BNN provides English-language US and world news, analysis and opinion from all over the Internet. We strive for high standards, ethical behavior, and the presentation of multiple responsible points of view.
|
Get More Traffic For Your Blog! Blog Explosion brings hundreds of interested visitors to your blog - without costing you a cent. BNN News Archive Page |
Friday, February 24, 2006
Enough demagoguing on the Dubai ports transaction As I see it, there are 3 basic areas of analysis for the issue: Security, politics, and economics, with the latter two being divisible into domestic and international. I’ll offer a brief take on each category as it relates to the current situation. [For those of you who have been living under a rock, the story is about Dubai Ports World (“DP”) a Dubai (United Arab Emirates) government-owned entity buying P&O, a British company which operates part of 6 major US ports, as well as parts of other ports around the world. The controversy comes primarily from security concerns due to the UAE’s being an Arab Muslim country, home to two of the 9/11 hijackers, and one of only three countries which recognized the Taliban as the government of Afghanistan.] SECURITY: Port security is the area getting the real attention throughout this debate, with the theory being that it would be easier for a radical Muslim, or at least a sympathizer, to infiltrate an Arab corporation and gain access to high-level information about port operations. While it is probably safe to say that there is little if any likely security benefit in this deal, the risks seem overstated by those opposed to the deal. Several factors are important to remember: 1. The US Coast Guard and other government agencies are now and will continue to be in charge of port security, 2. DP is simply buying a British company that already runs the port operations in question. In fact, the operations are just a part of the total operations of any of the ports, each of which has several other foreign companies performing these same functions; there are very few American companies in this business. 3. The actual operations on the docks will still be by American stevedores and longshoremen. It’s not as if there will suddenly be hundreds of Arabs working the giant cranes. 4. Maybe most importantly, this deal had to pass muster with several US government agencies, each of which would be scared to death of approving a transaction which could be said to have lowered our national security. According to the Wall Street Journal: “Among other things, DP World agreed to accept mandatory security screening at port facilities in Dubai and to embrace tighter security practices along the "supply chain" operated by London-based Peninsular & Oriental Steam Navigation Co. U.S. officials also will have access to company records -- without subpoena -- and background information on DP World employees and managers working in the U.S. The assurances lock in requirements that had previously been only voluntary commitments on the part of DP World and P&O. I acknowledge that it must be easier for an enemy of the US to infiltrate operations in an Arab company than a company from elsewhere, although given what is going on with British Muslims having P&O run port operations doesn’t give me great comfort either. While conceding it is hard to see an argument for this deal strengthening our security, it is nevertheless nearly as difficult to see it making us more vulnerable. POLITICS – DOMESTIC: This is the only real negative for the deal. Many have spoken of President Bush’s approach to the issue as “tone deaf”, and that is certainly true. Although he is probably right on the facts, it was a huge political blunder to present it as a fait accompli and then to threaten his first ever veto on something like this. Bush has given the Democrats their first real chance to appear more concerned about security than he is, and he has made it nearly impossible for most Republicans to back him up. Unfortunately for Bush, he was not told about the deal until government agencies had already approved it. Indeed, it seems that many in the highest levels of government who might have been expected to know about the review of the transaction were not in the loop until very late. Another negative for Bush is the fact that a former Dubai Ports World executive, David Sanborn, was recently named to head the US Maritime Administration, meaning that he would then have oversight of his former employers. After the Mike Brown/FEMA fiasco and the Harriet Miers blunder, Bush can scarcely afford the appearance of even more cronyism or appointment incompetence. Executive branch employees involved in the review should have gotten the upper levels of the administration involved early on so they could warm the country up to the idea. Instead by letting the media break the story in their own way, Congress and voters have been bombarded by misleading information and political demagoguery which does no good for anyone but Democrats and those who hate the USA. POLITICS – INTERNATIONAL: Blocking this deal would be a major mistake for international relations. It comes down to two things: 1) It shows America as anti-Arab rather than anti-terrorist, particularly given DP’s reputation as one of the most efficient port operators in the world, costing us the moral high ground in the battle for hearts and minds in Iraq and elsewhere, and 2) most importantly, it would cause any potential ally in the war on terror (or any other war) to wonder what the potential benefit is of cooperating with the US, especially if that is politically difficult for them domestically. Dubai Ports seems to have jumped through many US government hoops to get this approval. Turning back this deal now would demonstrate that we are willing to change rules in the middle of the game…meaning we should then expect others to do the same to us. ECONOMICS – DOMESTIC: I see two