Also mark a strong piece of own-goal agitprop for the Jiihadis who have yet another arrow in the "you 'so called moderates' will never be acceptable to the Westerns, you're just dirty wogs not matter your Western manners, education and professionalism" quiver.

Brilliant work that. No substantive change in risk re ports, offended moderate Arabs who actually like the US, underlined inability to get act together on real action re port security, and another ding in the attractivness of FDI in the US do to political irrationalism, likely to throw up more economically illterate know-nothing nativist protectionist measures which will strangle quality investment in the US' already poorly run, under-financed ports. Brilliant moves. Absolutely brilliant.

I may as well as take time away from my banging my head against operational risk blather for funds and close out on this issue with a roundup of The Financial Times reporting I have been collecting (for my money the only reporting that showed some reasonable level of literacy on the issue).

First, there is the issue of the new Irrational Nativist Jihad to require nationality to trump experience, finance, expertise and other commercial considerations for the right to manage port cranes. FT notesthe following:

Few potential buyers meet requirement for a ‘US entity’

As the arty notes, the DPW pledge to

to sell P&O’s US business to “a US entity” goes against a decades-long trend during which American shipping and port operations have gradually been bought by foreigners.

Given the shortage of sizeable US terminal operators capable of raising the several hundred million dollars required for the transaction, the facilities could end up in the hands of a financial buyer such as Blackstone. The private equity group is believed to have expressed interest in the operations.

I'd note as an aside that it would be richly amusing for Blackstone to turn around to subcontract actual management to DPW (which is of course precisely what the DPW "takeover" was doing anyway).

However, the real problem is how backwards and under-invested the US ports industry is that

Such a deal would make the already inefficient US container ports industry an even starker exception to the rest of the world, where terminals are more frequently being run by a handful of large efficient operators.

Neil Davidson, a container ports analyst with Drewry Shipping Consultants in London, said that in normal circumstances the likely purchasers would include Hong Kong's Hutchison Port Holdings, the world number one, and Singapore’s PSA, which bid against DP World for P&O in January.

However, either company would face formidable difficulties participating in this transaction. Hutchison has avoided investing in US ports because it dislikes how they are organised and is reviled on the US right because of the alleged links between Li Ka-Shing, its dominant shareholder, and the Chinese government.

PSA’s problems is that, like DP World, its controlling shareholder is a foreign government, through Tema­sek, Singapore’s state-owned investment fund.

Of course PSA isn't Ay-rab so less scary. However, the linkages to PRC investment money and direct state ownership will make them politically inpalatable in the land of rabid Know Nothing Navistis ignorance and Mob Rule.

The article also mentions Maersk aka

Denmark’s APM Terminals, the other member of the quartet including DP World that now dominates the container ports industry, might be eligible. It bought SeaLand, a US shipping line, in 1999 and has many US executives and operations. It also already owns 50 per cent of Port Newark Container Terminal, the largest operating company in the deal.

Well, how can one object to pleasing blue-eyed blond shareholders? Or at least the knee-jerk assumption of pleasingly blue-eyed and blond shareholders, should be good enough.

I'm sure it would fly in the US of A, bastion of irrational bigotry and anti-Arab fear-mongering as it is at present. It would, of course, merely knock another own goal into the net in the MENA region, but fuck it, the US of A wants to fly its irrational racialised nativist sentiments colours high, let it.

The article does draw attention to two minnows that the port leases could be transfered to:

The most realistic options among truly US-based companies, Mr Davidson said, were both family-controlled: New York’s Maher Terminals, where Ted Bilkey, DP World’s chief operating officer, was once a senior executive; and Seattle’s SSA Marine, the largest US-owned terminal operator.

“There are not that many that are actually American-owned that are big enough to take over five operations,” he said. “It’s a fairly short list if it has to be American-owned.”

Outside the ports industry, the operations could easily be sold to a financial investor. with a steady revenue stream, such as ports, are ever more popular with such companies – two Australian funds recently conducted a bidding battle over PD Ports, a small UK operator.

Among the most enthusiastic buyers of infrastructure assets worldwide is Macquarie, the Australian bank. But as with most trade buyers, its nationality could rule it out.

Well, wait a few weeks, then the divestiture will be set up such that some less-dark and more Christian company can take over the management leases, and all the know-nothing bigots will be happy, while nothing re US port security will have changed one iota, other than the same persons will have set back US interests in the Muslim world by the transparent bigotry.

