WASHINGTON – President Bush was unaware that a controversial deal to sell shipping operations at six major U.S. seaports to a United Arab Emirates-owned firm was in the works until it was approved by his administration, the White House said Wednesday.
After Bush defended the deal Tuesday and threatened to use his veto power against any congressional legislation aimed at stalling it, the administration also said that it should have briefed Congress sooner about the transaction, which has triggered a major political backlash among both Republicans and Democrats.
"He became aware of it over the last several days," White House spokesman Scott McClellan told reporters Wednesday. Asked if Bush did not know about it until it was a done deal, McClellan said, "That's correct."
"The president made sure to check with all the Cabinet secretaries that are part of this process, or whose agencies or departments are part of this process," the spokesman said. "He made sure to check with them — even after this got more attention in the press, to make sure that they were comfortable with the decision that was made.
"And every one of the Cabinet secretaries expressed that they were comfortable with this transaction being approved," McClellan said.
The Senate Armed Services Committee will get a briefing from Defense Department officials on Thursday afternoon about the decision by a 12-member government panel to approve the sale of London-based Peninsular and Oriental Steam Navigation Co., which runs commercial operations at the six U.S. ports, to Dubai Ports World, a company owned by the United Arab Emirates.
In announcing the briefing, Committee Chairman John Warner, R-Va., said Wednesday he met with Defense Secretary Donald Rumsfeld, Deputy Secretary Gordon England, and Joint Chiefs of Staff Chairman Gen. Peter Pace at the Department of Defense a day earlier to discuss DP World's acquisition of P&O.
Warner said that while it's important to ensure that any foreign acquisition doesn't threaten U.S. national security, "we must also recognize the importance of making fair and objective decisions in working with our allies, especially those which are actively supporting the coalition of nations engaged in fighting the global War on Terror."
Warner said the UAE "has played a key role" in support of the War on Terror by providing logistical assistance to the U.S. Armed Forces in Afghanistan and Iraq, particularly through docking support for naval ships and providing airfields for the U.S. Air Force.
Warner's comments came after the White House went on the offensive in support of the pending sale, which will lead to DP World's owning the contract for operations in New York, New Jersey, New Orleans, Baltimore, Philadelphia and Miami.
On Tuesday, President Bush said objections to the deal are unfair, and DP World, the 7th largest international port operator in the world, deserves to be judged by the same rules as the British-owned P&O.
"I think it sends a terrible signal to friends around the world that it's OK for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world can't manage the port," Bush said.
Bush said he's not sure about the need for congressional briefings on a company whose record is well established and who he called an ally in the War on Terror.
"I can understand why some in Congress have raised questions about whether or not our country will be less secure as a result of this transaction. But they need to know that our government has looked at this issue, and looked at it carefully," he said.
Speaking to reporters on Wednesday, Treasury Secretary John Snow said failing to let the transaction go through would send a terrible message overseas.
"The implications of failing to approve this would be to tell the world that investments in the United States from certain parts of the world aren't welcome," Snow said following a speech in Connecticut to a fuel cell manufacturer.
But Sen. Robert Menendez, D-N.J., who is introducing legislation to prevent foreign governments from owning port operations in the United States, said the fact that Bush was on the outside of the process until this week shows that the process if flawed.
"There is a big difference between a foreign company and a foreign government controlling operations at our ports, and the administration should be straight with the American people about that difference," he said in a statement.
Presidential adviser Dan Bartlett said that security for the ports will remain with the United States.
"The physical security of the ports is at the charge of the Coast Guard. The actual cargo that comes in on the ships, is ... charged to the United States Customs Service. So it's critically important for America to understand that doesn't change — not today, not tomorrow, not next week, not six months from now. They are in charge of the security of our ports," Bartlett said.
"The country in question has been a strong partner in the War on Terror. They are helping us cut of financing. They are working side by side with military. They are sharing intelligence. If we are going to win this ... we have to be adding partners in the Middle East, not subtracting," he added.
Dennis Rochford, president of Maritime Exchange for Delaware River and Bay, told FOX News that DP World, like P&O, would function as terminal operators or stevedoring companies. They load or offload cargo. They are not responsible for port security. As a business or a vendor, they must operate by security rules already in place and must comply with port facility security plans submitted to, approved and enforced by the Coast Guard.
"If you have a problem with port security as it is, and think the regulations should be changed, then you should take it up with the entire maritime system. But using this company as a scapegoat is pushing the envelope," he said.
Rochford argued that DP World is "extremely well-respected" internationally for its operations, and if the United States relied on American ships and port companies to run the shipping industry, the ports would shut down.
