Ports of No Return
Is the Dubai Fiasco the Official Unraveling of the Bush Administration?
Recently we had drinks with some New York friends in South Pointe Park at Smith & Wollensky, the restaurant that might have the best water location of any spot on the Beach. While there, two enormous cruise liners and one cargo tanker laboriously made their way past. Normally, the sight of those ships would have been the cause for much tourist admiration. But on this evening it was different, as much of our conversation had been about the “war on terror.” One of our friends had recently retired as an attorney in the Justice Department, another had done duty in the State Department, and we were busy getting the latest scoop about what was really happening in our nation’s capital.
“Only 35 percent of all containers coming into the country even get a rudimentary radiation screening,” remarked our Justice friend, pointing to one of the ships. “We let two-thirds go by without even attempting to ensure no nuclear weapons or radiological dirty bombs are entering the U.S. and about to be transferred to someplace in the heartland.”
“Port security is a joke,” agreed our State Department friend. “You probably look at these ships every day, or drive past the port on your way somewhere, and don’t even pay attention. When you get to the airport, you’re aware of everything from removing your shoes to checking your notebook But when it comes to the ports, everyone takes them for granted.”
Little did we know how prescient that talk was. By now, you’ve heard almost too much about the controversy concerning the Arab company that wanted to take control of U.S. ports, including Miami’s. Backed by the Bush administration, but opposed by key Democrats and Republicans, the deal finally fell apart last month. Who would have thought it was possible to fly under the radar with a proposal to turn over key infrastructure to a foreign government after 9/11? So, whether you barely followed the political storm or are a news junkie, we figured it was time to provide a “ports primer,” the definitive cheat sheet to everything the Bush administration would rather you didn’t know about why its deal flopped.
Foreign-owned firms play a crucial role in the American economy, accounting for about six percent of all private- sector business. So what was it about Dubai Ports World’s $6.8 billion takeover that caused such a controversy?
Dubai Ports World was no mere privately owned foreign company. It’s run by a royal family of the United Arab Emirates, the Maktoums (Dubai is one of seven states in the UAE). And they were not just buying a steel mill in the heartland, but rather control of ports, an area that almost every security expert agrees is woefully inadequate, even after 9/11. The UAE was one of only three countries to recognize the Taliban (the other two were American “allies” Saudi Arabia and Pakistan). Two of the 9/11 hijackers were UAE nationals, who drew money from UAE banks. Since 9/11, the UAE has continued to be a money center for Islamic extremists. Nuclear components shipped to Iran, North Korea and Libya were sent through Dubai. During the Clinton administration, U.S. intelligence had tracked Osama bin Laden, a convoy of Toyota Land Cruisers, and a private plane to an Afghanistan compound owned by wealthy emirs. The President decided in part not to launch a missile attack if some of the casualties might be members of a UAE royal family-the same royal family, the Macrons, who own Dubai Ports World. And did we mention that Dubai Ports World still adheres to the Arab boycott of all Israeli goods? Even Egypt and Jordan have dropped that boycott, but not Dubai.
But only six ports were involved, right?
And wasn’t Dubai Ports World strictly vetted by the U.S. government before initially getting a green light for the takeover? Actually, the UAE-government-owned company was poised to take over operations in 21 American ports, far more than the six trumpeted by the Bush administration. P&O, the British company being bought by Dubai Ports, leases terminals for the import and export, loading and unloading and security of cargo at 11 ports on the East Coast ranging from Portland, Maine to Miami, and 10 on the Gulf Coast from Gulfport, Mississippi, to Corpus Christi, Texas, according to the company’s website.
As for the vetting, it was done in secret by a subdivision of the U.S. Treasury Department, the interagency Committee on Foreign Investments in the United States. The Bush administration has reported that the decision of the CFIUS was unanimous. But since the controversy broke, both Homeland Security and the U.S. Coast Guard leaked information that they objected to the Dubai Ports takeover because of security concerns. The Coast Guard actually warned it was unable to determine whether Dubai Ports might support terror operations against the U.S. Those warnings were ignored in the initial approval.
And the CFIUS approval did not require Dubai Ports to keep copies of business records on U.S. soil, where they would be subject to court orders. It also did not require the company to designate an American citizen to accommodate U.S. government requests. According to legal experts, such obligations are routinely attached to U.S. approvals of foreign sales in other businesses.
