UAE Firm Struggles to Run Ports Against U.S. Opposition

Executives at Dubai Ports World are intensifying a public relations effort this week as lawmakers ratchet up protests against the Bush administration over allowing the United Arab Emirates-owned firm to run six U.S. ports.

The government in Dubai will lobby port officials along the East Coast, and DP World's chief operating officer — American shipping executive Edward H. Bilkey — is expected to travel to Washington this week for meetings on Capitol Hill and elsewhere.

Michael Seymour, president of the North American arm of Peninsular and Oriental Steam Navigation (P&O), the company DP World wishes to buy in order to run the six ports, said in a statement that the London-based P&O "is itself a foreign-owned terminal operator that has long worked with U.S. government officials in charge of security at the ports to meet all U.S. government standards, as do other foreign companies that currently operate ports in the United States."

"We are confident that the DP World purchase will ensure that our operations continue to meet all relevant standards in the U.S. through ongoing collaboration between the port operators and American, British, Australian and port security officials throughout the world," Seymour said.

Lawmakers are upset that P&O, which runs 100 ports in 19 countries, is being purchased by DP World with the approval of the U.S. Committee on Foreign Investment in the United States (CFIUS), a 12-member panel chaired by Treasury Secretary John Snow and comprised of members of the departments of State, Defense, Justice, Commerce and Homeland Security.

P&O currently runs commercial operations in the ports of New York, New Jersey, New Orleans, Baltimore, Philadelphia and Miami.

Some lawmakers are considering legislation to stop the deal. Sens. Robert Menendez, D-N.J., and Hillary Rodham Clinton, D-N.Y., are sponsoring a bill that would prohibit companies owned or controlled by foreign governments from running port operations in the United States.

"What people lose sight of in this particular takeover is that this company is owned by the government of Dubai and, therefore, that brings a whole different dimension to it. I just don't think that the ports of the nation ... that go uninspected can be subjected to the foreign operation by a government of a foreign country, especially one that has this history," Menendez told FOX News, adding that the ports in New Jersey and New York supply 185,000 jobs and $25 billion of economic activity.

Menendez said the U.S. government only has until March 2 to act. That's the deadline for Bush to overrule CFIUS on the decision.

"We can turn it around if we get the administration to understand this is not in the national security of the United States. ... So we hope the president will act. And if not, I hope that when the Congress goes back to session in a week it will act before we ultimately get to the point that this deal goes through," he added.

National Security Danger?

On Sunday, Homeland Security Secretary Michael Chertoff defended CFIUS' review of the international shipping deal, saying the panel had done due diligence, even thought it had been done in secret with no congressional oversight.

"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. On Friday, representatives from that company asked a judge to block the takeover of P&O, saying that U.S. agencies cannot 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.

It also doesn't jibe with Baltimore Mayor Martin O'Malley, who said Monday that he is going to rally other mayors in cities affected by the deal to block the transfer of port operations to DP World.

The idea is "reckless, outrageous and irresponsible," O'Malley said, adding that Chertoff was wrong to suggest that "assurances" are in place to prevent threats to national security.

Republican Govs. George Pataki of New York and Robert Ehrlich of Maryland also voiced doubts about the sale.

"I have directed the Port Authority of New York and New Jersey to explore all legal options that may be available to them in regards to this transaction," said Pataki, who is still in the hospital recovering from an appendectomy.

"We needed to know before this was a done deal, given the state of where we are concerning security," Ehrlich told reporters in the State House rotunda in Annapolis.

The state of Maryland is considering its options, up to and including voiding the contract for the Port of Baltimore, Ehrlich said, adding: "We have a lot of discretion in the contract."

Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee, also said he's not certain the UAE firm will live up to national security rules for running U.S. ports. He added that the rules themselves are not as specific as they could be, and CFIUS was not as tough as it should have been.

"They didn't do an in-depth investigation. If any of us were nominated to be, let's say, some Cabinet post in the government, we'd be subjected to incredibly intense scrutiny. Nothing like that happened with this company," King told FOX News.

King acknowledged that the ports have been run by a foreign company since 2000, when no American firms bid on the open contract to run the ports.

"As of now there are very few American companies involved" in port operations, he said. "The reality is, it's very tough to get American companies that actively involved."

"What creates the problem now is that the British company is being taken over by the company from United Arab Emirates," he added.

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 two of the terrorists, Marwan al-Shehhi and Fayez al-Hamadi, were 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."

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 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.

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.”

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."

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