"2,700 ships come up the Delaware River each year; 2,500 are flying foreign flags," he said, explaining that the United States dropped out of shipping operations by the 1970s as international consolidations increased.
Strength in Opposition
To assuage concerns, the administration has disclosed some assurances it negotiated with Dubai Ports. It required mandatory participation in U.S. security programs to stop smuggling and detect illegal shipments of nuclear materials; roughly 33 other port companies participate in these voluntarily. The Coast Guard also said it was nearly finished inspecting Dubai Ports' facilities in the United States.
A senior executive from Dubai Ports World pledged the company would agree to whatever security precautions the U.S. government demanded to salvage the deal. Chief operating officer Edward "Ted" H. Bilkey promised Dubai Ports "will fully cooperate in putting into place whatever is necessary to protect the terminals."
Bush on Tuesday brushed aside objections by House and Senate leaders, both Democrat and Republican, that the $6.8 billion deal could raise the risk of terrorism at U.S. ports or allow terrorists to slip into the country unnoticed. He said he will object to any legislation that is offered to stop the deal.
"There's a mandated process we go through. ... They ought to listen to what I have to say to this. I'll deal with it with a veto," Bush told reporters after an unusual decision to call media aboard Air Force One to the airplane's conference room.
But the opponents of the sale say they can count enough votes in Congress to override a veto.
"I will fight harder than ever for this legislation, and if it is vetoed I will fight as hard as I can to override it," said Rep. Pete King, R-N.Y., chairman of the Homeland Security Committee. King and Democratic Sen. Charles Schumer of New York said they will introduce emergency legislation to suspend the ports deal.
"This deal doesn't pass the national security test," said Rep. Jim Saxton, R-N.J., chairman of the House Armed Services Terrorism, Unconventional Threats and Capabilities Subcommittee. "I think it's a mistake. If necessary, Congress should act independently of the president. Frankly, I think we can override a veto. We have more than enough votes to do it."
Menendez urged his colleagues to force Bush to wield his veto, which Bush — in his sixth year in office — has never done. "We should really test the resolve of the president on this one because what we're really doing is securing the safety of our people."
Menendez added that the UAE may be an ally now, but that doesn't mean their support is guaranteed.
"The administration says that the United Arab Emirates is an ally. Fine. But we also supported Saddam Hussein at one time and the reality is that it became one of our biggest nightmares," he told FOX News.
But Sen. Joseph Biden, D-Del., said the bipartisan opposition to the deal indicated "a lack of confidence in the administration" on both sides. "Sure, we have to link up with our Arab friends but ... we want to see and those in Congress want to know what ... safeguards are built in," Biden said on ABC's "Good Morning America."
In a break from most lawmakers, Sen. John McCain, R-Ariz., said the public and Congress should not rush to judgment.
"The president's leadership has earned our trust in the War on Terror, and surely his administration deserves the presumption that they would not sell our security short. Dubai has cooperated with us in the war and deserves to be treated respectfully," McCain said, adding that due diligence is necessary, but a conclusion about the sanctity of the deal shouldn't be reached before lawmakers have all the pertinent facts.
"Until then, all we can offer is heat and little light to the discussion," McCain said.
Lawmakers from both parties have noted that some of the Sept. 11 hijackers used the United Arab Emirates as an operational and financial base. In addition, critics contend the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist.
CFIUS approved the sale last Monday and Bush has until March 2 to decide whether to reject it. Without action, the deal will go into effect automatically. Lawmakers have asked him to delay approval until the multi-agency task force can take a closer look at the sale.
CFIUS is headed by Treasury Secretary John Snow and comprised of members of the departments of State, Justice, Commerce, Defense and Homeland Security reviewed the transaction and said it posed no national security threat.
On Wednesday, Sen. John Kerry, D-Mass., wrote Snow asking him to disclose how CFIUS concluded that approval should be granted, suggesting that CFIUS "approved the sale as expeditiously as possible, without even using the additional 45 day investigation process that was clearly warranted under the circumstances."
Kerry also said that ties between the Bush administration and DP World raise suspicions about the basis for approval. For instance, CSX rail corporation, of which Snow served as chief executive officer, sold its port operations to DP World in 2004. Moreover, David Sanborn, the president's nominee to be head of the U.S. Maritime Administration headed DP World's operations for Latin America and Europe.
"In light of these connections, Congress needs to learn more about the relationship between CFIUS members and DP, and whether Administration officials could have unduly influenced CFIUS's approval process," Kerry wrote.
FOX News' Trish Turner and Kelly Wright and The Associated Press contributed to this report.