Brouhaha Over Ports—In Troubled Waters

The article appeared as "Stopping sale of ports would risk U.S. image" in the Patriot News, Sunday, March 5, 2006.

An Arab company is poised to take over operations at six major U.S. ports—and this is causing alarm in Congress. National security, say the critics of the impending deal, will be compromised.

The ports are currently under the control of British-based P&O which is in the process of being bought by Dubai Ports World. Based in the United Arab Emirates, DPW will thus gain control of ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia .

Are the security concerns justified?

At first glance, the proposed transfer of ownership from British to Arab hands does seem troubling. Middle Eastern terrorist organizations like Al Qaeda, perverting Islam for their gory ends, have sworn undying war on the West and particularly on the United States . Governments in the region have failed to stamp out these virulent groups ( Iraq is rapidly turning into Exhibit A)—and there is rampant suspicion in the West that some countries are actively supporting their operations ( Syria and Iran are the prime suspects here). So to give control of ports in the U.S. to an Arab state-owned company raises the specter of terrorists, aided and abetted by a compliant government, smuggling weapons into the country to unleash widespread destruction.

On closer inspection, this scenario looks highly unlikely. To take over the British firm, DPW is paying $6.8 billion—not exactly chicken feed. DPW has operations in several countries— China , Malaysia , South Korea , India . Their presence in Australia will expand after the deal goes through. Will they place all this in jeopardy—the billions of dollars invested, their worldwide operations, indeed their very existence—by permitting breaches of security in American ports?

If the company were found to be complicit in any terrorist plot, the cost to the company would be catastrophic. They would lose everything, and since the company is state-owned, the UAE government would also bear the brunt of any retaliation by the U.S. and the West. And retribution, undoubtedly, would be swift and punishing—conceivably, the case for war against the UAE would garner immediate and widespread support in the West (if not in other parts of the world).

The UAE government, currently one of the most liberal regimes in the Middle East, has in recent years transformed its economy into a model for economic development: Dubai (its most well known city) is prosperous and cosmopolitan with fast-growing financial and transportation sectors.

Will the UAE government throw all this away? To support the actions of terrorists in a distant land?

Members of the U.S. Congress from both parties continue to decry the proposed takeover of the ports. They are putting pressure on the Bush administration to rescind its approval of the takeover (done, incidentally, after all normal reviews by the FBI and other government agencies).

If Bush relents and prevents DPW from taking over the ports, America 's image in the rest of the world will be tarnished. First, the perception that the U.S. employs double standards in cases of foreign ownership of its assets will become more deeply entrenched: Why was there no problem with British ownership of the ports?

Second, there will be a backlash against American companies in the Middle East . U.S. corporations ranging from Boeing to McDonald's to Citicorp will find the business environment in Arab countries to be less hospitable. The “national security” argument can easily (and as absurdly) rear its head in the Arab world: Can we trust an American bank?

The takeover of P&O by DPW—and the passage of control of the U.S. ports to DPW—should have been a relatively straightforward affair. Unfortunately, the desire of politicians to manipulate voters' emotions with facile cries of threats to national security has made the process more complicated—and unpleasant.

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