Just to clear up one of the facts. The ports in question are not private assets. They are all public assets owned by various governmental entities such as the Port Authority in New York and I believe, New Jersey. Additionally, they are under Federal jurisdication both Constitutionally and by statute. The Federal/State/agency relationships differ from port to port, but they are complex and there are a variety of interests, some of which conflict in various situations. Federal interests are supreme under the Constitution. That is why the Federal gov't can override agency decisions. These entities (agencies) generally develope the facilities by the issuance of debt which is repaid by the collection of tolls, license fees, etc. The agencies are generally quite independent of the political processes as was intended when they were formed. They enter into lease arrangements of various sorts with port operators, shipping lines, air lines in the case of air ports, etc. I do not have an opinion as yet on the transfer, but it is important that we get the facts right.

They are private assets, the asset is the lease. A lease is an asset. I will clarify for those not used to investment analysis.

Also the issue of Federal US jurisdiction was not in question at all.

___
Update: looking at my phrasing, I see I do misstate the nature on one line.

To "The Lounsbury" Blog Poster,

I recently posted on a blog in the Washington Post on this issue---- if there may be some actual facts in dispute, I would certainly like to know.

For your information, here is the Associated Press report which I derived my facts from.

If the AP's journalist indeed has incorrectly reported on this issue---your firm's Press Relations section needs to take it up with the AP so they may if necessary, run a correction for the Public and for bloggers to read.

Thank you.
-----------------------------------------------
Arab firm may run 6 U.S. ports
By TED BRIDIS
The Associated Press

Cargo containers are loaded in Baltimore, Md. The Port of Baltimore is one of the nation's most important seaports, and it's among the six due to be sold to a UAE company.

WASHINGTON — A company in the United Arab Emirates is poised to take over significant operations at six U.S. ports as part of a corporate sale, leaving a country with ties to the Sept. 11, 2001, hijackers with influence over a maritime industry considered vulnerable to terrorism.

The Bush administration considers the UAE an important ally in the fight against terrorism since the suicide hijackings and is not objecting to Dubai Ports World's (DP World) purchase of London-based Peninsular and Oriental Steam Navigation.

The $6.8 billion sale is expected to be approved Monday. The British company is the fourth-largest ports company in the world and its sale would affect commercial U.S. port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

DP World said it won approval from a secretive U.S. government panel that considers security risks of foreign companies buying or investing in U.S. industry.

The U.S. Committee on Foreign Investment in the United States "thoroughly reviewed the potential transaction and ... had no objection," the company said.

The committee earlier agreed to consider concerns about the deal as expressed by Miami-based Eller & Co., according to Eller's lawyer, Michael Kreitzer. Eller is a business partner with the British shipping giant but was not in the running to buy the ports company.

The committee includes representatives from the departments of Treasury, Defense, Justice, Commerce, State and Homeland Security.

The State Department describes the UAE as a vital partner in the fight against terrorism.

But the UAE, a loose federation of seven emirates on the Saudi peninsula, was an important operational and financial base for the hijackers who flew two 757 and two 767 jetliners into the World Trade Center, the Pentagon and a field in Pennsylvania, killing nearly 3,000 Americans in the nation's deadliest terrorist attack, the FBI concluded.

Last month, the White House appointed a senior DP World executive, David Sanborn of Virginia, as new administrator of the Maritime Administration of the Transportation Department. Sanborn worked as DP World's director of operations for Europe and Latin America.

Critics of the proposed purchase said a port operator complicit in smuggling or terrorism could manipulate manifests and other records to frustrate Homeland Security's limited scrutiny of shipping containers and slip contraband past U.S. Customs inspectors.

"When you have a foreign government involved, you are injecting foreign national interests," Kreitzer said. "A country that may be a friend of ours today may not be on the same side tomorrow. You don't know in advance what the politics of that country will be in the future."

Shipping experts pointed to DP World's economic interest in operating ports securely and efficiently.

"Does this pose a national-security risk? I think that's pushing the envelope," said Stephen Flynn, who studies maritime security at the Council on Foreign Relations.