The irony of all this is only a few days ago

leaders of the transportation industry have warned that rising protectionist sentiment is posing a threat to the US economy and called for greater public education about the benefits of global commerce. The comments, made at a conference in California, reflect fear that opposition to Dubai Ports World’s takeover of five US port facilities could signal weakening public and political support for open markets.

That will rather clearly be the case.

At least one can say that in London rationality and commitment to liberal trade and liberal principals have held, despite some idiotic American legal maneuvers.

All this rather render's the title of this FT article all the more ironic:

An American style emirate? Dubai sees a future as an ally, entrepôt and playground

Ah the rewards that come with being an Arab ally of the US. The fear, the suspicion, the baseless and grossly exagerated innuendo, the smears. All from your "friend."

Good work that.

But let's get down to the meat of the article, shall we?

As the article notes, there is a lot of jealousy in the Arab world (and Gulf for that matter) directed at Dubai for its booming success and seeming inability to fail at any project it takes on. However much jealousy there is, the article notes, and I agree,

confronted by an American populist backlash against the prospect of Dubai Ports World (DPW) running US container terminals as part of its $6.9bn (£4bn, €5.8bn) acquisition of the UK-based P&O, the more common sentiment among Arab businessmen and officials is indignation.

Suspicions of Islamophobia aside, seen from the Middle East it is as if Dubai is being treated as an upstart long after much of the world has acknowledged that the city is a phenomenon to be reckoned with.

Except of course the US of A, where despite having invaded and occupied one of the largest countries in the region in a fit of truly world-class astounding incompetence, the average American is not only profoundly ignorant of where his troops are dying, but knows little to nothing of and fears and even hates the people he's supposed to be rescuing. Nothing better than ignorant self-regarding Messianism. I believe we tried that a few years back. It was called the British Empire (II).

Where to lay the blame for this?

Certainly the Bush Administration's staggeringly stunning incomptence in Iraq - especially in the clownishly amateurish affaire that was CPA-Iraq (see my Lounsbury Archives for my own interactions with CPA-Iraq as I tried to move millions of equity into real investments, all the while astounded at the delusional pseudo-optimism of the CPA-Iraq staffers who seemed to live in an alternate universe - but then so did most US right bolshy commentators with their constant whinging on about the 'good news." Bloody self-deluding morons the lot of them.) - bears some responsibility.

But I think things run far, far deeper than that. Well, back to the article:

Well, yes. Rewards, again, as I said of being an American Ally in the region. You get fucked over, randomly by ignorant know-nothings.

More than any Gulf state, the city has promoted itself as a natural home to multinationals and pragmatic ally of the west capable, in its pursuit of global status, of shrugging off vexed issues that have turned other parts of the region into cauldrons of anti-western sentiment. At a time when tackling the Middle East's volatile mix of oil, authoritarianism and religious extremism is a priority for western policymakers, the Dubai emirate has provided a compelling example of an Arab city embracing modernity.

Well, yes, indeed.

The very model, ex some tedious and stupid censorship, of what the US claims to want to see in region.

But fuck 'em, they're dirty sand niggers and you never know when them foriegners might turn on you - well unless they're blonde of course.

By the way, one of my co-authors directs me to this blog post Letter from Gotham, In need of Oxygen where the I suppose otherwise charming little twit of a sub-literate writer whinges on like an ignorant cow about Dennis the Peasant, for my money one of the few informed and rational commentators on the issue to date, wherein the ignorant twit goes on about how doing business in Dubai is not like doing business elsewhere, as the wily wogs don't play by "our" rules - transparency and all that. I do so wonder where the stupid little git gets her infos from, but trying to claim that contracts don't hold with Dubai international companies is indeed pure idiocy and bigotry. Dubai has its fault, but its international operations are not one of them. Well, what can we expect, from yet more hand-havingly ignorant guilt-by-association-fear-of-the-mysterious-wogs writing? (Never mind the sheer icoherence of the threat-thought train requiring a coup-d'etat in UAE then Dubai, then Dubai changing management at DPW, then DPW beginning some strange plot to ruin the value of its extensive global investments in ports in Europe, Asia, Australia, etc. etc. in order to pull off some supposed terror attack, which will somehow slip by because of the sneaky wog plot, US authorities in all the months this will take to execute. Sharp thinking that. Worthy of TV.)

