U.S. to Conduct New Review of Ports Deal

WASHINGTON – The U.S. Committee on Foreign Investment in the United States will begin a new review of a deal involving a United Arab Emirates-based company seeking to purchase a London stevedoring firm that runs commercial operations at six U.S. ports.

Congress will be back in session Monday and the controversial deal likely will be a topic of great debate.

Senate Majority Leader bill Frist, R-Tenn., said he will recommend the Senate wait for results of the broader review before acting on any legislation to delay or block the deal. Frist said he anticipates oversight hearings this week to continue to examine the agreement and any implications it may have on maritime security.

The Treasury Department will re-review the $6.8 billion purchase by Dubai Ports World of Peninsular & Oriental Steam Navigation Co., as soon as the request is filed. CFIUS earlier investigated the deal but found no reason for national security concerns will reconsider it.

"DPW has asked for a CFIUS review, including the 45-day investigation under the Exon-Florio amendment, based on a restructured transaction that the company intends to file with the Committee. Upon receipt of the new notification, CFIUS will promptly initiate the review process and fulfill DPW's request for a full investigation," said a Treasury Department statement released Sunday. The Exon-Florio amendment requires a full 45-day review when national security interests are at stake.

DP World sought a new review of security risks in an attempt to put U.S. lawmakers at ease over the deal. Beyond the length of the review, which will include significant congressional oversight, DP World has also promised to create a U.S. subsidiary that would operate independently of executives in Dubai until May 1 or when the deal is done, whichever comes sooner.

"We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States," Edward H. Bilkey, the company's chief operating officer, said Sunday.

During the expanded review DP World would appoint Robert Woods, a British citizen operating out of London with authority over the U.S. ports during the review. Woods is the CEO of P&O, which DP World purchased, pending approval of the U.S. government since P&O runs commercial operations at ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. P&O North America's Web site shows operations in 15 other U.S. ports as well.

An American citizen would serve as the chief security officer during this period, the company said.

The company's offer is aimed at quelling opposition in Congress.

Some senators, led by Charles Schumer, D-N.Y., said they still intend to introduce legislation Monday to block the deal pending the 45-day review and to require congressional approval before DP World can conduct business in the United States. Under existing law, Congress effectively has no role considering deals. Even Frist had proposed halting the deal until security issues could be further probed.

Schumer said Monday he is skeptical of CFIUS' ability to evaluate the deal, saying the government panel has been more focused on economic development rather than national security.

"The bottom line is this group did a very cursory review" when it approved the deal, Schumer said on ABC's "Good Morning America." "I'm a little dubious of this review, but let's wait, let's see the report and see what they say."

Rep. Peter King, R-N.Y. chairman of the House Homeland Security Committee, said the proposal appears to offer the more intensive investigation that many lawmakers had sought and could be enough to put off an immediate vote in Congress that might have blocked the ports deal.

"If it is what it appears to be, to me there's no need at this time to go forward" with emergency legislation, King said before the White House accepted the plan. "Obviously we have to hold it in reserve and see what happens."

Earlier in the day, Frances Fragos Townsend, the White House homeland security adviser, told "FOX News Sunday" that the administration was inclined to accept the deal.

"We believe that anything that permits there to be additional time so that more people can learn the facts as we learned them is to the better, because once people understand that security is never going to be outsourced, it will continue to be handled by the men and women of the Coast Guard and customs and border patrol, and that this is really a commercial deal where the security concerns have been addressed. That's a good thing, and people will be more comfortable with it," Townsend said.

The ports deal is still clouded in controversy, however. Republican and Democratic lawmakers alike want to know why the Bush administration would allow an Arab company to operate major U.S. ports.

It "would have to be shown that there is nobody in the UAE [who] has ties to the Taliban or to Al Qaeda, no one within this company has ties to Al Qaeda or to the Taliban," King said on "Meet the Press."

"Remember this was only 4 1/2 years ago that they were very close to bin Laden, they were supporting the Taliban and unless there has been a complete transformation, I have real concerns," he added.

Critics of the deal have cited the UAE's history as an operational and financial base for the hijackers who attacked New York and Washington on Sept. 11, 2001. Furthermore, the United States raised concerns with the UAE several years ago about possible ties between officials and Usama bin Laden, according to the report by the independent commission that investigated the attacks.

Also, the UAE was one of only three countries that recognized the Taliban government in Afghanistan before its 2001 overthrow by U.S.-led forces.

"It reflects the fact that the 9/11 commission has given this administration failing grades on port security, failing grades on homeland security, and that's what you're seeing underneath all this," Sen. Joe Biden, D-Del., told "FOX News Sunday."

The White House says misconceptions persist about Dubai. Releasing a fact sheet Saturday to bolster its case, the White House says it's a myth the UAE is a "haven for terrorists," and calls the Arab nation a friend and ally.

"The UAE has worked with us to stop terrorist financing and money laundering, including by freezing accounts; enacting aggressive anti-money-laundering and counter-terrorist-financing laws and regulations; and exchanging information on people and entities suspected of being involved in these activities," the fact sheet argues.

"We have more U.S. Navy ships in UAE ports than in any other port outside the United States. The UAE services our ships while in port, refueling them, providing them with food and water and doing small repairs, among other services," it says.

Schumer said DP World's willingness to submit to a lengthier review was "certainly a significant step forward, but the devil is in the details."

"If the report is completed and kept secret and only given to the president, who has already come out for the deal, it will not reassure Americans," Schumer said.

He said if lawmakers are allowed to examine security concerns and give their approval, then "I don't see any need for legislation or further conflict."

If the deal is stopped, DP World would retain its right to sue, said one person familiar with the proposal. Asked whether the company faces liability from shareholders, Sen. John Warner, R-Va., a supporter of the deal, said: "I don't want to go all the way down that road."

FOX News' Kelly Wright and The Associated Press contributed to this report.