Copyright © 2006 The Seattle Times Company
[Source: http://seattletimes.nwsource.com/html/politics/2002800202_ports12.html]

Ah, I have no clue as to what your comment is about?

The guy commenting must believe you're a DPW agent of some sort- he's asking you to challenge the AP report.

the UAE, a loose federation of seven emirates on the Saudi peninsula, was an important operational and financial base for the hijackers

The UAE is on the Saudi peninsula? Well, that's the first time I've heard the Arabian Peninsula being referred to as such, but that's a relatively minor concern. On the other hand, this idea that the UAE was an operational base for the hijackers is out and out false. There are also malicious insinuations there about DPW's intentions, but it will be far more entertaining to watch Lounsbury tackle those.

Well, then I shall oblige, at Lounsbury, not here.

Update: see http://lounsbury.aqoul.com/archives/2006/02/more_mendacios.html

Pardon my financial ignorance. Perhaps my degrees from the Columbia Law School, MBA from Columbia in finance and accounting and 35 years of work in this area were all a dream.

But speaking of sensitivities, the New York Port Authority which is the owner of the New Jersey Port, also developed and owned the World Trade Center which they ultimately leased in a ground lease arrangement to private parties who, in effect, owned the buildings on 9/11. The Port Authority lost a few hundred employees and probably have a heightened concern about the situation. They still own the real estate.

By the way, leases under both American and English law are not sold, but are "assigned." The distinction relates to restraints on alienation which are typically contained in leases but are generally frowned upon with respect to transfers of most other kinds of assets, particularly real estate and of course, financial assets as well.

Thus, the port leases in question are, of course, assets, but they contain provisions regarding assignability that give the owner of the port a degree of control over assignments. I am not familiar with the specific texts, but I have drafted similar leases with quasi-governmental entities elsewhere. These leases contain provisions restricting both direct and indirect assignment and since the sale of a company which in turn is a lessee has, under English law been an assignment for, I believe 300 years, a principle that has been adopted by American law, I think this a bit more complex than you pose.

Finally, you are not correct about Federal jurisdiction. Many non-Americans are confused about our Federal system. The Federal government has exclusive control over all navigable waterways including all rivers, ports, and the oceans within the international limits. In some instances, by statute, the Federal government has ceded limited control to the states, as for example, with control over port facilities. However, the Federal government retains considerable control over development and usage of these waterways and can override state decisions where that right is either reserved by statute or by contract, or where national interests are involved including interstate commerce, by virtue of the Supremacy Clause of the Constitution.

Again, I am not familiar with the documentation of the arrangements between the Federal government and the quasi-governmental agencies that own the ports in question. However, I would be astonished if the states were ceded a carte blanche to do whatever and whenever they wanted as that would be contrary to all historical precedent. You will note that the transfer was subject to review at least by the Executive Branch and that the controversy here involves the question of whether the legislative branch also has review jurisdiction. Again, I haven't reviewed the applicable documents and court decisions and frankly don't have time. However, I do know what I am talking about.

"Finally, you are not correct about Federal jurisdiction. Many non-Americans are confused about our Federal system. The Federal government has exclusive control over all navigable waterways including all rivers, ports, and the oceans within the international limits. In some instances, by statute, the Federal government has ceded limited control to the states, as for example, with control over port facilities. However, the Federal government retains considerable control over development and usage of these waterways and can override state decisions where that right is either reserved by statute or by contract, or where national interests are involved including interstate commerce, by virtue of the Supremacy Clause of the Constitution."

To (hopefully) help matters - I'm pretty sure Loundsbury is well aware of the Federal juristictional extent it has regarding it's power over waterways and regulation of interstate commerce (both Executive and Legislative).

Where the Federal government DOES NOT have jurisdiction is over financial transactions that take place between foreign entities (P & O, a British-based firm, being bought out by DPW, a UAE-based firm). However, this transaction DOES come under federal govnernment perview with respect to those "assets" that are US-based (the 6 ports in question). Loundsbury rightly points out that the Feds have gone through the normal (financial oversight) procedures in reviewing the transcation (P & O acqusition by DFW). Which makes sense as his backbround is in finance.

