Chertoff Defends UAE Port Deal

Published February 20, 2006

| FoxNews.com

Homeland Security Secretary Michael Chertoff is defending the Bush administration's review of an international shipping deal two days after one company in the Port of Miami sued to prevent an Arab-owned firm from taking over port operations.

Meanwhile, lawmakers also are considering legislation to stop foreign-owned companies from running U.S. ports.

Chertoff on Sunday said the U.S. Committee on Foreign Investment in the United States, or CFIUS, had carefully reviewed the Dubai Ports World purchase of London-based Peninsular and Oriental Steam Navigation Co., which runs commercial operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

"We make sure there are assurances in place, in general, sufficient to satisfy us that the deal is appropriate from a national security standpoint," Chertoff told ABC's "This Week."

That doesn't sit well with Miami firm Continental Stevedoring & Terminals Inc., a subsidiary of Ellery & Company Inc. Representatives from that company asked a judge to block the takeover of P&O, saying that U.S. agencies can not guarantee DP World will comply with U.S. security rules.

The deal "may endanger the national security of the United States," reads the suit filed late Friday.

DP World is owned by the government of the United Arab Emirates, a loose federation of seven emirates on the Saudi Arabian peninsula. The State Department calls the UAE an ally in the War on Terror, but critics note that the Arab nation had ties to the terrorists prior to Sept. 11, 2001, and one terrorist, Marwan al-Shehhi, was born in that country.

Opponents of the deal also argue that the FBI found that the UAE's banking system filtered much of the money used for the operational planning before the Sept. 11 attacks, and many of the hijackers traveled to the United States through the UAE. On top of that, the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist.

"It's unbelievably tone deaf politically at this point in our history," Sen. Lindsay Graham, R-S.C., said on "FOX News Sunday."

"Most Americans are scratching their heads, wondering why this company from this region now," Graham said.

Added Sen. Evan Bayh, D-Ind.: "I think we've got to look into this company. We've got to ensure ... the American people that their national security interests are going to be protected."

But Chertoff said the UAE-owned firm is well-known to the United States. Several top executives in the agency are American-born.

"We have dealt with this port operator in Dubai for years because many of our port security operations don't begin when you hit American territory; they actually begin at the port of embarkation. So we don't write with a clean slate. We have a lot of experience in general with overseas port operations when we make these decisions," the secretary said.

The two companies involved in the $6.8 billion sale agreed that U.S. government approval is required for the deal to go through. Chertoff said the review by the 12-member CFIUS, which is chaired by Treasury Secretary John Snow and involves members from the departments of Defense, Justice, Commerce, State and Homeland Security, was done in secret with no congressional oversight.

Chertoff said Congress is welcome to look into the sale in classified briefings.

"Without getting into the specifics of this particular classified discussion, I can tell you that the process is designed for Congress to be rigorous and to make sure we properly take into the account of security when we approve any transaction," he said.

Last week, seven lawmakers from both major parties and both chambers of Congress asked the Treasury to take the additional unused two weeks authorized in its 45-day review period to look more closely at the agency. The legislators said they are considering other options to expand review of the sale before the deal is complete.

Rep. Vito Fossella, R-N.Y., said he has asked House Homeland Security Committee Chairman Peter King, R-N.Y., to hold hearings on the transaction, and to get CFIUS' rationale for the decision. A Senate oversight hearing is also planned for later this month.

On Saturday, Rep. Frank LoBiondo, R-N.J., chairman of the House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee, said he will further monitor the deal to make sure DP World "complies with all U.S. port security laws and that our nation’s security is not jeopardized by this recent business merger.”

On Sunday, Sen. Robert Menendez, D-N.J., said legislation he and Sen. Hillary Rodham Clinton, D-N.Y., are sponsoring would prohibit companies owned or controlled by foreign governments from running port operation in the United States. He added that Chertoff's comments show that the administration "just does not get it" when it comes to balancing security against business interests.

"No matter what steps the administration claims it has secretly taken, it is an unacceptable risk to turn control of our ports over to a foreign government, particularly one with a troubling history. We cannot depend on promises a foreign government has given the administration in secret to secure our ports."

Sen. Chuck Schumer, one of the seven lawmakers who last week said they were looking into additional oversight of the sale, appeared Sunday in New York with family members of Sept. 11 terror victims to protest the sale.

The president "should override the agreement and conduct a special investigation into the matter," Schumer said

In Washington, Chertoff said DP World should not be excluded from operating the U.S. ports just because it is based in the UAE. DP World would not be responsible for cargo screening, which is performed by the Department of Homeland Security, but the port operator would handle security for cargo coming in and out of the port and the hiring of security personnel.

DP World has said it intends to "maintain and, where appropriate, enhance current security arrangements." The government in Dubai is also trying to lobby port officials along the East Coast, and its chief operating officer, American shipping executive Edward H. Bilkey, is expected to travel to Washington this week for meetings on Capitol Hill and elsewhere.

FOX News' Julie Kirtz and The Associated Press contributed to this report.

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