issues here, although the domestic economic effects are less important than the other categories discussed in this note. First, DP is known for very efficient port operation. This helps, albeit marginally, to keep down the costs of goods coming into the US via DP-operated ports. Second, if this deal is scuttled because of political considerations, it will dissuade other foreign companies from bidding for American companies, limiting (again, marginally) potential choices and gains for shareholders and investors. Given the large and growing percentage of Americans who own stocks either directly or indirectly, American policy should aim at maximizing American wealth. The DP deal is a fair example even though in this case the target company was British: Dubai’s original bid of 443 pence per share was topped by a Singapore company’s bid of 470p, which Dubai came back and beat with a bid of 520p. The fact that there were two companies instead of one involved in the bidding increased the value to P&O shareholders by over 17%. ECONOMICS – INTERNATIONAL: If ever there were an obvious opportunity for trade retaliation, this is it. Dubai is a place of huge economic opportunity for entrepreneurial companies. (In fact, I own stock in a small company which is just now opening an office in Dubai.) In general, one might expect an international fallout from disillusioned countries whose companies do not feel free to get involved in the US economy. These countries will make it difficult or impossible for American companies to gain a foothold in their economies…and why shouldn’t they? The international economic ramifications from a political attack on this deal could be enormous and very long-lived. Another major problem with blocking this deal is that it reinforces Congress’ views of their own power to alter economic transactions because of political considerations. Given that DP’s role has almost nothing to do with port security, what is to keep some nativist politician from arguing against Emirates Airlines being allowed to land in the USA? The security risks are (in my opinion) roughly similar. On one hand, it is hard to imagine a particular airline (especially one with a great reputation) being blocked from the US, it is quite easy to imagine an opportunist politician making the suggestion. Let me be clear about the argument I am NOT making. Some on the left and some anti-Iraq-war libertarians claim that the furor about this deal is simply racial or ethnic profiling moved into the economic sphere. I state for the record that I support profiling, whether racial, ethnic, or any other sort that is statistically rational and likely to reduce crime, violence, etc. All the 9/11 hijackers were Muslim Arab men, and the US should not be ashamed about paying more attention to Muslim Arab men as potential security risks. On the other hand, it must be possible for an Arab person or company to demonstrate to a reasonable degree of certainty that he/it is not our enemy and deserves an opportunity to do business in and with the USA. The bottom line is that it is inconceivable for this deal to have been approved without various government agencies (who are notoriously risk-averse) being convinced that it was not a security risk. The political demagoguing is predictable. In another example of political clumsiness, the President has opened that most inviting door to people on his left and his right. At the end of the day, the deal will probably go through and it should. But it need not have been this difficult or controversial. Congress should not legislate to block this deal, though they probably will. It would be a sad commentary on the Bush presidency if this is the cause of his first-ever veto (primarily because it would highlight all the things he should have vetoed before, but that’s another story….) Beyond that, the only thing which causes me concern about this deal and makes me wonder if my position is wrong is that Jimmy Carter also supports the transaction. Blogger News Network is advertiser-supported, and your visits to our advertisers help BNN to meet its expenses. Help keep us afloat! posted by Rossputin at 10:00 AM |
Subscribe to BNN and get a daily bulletin of all our news postings. Interested in writing for BNN? Want information on our news service? Contact The Editor Writing for BNN BNN Editorial Policies Previous Posts
|
1 Comments:
It is depressing to see so many people go off half-cocked, misinformed, and utterly emotional. And, therabove, with no regard to any consequences as to world opinion. What happened to the old French proverb "one washes one's dirty linen at home" ?
It does not really matter who, even remotely, leases harbour real estate. The labour and management remains exactly the same.
What REALLY matters is our security and no one is addressing the subject. What we need - who ever runs the wharfs - is for Home Land Security to step up to the plate by :
-1)Organizing total gouverment background checks on everybody that works in or around a harbour (just like for airports) and not leaving that up to the individual tenants.
-2) Passing every container through a drive-by radioactivity detector - they exist already.
-3) Have the Coast Guard check every incoming boat AT SEA to check out the crew against a "undesirable" data base,
physically. Just like in WWII. And stopping any boat from approaching into our territorial waters if they have any doubts.
And because none of these very elementary steps that are being debated since 9/11 are taken, one can suspect that this whole issue is a smoke screen set up to distract from the fact that the basic, elementary, security steps are still not implemented.
There may be millions of containers, but there are only a few thousand ships, and slipping an offensive one through our non-existing security would be a very tempting way to sow mayhem and chaos.
Post a Comment
Links to this post:
Create a Link
<< Home