You are correct that the feds can step in and assert their powers accordingly, but 1) it looks pretty bad when said operations at those ports are already being run by a foreign owned company (where's the outcry over P & O?); 2) Nothing will change with respect to port operation personnel (the only thing that's changing is the name); 3) Nothing will change with respect to US jurisdictional oversight in re security concerns, laws, and procedures.

Now, admittedly, the current Bush Administration could be faulted for not taking port security more seriously (which is a seperate issue from DPW acquiring P & O). And I suspect that this may be why Schumer and other Dem politicians have weighed in on this (better to bash Bush admin on their lack of concern on port security).

But it reeks of political opportunism at its worst - playing on the fears and bigotry of people in a context that's not warranted.

Well, touchy aren't we?

It will make you feel better that I changed the description on rereading.

The main thrust of my commentary was not the legal issues - rather obviously US authorities have both practical power and theoretical authority to effect changes - but the fact the assets in question were not under governmental management / operating (ex security) control with respect to direct operations (in the sense most persons coming to the issue would understand).

As to the issue of Federal control, etc. from your exposition - this blog is not about US political powers, the focus again was the core issue with respect foreign presence, etc.

Your exposition is well taken - not being an American lawyer I intend no commentary on this issue. However, in the final analysis with respect to DPW it would seem it is US federal authorities that pose the core hurdle in terms of the positive. Certainly given the mad decentralisation in the US, there are a multitude of other hurdles potentially blocking.

Again, thanks for the details, but do try to keep in mind the skeleton above is aiming at a certain context.

Col,

You may want to check out the following site:

http://www.cosco-usa.com

Seems as if the Chinese are heavily involved in port operations along the west coast (especially Long Beach/Los Angeles). COSCO is, if I understand correctly, 100% owned by the state (and, I believe, managed by the People's Liberation Army).

You might be able to do a serch on COSCO and pull up old news articles regarding it - apparently, there was quite some concern in the government over port operations in Long Beach at the time).

From FT:

Republican senator Lindsey Graham joined the fray on Sunday when he said in an interview on Fox that it was a mistake for the White House to have approved the deal.

“It’s unbelievably tone deaf politically at this point in our histroy, four years after 9/11, to entertain the idea of turning port security over to a company based in the UAE who avows to destroy Israel,” said Mr Graham.

"Who avows to destroy Israel?"

First, the US is not Israel, second UAE has actually been quietly friendly to Israel.

Amazing. The level of ignorant pandering only rises.

Indeed. Much cheap crack being smoked in Washington this evening.

Col,

Found this commentary on another blog - thought you might find it useful/intersting.

http://dennisthepeasant.typepad.com/dennis_the_peasant/2006/02/playing_the_mus_1.html

Epo

Excellent find.

It is, in short a state-owned firm run like a private corporation.

But isn't the (separation?) of state and state-owned interests somewhat less or different here than overseas? Certainly among the media here, we regard government owned or backed companies as essentially one and the same as the government. Technically this might be wrong, in practice... you know how it is here. If it's Mo, tread with eggshells. And most of it is Mo.

For example, try this Google news search and then try clicking on the article. They weren't the only local media forced to pull it. (Anticipating a short life for it, I saved a copy before it vanished).

Secret
But isn't the (separation?) of state and state-owned interests somewhat less or different here than overseas? Certainly among the media here, we regard government owned or backed companies as essentially one and the same as the government.

Indeed, state owned firms, in Singa, in Dubai, etc. are subject to state pressure. Indeed so are private firms.

The issue here is the structure and general objectives of the firm. Organised as a corporation, as a general matter DPW is not the same thing as a governmental agency. It has Western executives, it seeks business on a business basis, is run by all accounts efficiently.

DPW likely does have capital subsidies, but in grosso modo is likely to act more or less the same as a private actor with respect to the issues ostensibly of concern to the objectors. Damaging its commercial reputation in the USA would destroy the business. The stakes are exceedingly high.

As a corporate actor, state owned or not, that is just not likely.

The next level of concern is staffing. There, we have really individual questions that I submit is not in fact an issue of ownership at all.

