February 17, 2006
MENA Investment & FDI: Oh my, they control our ports (Updated: Dubai & US Ports)
Foreign direct investment often provokes among the less than economically literate frightened reactions about loss of control - sometimes justified but in general, not. That politicians exploit tribal fears of foreigners controlling the jewels of the nation (whichever nation) is perhaps not surprising. It is always depressing. As we pass through a small storm of Islamic versus Western tensions, it is not surprising that the forces of unreason, emotive fear sweeping MENA, etc. have had an influence.
[Update: related post chez my Lounsbury den of iniquity, with respect to blog commentary and xenophobia, a small obs and question posed.]
[Update II: My coyness aside, a discussion of the Dubai Port World - US Ports issue broke at at the above commentary linked at Lounsbury - after some obligatory beating of a sensless commentator sensless.]
In the United States.
As reported in The Washington Post in this profoundly depressing article:
Some in Congress Object to Arab Port Operator
Company Based in United Arab Emirates Set to Manage 6 East Coast Facilities After Takeover
By Paul Blustein
At least the opening gets to the point:
The management of major U.S. ports taken over by an Arab-owned company? What was the Bush administration thinking when it allowed such a thing?
That is the question being asked by members of Congress from both parties. Their indignation is aimed at the $6.8 billion purchase by Dubai Ports World, a state-owned company in the United Arab Emirates, of a firm that handles most operations at ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
Let me note from the outset that if there is a point where one might have some issues, it is the fact that Dubai has not privatised the ports company and it is state owned. Of course if they did privatise it now, I am certain they would achieve truly lunatic valuation, but that is another matter.
But let me get to the heart of the controversy:
At a news conference yesterday, a bipartisan group of seven House and Senate members demanded that an interagency task force on foreign investments, which approved the transaction, examine it more closely. The group contended that although the UAE may have a strongly pro-U.S. government, the country was traversed by some of the Sept. 11, 2001, hijackers and its banking system has been used by groups affiliated with al Qaeda.
Let's be clear, this is nothing but completely irrational bigotry.
Yes, indeed the UAE has all kinds of shady business, and the 11 Sep groups used Dubai as a transit and staging point, etc. But so the bloody hell what? They also used Germany. There is not a grain of logic in fearing DPW because of some logically impaired connexion with al Qaeda.
"Our ports are major potential terrorist targets," said Sen. Christopher J. Dodd (D-Conn.). "I strongly urge the administration to thoroughly investigate this acquisition."
Sen. Tom Coburn (R-Okla.) said, "Handing the keys to U.S. strategic ports to a regime that recognized the Taliban is not a sound next step in our war against terror."
To allow Tom Coburn to speak in public is not a sound step in this ridiculous 'war on terror' - in particular his brainless insulting of a friendly and helpful government. A corrupt one, to be sure, but corrupt in a fine and efficient manner, with generally progressive policies in the social area (relative to its neighbours at least) and fairly decent economic policy (although the black box that is Dubai is not entirely... well ... let us say may not be all real) with good standards at least on the level of its free zones and efficient business climate.
So, what is the reward for Dubai / UAE. Getting insulted by a half-witted fearful cretin of course.
Taken aback by the uproar, administration officials defended approval of the deal by the Committee on Foreign Investment in the United States (CFIUS), a panel with representatives from 12 U.S. agencies that reviews foreign takeovers of U.S. companies or possible risks to national security.
The company that currently operates the ports, they noted, is foreign -- Peninsular and Oriental Steam Navigation Co., a British firm -- and its employees in U.S. ports, who are mostly Americans, are expected to do the same work they're doing now. Furthermore, Dubai Ports World, which won a bidding war this month for the company, has proved itself to be a reliable partner in screening cargo headed for the United States. And once cargo arrives, federal agents would continue their current level of inspections, regardless of who runs the ports.
"This company will be subject to any U.S. laws that apply to port security, and will be obliged to have a port security plan that we will review," Stewart A. Baker, the assistant secretary for policy at the Department of Homeland Security, said in a phone interview. "So if there's a falloff in compliance on security here in the United States, we're not completely lacking in ability to respond to that."
In general the Bush Administration is entirely in the right here. Mr Baker could have rephrased that response however.
... Talk of major changes in the law has subsided, but the Dubai Ports World deal could reignite the effort. If the administration is perceived as not vetting the deal carefully enough, congressional skeptics of foreign investment may feel obliged to take matters into their own hands, said Todd M. Malan, executive director of the Organization for International Investment, which represents the U.S. subsidiaries of many foreign companies. Malan was especially concerned because CFIUS did not conduct a 45-day investigation on top of the initial 30-day review that it usually gives to foreign purchases of U.S. businesses.
