Schumer said.

But some members still expressed concerns. Rep. John Barrow, D-Ga., whose district includes a Doncasters plant, called on the president to release the results of the CFIUS investigation.

“The president wants us to trust that the right decisions are being made for the right reasons, and that we’re not compromising our national security in the interests of foreign investment. But as President Reagan said, ‘trust, but verify,’” Barrow said.

Congressional leaders have said that the CFIUS process needs to be made more transparent, with a greater role for Congress.

The Senate Banking, Housing and Urban Affairs committee approved a measure on March 30 that would overhaul the foreign investment review process. On the House side, Majority Whip Roy Blunt, R-Mo., said Thursday that he will introduce a bill by Memorial Day.

Richard C. Shelby, R-Ala., chairman of the Senate committee, said in a statement Friday that he was “encouraged to see that the appropriate process was followed by CFIUS” in the Doncaster transaction.

But he said he remains “committed to continue to press for an overhaul of CFIUS to bring accountability, transparency and confidence to the process.”
 
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