Epo.

I think COSCO is no longer controlled by PLA--the Chinese made big stink during the last decade about getting the military out of managing corporate assets and generally succeeded at it. There were some noises about their takeover of the port operations in LB when it took place, with all the "expected" excuses...but it blew over rather fast, as the Chinese proved themselves quite competent and law-abiding managers. Of course, something tells me that they would not be able to take over port operations nowadays quite so easily as they back then (note the bruhaha over the CNOOC trying to take over UNOCAL not long ago.)

But the UAE, a loose federation of seven emirates on the Saudi peninsula, was an important operational and financial base for the hijackers who flew two 757 and two 767 jetliners into the World Trade Center

I hear this bandied about constantly, yet never a single piece of evidence to support this . Of course the word 'Arab' sends chills up and down the spine of Michelle Malkin, but educated people usually would want to see some dot-connecting or even a toilet paper trail before making accusations as such.

Dubaiwalla - your name is suspiciously Parsi - any chance?

kao_hsien_chih,

Thanks for the update - I wasn't entirely certain about the PLA aspect. However, COSCO it still a state-owned company, correct?

I believe it is...as most large enterprises in PRC still are.

kao_hsien_chih,

Thanks - I'm finding it quite irritating that there's much screeching from both the left- and right-side of the blogopshere regarding DPW, but nary a peep regarding port operations on the West Coast by the Chinese (COSCO). Granted, most people are (were) unnaware of the global nature of port operations and how much of it is handled by foreign companies.

If an issue regarding this is state-owned enterprises conducting port operations, then one would think that ALL (whether they be UAE, Chinese, Singaporean, etc.) state-owned enterprises should come under closer scrutiny. At least, to be consistent.

But I guess it's easier to make a stink over the issue if Arabs are involved.

Well, it hasn't been all that quiet on Chinese port operator front: one might recall some years ago (other than the considerable bruhaha at Long Beach, which I remember rather vividly, being originally from that part of the world) that there was much talk about how a Chinese firm was to manage port operations at the Panama Canal after it was handed over to the Panamanians.

Yes, but not quite the same Jihad as against my Arab brethren.

In case you can't bear to visit there yourself, here's one SDMB user's reaction:

"Fuck the Fucking Shit!!!! We're Fucked Now!!!!
What the FUCK is Bush thinking??????? WHY did he just sell this whole fucking country up the river and what the fuck are we going to do about it???? The Arab Nation running 6 major ports in the USA WHAT THE FUCK IS UP WITH THAT?????WE ARE SO FUCKED!!!
Why doesn't he just MOVE there is he thinks those primitive assholes are so great? And not a word of explanation or any forewarning at all!!!
I AM HAVING THE HISSY FIT OF MY LIFE!
HELP ME!"

eponymous -
"But it reeks of political opportunism at its worst - playing on the fears and bigotry of people in a context that's not warranted. "

Isn't that how the Patriot Act got passed? Just asking.

From FT (again):

US lawmakers threaten to block Dubai ports deal

President George W Bush immediately responded by saying he would veto any legislation and warned the US was sending “mixed signals” by raising barriers now when no objection had been made against British ownership. Lawmakers, the president said, must “step up and explain why a Middle Eastern company is held to a different standard”.

First off, I see nothing wrong with jumping around the internet posting on strange blogs. If I wanted a subscription, I'd read the papers.

Second, my first prejudice is hearing for years that the Bush Administration has done little to bolster port security since 9/11.

Third, my second prejudice comes in seeing that Bush was completely surprised that handing over 6 important port operations to an Arab nation might cause a stir. Ah yes, the Bush bubble at work again. Anyone remember Hutchinson Whampoa and the Panama Canal? So, if the Bush Administration can't even figure out that this item might cause worry, I don't trust whatever other analysis they might have done (really, Harriet Miers is a remarkable woman, and no one should care that Cheney shot a man).