I'll come back to this later, but more on Dubai from our FT article:

In four decades it has gone from being a pearl fishing and trading outpost to a regional centre for commerce, transport, tourism - and increasingly finance. City officials like to compare Dubai today to New York a century ago - a melting pot of creative endeavour.

The emirate has seen its economy double in size in real terms within the last 10 years while its population, which by some estimates has reached 1.5m, is being boosted by immigration. Dubai's allure is founded on a paradoxical blend of laisser-faire and rigid authoritarianism. [Lounsbury: rather like Singa, except not as rigid or wierd] Thus the ruling Maktoum family has brooked no dissent when it comes to enforcing the central principle that has distinguished it from its peers: allowing people to get on with it in a region otherwise intensely regulated.

Precisely. Other than some odd porn controls and rather silly censorship in trivialities, in business you can get things done, and be reasonably certain of contract execution etc. One need only take a gander at The World Bank's database On Doing Business and run some comparatives although this will be off of UAE aggregate data which masques Dubai's somewhat better, but imperfect, record. Still the numbers are not bad. I'll run some excel later to illustrate.

Returning to the article, some precisions on Dubai versus the rest of the UAE

Dubai is one of seven emirates that, in a loose federation, make up the UAE. Brokered by the British at independence in 1971, the federation has been held together in large part by Abu Dhabi's vast oil wealth. However, unlike the poorer emirates dependant on Abu Dhabi largesse, Dubai struck out early on its own path, playing the entrepreneur to Abu Dhabi's oil baron, albeit with consent and substantial subsidies from its richer neighbour. Dubai's own oil production now hovers somewhere below 200,000 barrels a day and, according to analysts, that will peter out after 2010.

Ever since Sheikh Rashid, the former emir, initiated plans in 1979 to build the world's largest man-made harbour at Jebel Ali, the city has attracted sceptics. Yet city officials have developed a knack for generating substance from the hype.

The Jebel Ali port, from which DP World originated, is itself at the heart of the greatest irony in Americans' concern about a state-owned Dubai company running their container terminals. Security at Jebel Ali is state of the art - as you would expect for the port outside the US that is most often visited by the US Navy.

But hey, you never know about those shifty wogs, do you?

In evidence to the Senate Armed Services Committee last month, Gordon England, deputy secretary of defence, noted that "the port at Jebel Ali is managed by Dubai Ports, so we rely on them, frankly, for the security of our forces there. There were 75 coalition partner ships there [last year]."

Obviously Mr England is part of a nefarious plot.

Some further background on Dubai, to supplement my colleague DubaiWalla's own entry:

The economic logic behind Dubai's transformation into an icon of urban capitalism lies in its abundant land, cheap energy and location in a region full of frustrated capital and labour. It needed a raison d'être as well as a revenue stream for when its own oil runs out. From south Asia it has hauled in a mass of indentured labourers to do the grunt work. Meanwhile a growing army of young professionals in search of career breaks - from South Africa to Turkey and the Levant - are joining the trail.

City officials argue that none of this would have been possible without the rapid-fire decision-making process that comes with autocratic rule.

Dubai's system of government is in many ways unique among the Gulf's dynastic autocracies. While state and ruling-family assets are at least as much entangled as elsewhere in the region, the bureaucracy is leaner and in general businessmen say government is far more efficient.

"People refer to our crown prince as the chief executive officer of Dubai. It's because genuinely he runs government as a private business," Saeed al-Muntafiq, head of the Dubai Development and Investment Authority, said in an interview before Sheikh Mohamed became emir following his brother's death last year.

Recognising that the overall business of "Dubai Inc" has become too big for any one man to manage, Sheikh Mohamed has endowed loyal lieutenants with land and, to varying degrees, capital and mandated them to realise a "vision" of which, he says, only 10 per cent has so far been achieved.

The more publicity-grabbing and iconic real estate projects, and those that have established Dubai as a brand, have mostly been devised by his three most powerful subordinates. Their role has been to push - with state backing - the boundaries of what is possible, in turn encouraging the private sector to be more ambitious and competitive.

They have already built the world's largest shopping mall, its most unlikely artificial ski resort (chilled under a glass dome in the desert) and - on artificial islands fashioned offshore into a map of the world - a playground for the super-rich. Now they plan to add the world's tallest building.

