Ports of CFIUS call

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Ports of CFIUS call

By Frank J. Gaffney Jr.

February 21, 2006

The federal bureaucracy has made a strategic mistake that threatens to cost the president dearly. The question is not whether last week's ill-advised decision by the secretive Committee on Foreign Investment in the United States (known by its acronym, CFIUS, pronounced syphius) will be undone. Rather, the question is: By whom -- and at what political cost to Mr. Bush?

    In the latest of a series of approvals of questionable foreign takeovers of American interests, CFIUS has given the green light to a company owned by the United Arab Emirates (UAE) to acquire contracts to manage port facilities in New York, Newark, Philadelphia, Baltimore, Miami and New Orleans. The company, Dubai Ports World (DP World), would do so by purchasing a British concern, Peninsula and Oriental Steam Navigation Company (P and O).

    Experts have long identified America's sea ports as weak links in the chain of our homeland security. With their proximity to major U.S. population centers, expensive infrastructure vital to the regional and, in many cases, national economy and their throughput of large quantities of poorly monitored cargo, they are prime targets for terror.

    As a result, a case can be made it is a mistake to have foreign entities responsible for any aspect of such ports, including managing their docks, stevedore operations and terminals. After all, that duty affords abundant opportunities to insinuate personnel and/or shipping containers that can pose a threat to this country. Even though the company in question may not be directly responsible for port security, at least some of their employees have to be read in on the relevant plans, potentially compromising the latter irreparably.

    At least the previous foreign contractors were from Britain, a country on our side before September 11, 2001. The same cannot be said of the United Arab Emirates, whose territory was used for most of the planning and financing of the September 11 attacks. While the UAE's government is now depicted as a friend and ally in the so-called war on terror, its country remains awash with Islamofascist recruiters and adherents, who are all too willing to exploit any new opportunity to harm us.

    Since a column raising an alarm about CFIUS' decision appeared in this space last week, three new factors have come to light that compound the strategic folly of the UAE deal:

    • First, in addition to the six affected ports mentioned above, two others would also have part of their operations managed by DP World -- on behalf of none other than the U.S. Army. Under a newly extended contract, the owner of P and O will manage the movement of heavy armor, helicopters and other military materiel through the Texas seaports of Beaumont and Corpus Christi. How much would our enemies like to be able to sabotage such shipments?

    • Second, while advocates of the stealthy CFIUS decisionmaking process point to Defense Department involvement in its DP World decision, it is unclear at what level this bizarre proposition was reviewed in the Pentagon. Many top jobs remain unfilled by presidential appointees. Past experience suggests the job may have fallen to lower-level career bureaucrats who give priority to maintaining good relations with their foreign "clients," like the UAE.

    • Then, there is the financing of the DP World takeover of Peninsula and Oriental. The UAE evidently intends to raise nearly all the $6.8 billion price for P and O on international capital markets. It must be asked: Who will the foreign investors be, and might they have malign intentions toward the U.S.? If American sources of capital are sought, will the possible danger this transaction may create for this country be properly disclosed? For that matter, will the underwriters, Barclays and Deutsche Bank, reveal to prospective funders the real risk that the deal will ultimately fall through?

    In fact, that seems virtually certain now that talk radio, the blogosphere and the public have become aware of -- and white hot about -- this transaction. Members of Congress on both sides of the aisle and of Capitol Hill have made known their determination to prevent the transfer of control of U.S. ports to the UAE. In particular, Democrats like New York Sens. Hillary Clinton and Charles Schumer have been quick to seize on this issue as an opportunity to burnish their national security credentials at the expense of President Bush and his party.

    So, the question recurs: How long will it take before Mr. Bush cuts his losses? This could be accomplished in one of three ways: He could reverse the decision himself (perhaps by directing CFIUS to reconsider its initial recommendation). He could encourage and sign into law legislation barring foreign ownership or management of U.S. port facilities (akin to the rules governing other critical infrastructure). Or he could quietly encourage the UAE to do as Communist China did last year with respect to the Unocal purchase -- withdraw the offer itself, sparing the country in question (and its friends here) the embarrassment of having its behavior carefully scrutinized and its offer spurned in a high-profile way.

    Call it a Harriet Meirs moment. Politics being the art of the possible, it is time to recognize the Dubai Ports World deal is neither strategically sensible nor politically doable. It is time to pull the plug, and to reform the secretive interagency CFIUS process that allowed this fiasco in the first place.

    Frank J. Gaffney Jr. is president of the Center for Security Policy and lead-author of "War Footing: 10 Steps America Must Take to Prevail in the War for the Free World."

http://www.washtimes.com/commentary/200602...01002-9838r.htm