Fourth, you can call me racist from the following statements if you feel that's apt. I may be. But I'm worried that half the ports will be shut down because a student newspaper somewhere published a slightly offensive cartoon. And I'm worried that some freak will smuggle some atrocious nuclear weapon through a port. I don't stay up nights worrying about this, I may think about it once every 6 months or so. But it's there, and I even thought about this stuff before 9/11. A seer. Now, it might not be an Arab or a Moslem (doubtfully a Christian Arab) that does it - it could be an outraged Serb, a Russian angry about Chechnya, someone from China, even someone from Afica. But due to a combination of our own stupid moves in the MENA and a fairly large number of people's penchant in MENA for liking to do things like blow planes out of the sky or send their children off with bombs in their dighties in the name of peace, it remains a concern.

Now, I know there are a lot of mixed-race nations, UK included. So Brits running the ports might mean more possibility of a terrorist Moslem getting access, as homegrown Moslem terrorists bombed the tube and buses. But we're talking about odds here, as well as the hope that British Moslems are on the whole more stable than UAE Moslems who are more stable than Iraqi Moslems who are more stable than Palestinian Moslems. (I don't know where to file Indonesians or Oklahomans...) Now, that's a lot of lumping people together, and I'd probably only do that with something fairly significant, like the ports handling most of the US' imports and exports, i.e. a large portion of our economy and survivability, Los Alamos, or some other fairly monstrous issue. If someone can show me that it really doesn't matter, that there is good reason why the risk wouldn't change much between UK & UAE, great, fine, I'll go back to sleep. But if someone appeals to me not to be a racist and just accept it as being fair, I get the creepy feeling of party guest checking out my back window locks.

Regarding whether the ports are private assets - fine, let's nationalize them if it means putting in good protection on something important. Or pass some other kind of muster. Yeah, I don't much like the Hillary proposal to prevent foreign ownership, but sorry, I don't much want to accept Chinese or Iraqi ownership, me just being racist again, and it's hard to pass a law saying, "only UK, Germany or Holland". Now I understand UAE's not Iraq or Iran, and I really don't know if there's any peril in trusting the UAE completely on something like this - that used to be the job of the intelligence community, but now that the intelligence community has been emasculated, well, I don't trust anyone. Uh, whether the review was "prior practice" up to now? Okay, FEMA & DHS have shown themselves pretty lackluster of late, and prior practices to 9/11 took a lot of beating. So, uh, we change them, okay? Poof, prior practices will be reviewed, and where not good, will be improved. Bingo. Now, if the assets won't be affected when some Imam issues a Fatwa, fine, that helps. If someone just says, "Don't worry about it", that doesn't. (Someone just posted that the name "Callahan" is banned at Yahoo because it contains the word "allah". Yes, the world is a strange place, though Yahoo member names are pretty unimportant)

Last, I don't really care what the UAE owns anywhere else. Except for recent protests against Denmark, most of the world reserves its outrage for the UK and America (not that we're completely alike, but we both speak English more or less well and we go to a lot of parties together). Spain got hit for supporting us, as did Australia (in Bali), and I'm sure it didn't help Denmark's fan club. So, UAE owning Rotterdam's port doesn't make me no never mind - there's a completely different security dynamic there. Hey, I wasn't for the war in Iraq, not that I thought letting Hussein thumb his noses and play hide-and-seek was a good long term solution. But there will be people - Moslems especially, even if not a majority - who would have no problem with seeing me dead. That's racism too. (or religionism, but I'm atheist, or something). 'Nuff said.

Hmm. Ok.
Anyway, being home sick today I get to watch CNBC during the day, and this is coming up a lot. Somebody from DC said something like "If you look at the facts of this case, it looks a lot like a business version of racial profiling." Mark Haines, an anchor on the channel, who was also against the CNOOC/UNOCAL deal on security concerns, is against this and wonders why the Admin didn't try to sell this more before.
Personally, my feeling is the only "Bush bubble" at work here is that Bush is probably astounded, knowing the facts of the UAE's and DPW's past cooperation with the US, that this kind of controversy could arise. It is true, given the reaction to the CNOOC deal, that someone in the Admin paid to keep tabs on the politics of things like this should have done some preparing for a possible controversy. Xenophobia is beginning to run rampant in these parts (see above, natch), all of it presented with the inviolable excuse of 9/11, so if you want to avoid a controversy like this, you have to do some work on the ground, at least enough so that members of your own party aren't rebelling against you.