Isn’t it true that Dubai Ports would have had no role in security at the ports?
Miami’s port, for instance, is County-run, so Miami- Dade is responsible for general security through police officers and private guards. They control the main gate. U.S. Customs and Border Protection handles all passengers and cargo entering the country. But terminal operators, like Dubai Ports, are responsible for security inside the property. While they must submit security plans to the Coast Guard for approval, and the Coast Guard occasionally inspects the terminals, the practical effect is that when terminal gates are locked, police monitoring is infrequent. If the deal had gone through as Bush wanted, there would have been a new security problem for the ports.
Why was the Bush administration so keen on approving the deal when it looked like a loser?
Business as usual. John Snow, the Secretary of the Treasury, was not only one of the most vocal proponents for the deal, but his department also had to sign off on the Dubai offer. It turns out that Snow was chairman of the CSX rail firm that sold its own international port operations to Dubai Ports World in 2004 for $1.15 billion. Snow had left the year before for Bush’s cabinet, but that same year The Carlyle Group-the Republican heavyweight financing firm that includes ex-President George H. Bush-bought CSX’s ships and containers. As if this wasn’t enough to have senior Bush administration officials recues themselves, David Sanborn, tapped in January to become head of the U.S. Maritime Administration, had formerly run Dubai Ports World’s European and Latin American operations. “He would have had oversight of his former employer, which raises questions about conflict of interest,” Senator Bill Nelson told Ocean Drive. Nelson is now on record ready to vote against Sanborn’s confirmation and to try his best to block it from reaching the Senate floor for a final vote.
The UAE has not been shy about spreading around money to buy influence. It gave $1 million to George Herbert Bush’s Presidential Library, and funneled $600,000 to Bill Clinton to address a business summit after he left office, as well as $1 million to his Library (although Hillary was against the deal, Bill advised the UAE on how to best get its purchase approved). And former Democratic Secretary of State Madeleine Albright and Republican Presidential candidate Bob Dole are both officially paid advisors to Dubai. How did the deal fall apart?
Bush angered not only Democrats and many Republican allies but also approximately 70 percent of the public, which was consistently against the deal in national polls. Moreover, Bush made a further mockery of his famous, “You are either with us or against us,” line of his post-9/11 speech. He has stepped on that phrase and mangled it repeatedly when it comes to preferential treatment for so-called allies such as Pakistan and Saudi Arabia. But in trying to push through a deal to give over some of the major ports in the U.S. to a questionable ally in the war on terror, he exposed the fact that his administration places more emphasis on business profits and connections than the security of the country. “The people of Miami and our nation are entitled to know that their lives and safety are not being placed at risk,” Miami Mayor Manny Diaz told Ocean Drive.
Manny Diaz is right. The surprise was that Bush stepped up to the plate and asked-behind the scenes-for Dubai to withdraw its bid. He has shown remarkably little ability since assuming the Presidency to change course once he sets a policy. Iraq may be the mother of all debacles, from which he won’t take sage advice on how to extricate himself and the country, but there are plenty of others, from his secret wiretapping of U.S. citizens to blocking any expansion of stem-cell research. Bush beat Kerry because he was able to convince a majority of voters that his obstinate nature meant he was a leader compared to Kerry’s perceived waffling. But voters, slow as they have been, have finally caught on to Bush, and nearly two-thirds in current public-opinion polls think he is doing a poor job.
Bush didn’t even have to back the Dubai deal. It was done in secret by a federal commission, and once it became public, he could have easily distanced himself from day one. But just as he felt compelled to go to CIA headquarters after 9/11 in order to pat the chief spook on the back, or believed he had to support the FEMA director and Homeland Security chief after the New Orleans and Katrina fiasco, his spontaneous reaction on the ports was to back the panel’s decision before he had even considered all the consequences. The result was a protracted embarrassment for scores of administration officials and allies who tried in vain to muster some public support for the deal. By getting Dubai to withdraw its bid, Bush avoided the defeat in Congress that he would have so loathed. But still, it doesn’t take a political-science major to figure out that this President is operating with bad instincts and little political power to push through proposals he wants. Three more years of this lame-duck leadership could be tough to take.