Further Thoughts on the Dubai Ports World Deal

Since President Bush has shown no inclination to pander to terrorists, and has kept us safe for 4 1/2 years in the face of incredible criticisms and partisan attacks, it might possibly be a good idea to support him on the UAE port terminals deal. Long after the purchase has been completed and forgotten, we will still have to figure out how to cut through the hypocracy of politicians from both sides of the aisle.

Listing to Port
By Daniel Ikenson
Published 3/2/2006 12:07:51 AM

WASHINGTON -- The firestorm over the proposed lease of certain U.S. port facilities to Dubai Ports World, a company owned by the government of the United Arab Emirates, raises several chilling questions. None has anything to do with the deal itself. It was approved in accordance with the same law and procedures followed in more than 1,500 prior cases where national security implications were assessed.

But to be extra certain, and to atone for its political maladroitness in failing to keep key congressional leaders in the loop, the Bush administration has instituted a full 45-day review by the Committee on Foreign Investment in the United States (CFIUS). Its outcome should be honored.

The chilling questions have more to do with the proclivity of certain politicians to exploit understandable American anxieties about security for their own political purposes. Do members of Congress have legitimate reasons to question the administration's efforts at protecting the homeland? Do they really believe the administration would subordinate national security concerns to other considerations? Have they no faith in an oversight process they themselves authored?

If the answer is "yes" to any of those, Americans need to hear why. Credible evidence that our security has been systematically compromised might shatter a covenant we take for granted. Despite any doubts and misgivings many of us may have about government's capacity to do things well, and regardless of our affinity, indifference, or disaffection for the Bush administration, most of us believe that the administration views national security as its paramount responsibility.

The same goes for any administration. Failure to honor the sanctity of that foremost responsibility would constitute the worst breach of trust between the people and their government. That is why we deserve to see evidence when a public official asserts or implies such a breach.

Referring to certain pledges made by DPW to make policymakers more comfortable with the deal, Sen. Robert Menendez (D-NJ) asserted that the company's "promise isn't worth the paper on which it is written." Why? The comment implies that Sen. Menendez has credible evidence that this company is untrustworthy. What is that evidence? And what are the national security implications?

Congressional detractors who have no evidence or who would answer "no" are guilty of exploiting fears or of knowing too little about port security to even begin to question the efficacy of CFIUS's endorsement of the deal. The website of Sen. Charles Schumer (D-NY) claims, "Next week control of the Port of New York and New Jersey will be handed over to Dubai Ports World..." That is patently false. Control of the ports, including security functions, has been and will remain the domain of the U.S. Coast Guard and the Department of Homeland Security.

To speak from a position of authority without understanding port security operations is reckless and misleading. Such demagoguery is worthy of stern rebuke, particularly considering the potential collateral damage caused by the hysteria.

THE BUSH ADMINISTRATION'S MIDDLE EAST policy, which some argue has been an utter failure, consists of carrots to complement the more familiar sticks. The carrots include access to the U.S. market through bilateral free trade agreements. The United States has agreements with Jordan, Morocco, Bahrain, and Oman, and is in the process of completing a deal with the UAE. None of the Arab free trade agreement partners participates in the Arab boycott of Israel. Bahrain turned its back on the boycott right after signing the agreement. The UAE would likely follow suit.

Encouraging moderate Arab states to remain moderate and to embrace capitalism and other western institutions is the quiet success of the administration's Middle East policy.

It is also threatened by reflexive political opportunism that is driving the furor over the port deal.

Maybe a debate about CFIUS, its processes, and the possibility of involving key members of Congress in decision-making is warranted. Maybe Arab investment should be held to a higher security standard than that of other would-be acquisitions. Maybe it already is.

Regardless, it is imperative that Congress and the administration get on the same page about the purpose and operation of CFIUS. As the world economy becomes even more integrated, we should expect to see more foreign acquisitions, particularly if the dollar depreciates, as many in Congress advocate. A cheaper dollar makes hard U.S. assets more attractive to foreign buyers. Let's not impede that important process with rules that are perceived as arbitrary and capricious.

Granted, matters of national security trump matters of commerce. If U.S. security would be legitimately compromised by some commercial transaction, that transaction must be prevented. So far, the investigation into the ports deal has produced no credible reasons to intervene.

Daniel Ikenson is a trade policy analyst at the Cato Institute.