In an interview last year, Mohamed Alabbar, who heads Emaar, the city's biggest property developer, said the fate of big ventures is often determined by a mobile phone call among the big shots. "What matters is that you are equipped to participate with good decisions," he said.

Anyone who has done business in Dubai (and I have) has to remain impressed by the sheer audacity of it all, and the highly commercial - not imperial - reach of the vision.

There is likely a bubble and it would strike me the real estate side especially in luxury is badly overbuilt, but you have admire the chutzpah of it all.

Better yet, the article is absolutely correct in noting:

The Dubai phenomenon has proved infectious, stirring more cautious regimes in the neighbourhood to be more innovative. When Dubai announces a new project or adapts an old one to new tastes, others in the Gulf tend to feign scepticism, before finding a way to adapt and follow suit. Thus Bahrain, which never had much oil of its own, has had to promote its own more established financial sector with a new and flashy property development, while gas-rich Qatar has launched a rival to the Dubai International Financial Centre (DIFC).

The DIFC and associated DIFX exchange were conceived to provide a global financial market to match those of Singapore or Hong Kong, bridging geographic and time zones between Europe and Asia.

As the projects have grown in ambition, so have the contrasts between conspicuous consumption and the grim conditions of the immigrant labourers who, for tiny wages and from miserable work camps out of sight in the baking desert, make it possible. As Dubai has developed aspirations to "world-class" status, so the cracks in the system have become more exposed.

To date, each time Sheikh Mohamed has run up against restrictive federal laws that conflict with Dubai's international aspirations, his tactic has been to hive off a new free zone. The empty desert has provided a tabula rasa on which he has drawn a slew of these, for health, media, education, technology, flower markets and many other sectors. The free zones are designed as a ready-made circuit board into which multinationals can plug in their regional operations. But they also reveal a certain schizophrenic character to Dubai.

Bankers and businessmen acknowledge that insider trading is rife on the local stock exchange, that some money laundering is an unavoidable by-product of a tax-free system and that there are still no effective commercial arbitration methods in Dubai. International banks are nevertheless encouraged to trust that the same standards that regulate the London or Hong Kong stock exchanges will be rigorously applied in the DIFX.

The Free Zones are in many ways like their own mini countries, there Dubai can escape some of the stupidity that Abu Dhabi and Sharjah impose.

When western visitors commend the city for its "liberal" attitudes, they are often talking about its striking tolerance of drinking, prostitution and bare midriffs in a region otherwise more obedient to Islam's strictures. They are not referring to government attitudes to free speech.

True enough. Dubai is a commercial hub, fleshpot, and center of emerging economic liberalism, not political liberalism, not a democracy.

I'll take economic liberalism.

Outside Media City, a district of air- conditioned offices with all services provided, where the regional press corps has been encouraged to make its base, journalists working for local newspapers are constrained by self-censorship and archaic federal laws. Surrounded as they are by an all-pervasive public relations machine, it is tough for journalists, and even to an extent investment banks, to provide the critical analysis that more developed international markets require.

Nor have UAE attempts at political reform matched even the timid efforts initiated in recent years by some other Gulf countries. Its response to outside pressure for change makes even Saudi Arabia's limited experiment last year with municipal elections look progressive. In the UAE, royally enfranchised appointees will elect from among themselves members of an assembly with no real powers.

"There's no one to say No. I think that is the principal Achilles heel of Dubai. These projects are so huge it could go wrong," says a well-connected state employee.

The final quote has it right. There is in fact too much dependence on the al-Maqtoum to continue to be pretty darn good. It has played well so far, but there are bound to be limits. Of course one can say the same for Singa and its little dynasty.

At the same time, the Dubai leadership knows that if it invited more participation from the local population in decisions, many of the projects would not be happening at all. Dubai nationals are already feeling encroached on by so many immigrants.

Bankers believe that when the oil runs out and demands for more services grow, Dubai will begin to face budget deficits. With them, and the possible need for more conventional borrowing, demands for more transparent government and even eventually reconsideration of the city's tax-free status may grow.

Such issues are beginning to come under greater international scrutiny as the city's own companies, like DP World, expand aggressively around the globe.

But the concerns of the local Emirati population have remained barely audible. Many of the well-to-do are happy to wander among the many worlds on their doorstep. But others worry that their privileged place in a Dubai society that provides jobs, homes and welfare for life will eventually dissolve in the melting pot around them.