Yet contra the concern (mentioned in omitted text) re Chinese acquisition of IBM's retail computer operations, which re technology transfer at least had some level of rationally plausible basis, herethe concern is Ay-rabs owning port assets.
As if al-Qaeda would need DPW to lay down major capital to get an inside view of US port security. Why one can't possibly imagine say an al Qaeda operative working for a German company and observing the same.... perish the thought.
DP World, the company at the center of the controversy, has been aggressively expanding since 1999 from its home in Dubai into operating ports in many other parts of the world, including Asia, Europe and South America. The takeover of Peninsular and Oriental would make it one of the three biggest port operators in the world, with companies from Denmark and Hong Kong.
Normally, such a company will be checked out by CFIUS for any "derogatory" information before being allowed to invest in a sensitive U.S. business, Baker said. In this case, the Homeland Security Department already knew the company well, he said.
"We have a relationship with this company because they have been a participant in some of our cargo and port security measures," Baker said. "Remember, our interest in port security extends well beyond the United States. If we discover weapons of mass destruction inside a U.S. port, we've already lost. So we do a lot of screening abroad, and our general experience with this company has been positive."
So, well known company - indeed as an operator it has been very well respected I might add from my business experience at looking at investments in this area, US security officials already have good operating experience with them and no issues.
So, the problem is then what? Well, they're Ayrabs and some of them have names that sound like hijackers.
... House Homeland Security Committee Chairman Peter T. King (R-N.Y.) said, "I am not convinced that the system that's used is satisfactory in a post-9/11 world.
"They just seem to do an analysis of what's known about the company -- is there anything known showing that they're a threat?" said King, who met with Baker and other administration officials yesterday. "To me, much more of an investigation is required. If someone was nominated for a sub-Cabinet post in this administration, they would get far more scrutiny than this company, which will be running major ports in this country."
I presume the answer is, from King's line of questioning, that somehow this fine bipartisan group of cretins finds the mere connexion with Dubai to be the grounds for presumption of terror connexions.
Well, to be fair in re Dubai generally, yes much lax funny things happen. However, suspecting the port operator of al Qaeda connexions despite existing security relations is ... well it speaks for itself.
Frankly, if I were a MENA region HNW individual, I would move me assets out.
But for further enlightenment, added coverage of the issue:
Port of Entry, an alarmist guilt by association op ed at military.com - the cretinous jingoism of the comments to the article are very encouraging.
Port Insecurity Op Ed with the NY Post. I need not inform most readers that the op ed is alarmist and incoherent. I do love this line "Do the feds really want to place the ports of New York and New Jersey in the hands of a Middle East country with ties to the Sept. 11 hijackers?" Of course one could write that about Florida, Germany.... well lots of people and places.
The Financial Time's own article on the 'backlash'. I am not suprrised that the pin-headed dimwit of a muddled Lefty, 'Chuck' Schumer put his name to a letter containing this fine piece of illogic: "New York senator Chuck Schumer and others said US ports were “the most vulnerable targets for terrorist attack”. They questioned whether DP World, which is owned and controlled by Dubai, should be allowed to take over P&O, charging that Dubai was a “key transfer point” for shipments of nuclear components bound for Iran, North Korea and Libya."
this blog naively asks "Earth to Chertoff? Anyone there? Seriously, can anyone justify this?" as if there is something particularly frightening and sinister going on - other than of course a scary ethnicity is involved in the sale.
This sort of idiocy, with the clumsy free form bigotry (whether hard or soft and unthinking) and guilt by association advances nothing and certainly goes a long way to underlining the sensation in the region that the US 'war on terror' is not that far removed from a US 'war on Muslims.'
Further, with this sort of reaction, it is hard to see how promoting win-win free trade and investment between the MENA region and the US, a much touted goal of the Bush Adminstration and one of the few which I think is reasonably coherent, will work.
One may also observe that it becomes harder to justify American FDI in the Islamic world in the face of opposition, given this kind of behaviour.
On the other hand, for the faux serious question often posed among naive American circles about why Iraqis had not proven estatic with joy to receive foreign direction and investment, well a point of reflexion on deeply ingrained xenophobia that runs through human nature.
TrackBack URL for this entry:
Personally I'm always amused by the phrase "post-9/11 world" or references to the "9-11 hijackers" (or "Islamofascists" for that matter) because they almost always are used in Chicken Little rationalizations. It's become the virtual equivalent of jumping around, waving one's arms and declaring, "I'm about demonstrate my gross ignorance and poor reasoning skills--please watch!"
Posted by: mrblue92 at February 17, 2006 01:00 PM
Posted by: drdougfir at February 17, 2006 09:20 PM