I'm confused about COSCO's relationship w. the Long Beach port. Here Eponymous & Kao-hsien are saying that COSCO operates the port. But when I wrote this in a diary entry at Daily Kos, this commenter wrote:

*******

"Cosco runs the port of Long Beach? Really?

Tell that to the Port of Long Beach http://www.longbeach.gov/harbor/faqs.asp#496:

'The Port is managed as a department of the City of Long Beach. Internationally, the Harbor Department is known as the Port of Long Beach. This title is consistent with other U.S. and world ports such as the Port of Los Angeles, the Port of Oakland, and the Port of New York/New Jersey.'

How is the Port governed?
'The Long Beach Board of Harbor Commissioners, whose five members are appointed by the Mayor and confirmed by the City Council, governs the Harbor District, which includes the Port.'

Now, check the [Cosco site - do you see them bragging about running the LB Port? No, they like many other international firms lease terminal space from the Port.

Now, look at the deal with DPW:

The deal would give Dubai Ports World a 50 percent stake in the Port of Miami Terminal Operating Company, one of three terminals at the Port of Miami-Dade. The company handles about half the cargo containers at the port, and a minority partner has sued to stop the sale.'"

********

When I research the ports of LB & SF I see that Chinese companies run terminals there but that's diff. than running the entire port isn't it?

I'm dying to refute this jerk but I need to have good information to go on. Any media or online reference that states clearly that COSCO runs the port would help.

If anyone else wishes to add their voice to that DK thread where 95% of commenters are rabidly anti-Arab or woefully misinformed--pls. be my guest.

Actually, the commenter on Kos is factually correct, but it also illustrates the kind of crass misinformation that we've been fuming about here.

It is true that COSCO is merely a contractor to LB Port Authority. The problem is that DPW wouldn't exactly "control" the ports it would be "taking over" any more than COSCO is in LB either, as I understand it. It would be merely managing them, on a contract with the appropriate authorities (e.g. their counterparts to the LB Port Authority) not necessarily more so than COSCO is in West Coast ports.

Remember that DPW is not buying the actually ports, merely the right to manage the port operations. The Port of NY and NJ, even with P&O (or, with DPW, for that matter) management, remain under the jurisdiction of the Port Authority, and the Port of Philadelphia, under Philadelphia Regional Port Authority.

Obviously, these guys have been told as much about DPW as LB Port Authority has been about COSCO.

Having said that, I found the connections between the various port authorities and P&O to be much more labyrinthine than I had thought. A search on NY/NJ Port Authority web page, for example, showed little if anything on P&O's involvement in managing its ports. A search on P&O's web page did lead to one of its subsidiaries, PNCT, LLC. (only 50% owned by P&O, by the way), which has a 30 year lease with the NY/NJ Port Authority to manage the cargo operations at the Port of Newark. So, this is what the fuss is all about--not even a "long term" contract, but just a 30 year lease (not sure when the deal was originally made) while the appropriate public authorities retain actual "control."

Mystery solved!

Just a grandmother here, concerned for kids and grandkids and our future. Decided to check individual State codes for jurisdiction of port authority - wondering about Eleventh Amendment etc. and how much control the Feds have. I still don't understand why State governors do not block this deal. But evidently, each State has the right to set up a port authority which has rights to make laws, rules, set fees, CONTRACT employment, and LEASE properties. And evidently this is OK AS LONG AS NO FEDERAL LAW is infringed. So, it's a done deal. Just business as usual, folks.

State governors breaking individual contracts is bad business.

Dubai spells DANGER.Apart from its known reputation for money laundering ,'hawala'and the grandiose visions of its emir,I would like readers to be aware of its role in terrorism.In 1993 more than 500 innocents were killed in bomb blasts and subsequent riots in Bombay India by one of Dubai's most pampered residents-the notorious Dawood Ibrahim.He has yet to be brought to justice.A good reason for the American public to be sceptical of Dubai's assurances