Emiratis now make up less than 10 per cent of Dubai's population. At 110,000, there are now almost as many British. Local ambivalence is encapsulated by an Emirati university professor, who says: "There are few success stories in the Arab world and we are proud that Dubai is one of them. But many of us feel that success is coming at too high a price."

The one thing that does need to be done is to pull more Emiratis into the system, and correctly, not as sinecure jobs.

FinallyI would be remiss not to bring this older article to the attention of the reader:

Racism is behind DP World port furore
By Gideon Rose

A nice opening, that I evoked above (accidentally, having forgotten it):

The great Indian writer Khushwant Singh once penned a poignant story called Karma, about the plight of Indian elites under British colonialism. The protagonist, Sir Mohan Lal, wants only to be accepted as a gentleman. Impeccably dressed in his Savile Row suit and Balliol tie, brandishing a copy of The Times, he proudly takes his seat in the first-class compartment of a train – only to be accosted by a couple of drunken, loutish British soldiers who fling him out, seeing only a “wog”.

Whether they realise it or not, most critics of the sale of P&O, the UK-based port operator that owns five terminals on the US east coast, to Dubai Ports World, owned by the United Arab Emirates government, are just replaying the scene with different accents.

Indeed.

Port security is indeed a critical issue, and it deserves far more attention than it has received from either the Bush administration or Congress. But that is not what all the hoopla is about. After all, DP World would not be responsible for first-order security measures, which would remain with the US Coast Guard, the Department of Homeland Security and local police.

The company already operates other port facilities around the world and has an excellent record. Its senior executives include several US citizens and local US port workers would continue to be unionised Americans. The deal has cleared numerous procedural checks, including scrutiny by the Committee on Foreign Investments in the US, which determines whether such deals might threaten national security.

Nor is the controversy about xenophobia or the fact that P&O is owned by a foreign government – for if those were the chief concerns, the fracas would have a much wider focus. Many US port operations are managed by foreign-owned companies; P&O is already owned by foreigners; and if P&O had not been sold to DP World, it would have been sold to the Singaporean government-owned PSA International.

The causes of the furore are actually quite simple, and ugly. “Port management” sounds like something important, especially in the post-September 11 world, and many think it cannot be left to “wogs” – a reaction that has been encouraged by shameless politicians quick to recognise a chance for cheap demagoguery. The irony here is that in many respects the Bush administration is reaping what it sowed, having previously played politics with homeland security and the war on terrorism, having blurred distinctions in the Muslim world by conflating the unrelated struggles against al-Qaeda and Saddam Hussein and having squandered its credibility and authority by its incompetent handling of the Iraq occupation and Hurricane Katrina.

I suppose I have to agreee that indeed the Ibn Bush have indeed reapt what they sowed, to an extent, although I agree the weakened adminstration was on the right side of this.

Nevertheless, on this issue, George W. Bush has so far been wiser than his critics. The greatest general challenge of this era is finding ways to reap the many benefits of globalisation while keeping its few actual dangers at bay. America is uniquely poised to succeed at this precisely because its relatively open and meritocratic society responds to people’s behaviour rather than their packaging. The greatest specific challenge, meanwhile, is helping the Muslim world make a successful transition to modernity – something the US has tried, albeit clumsily, to do, not least through close relations with countries such as the rapidly modernising UAE.

The nativist opposition to the port deal, however, cuts directly against these issues, throwing a wrench into the workings of globalisation while declaring that people’s background matters more than anything else.

Mr Bush defended the deal by saying: “I think it sends a terrible signal to friends around the world that it’s okay for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world can’t manage the port.” Whatever the syntax, he could not have been more correct.

Given the situation’s political realities, it makes sense to delay finalising the deal briefly. In fact, the crisis creates a perfect opportunity for the president to educate the Congress and the public on what globalisation means in practice, how it generally benefits Americans and the world at large, and how wrong it is to lump all Arabs, Muslims and Middle Easterners into a scary, undifferentiated mass. The administration could also take lessons about the importance of approaching homeland security seriously and the danger of playing with demagogic fire across the board.

Will any of this learning occur? If you think it will, I have a fantastic port to sell you . . .

Sadly prescient.

No, the whinging wingjut American left blithered in their usual illiteracy and exposed their own latent Islamophobia and racism, and the Know Nothing Nativists generally won.