Deal on Ports to Get Review

A state-owned Arab company seeking to take over operations at port facilities in six U.S. cities asked the U.S. government Sunday to conduct a new security review of the transaction, sparing President Bush -- at least for the time being -- a politically uncomfortable showdown with members of his own party.

Dubai Ports World, owned by one of the sheikdoms that make up the United Arab Emirates, announced it was requesting the 45-day review as lawmakers prepared to introduce legislation to block the sale until its potential effect on national security could be more thoroughly studied.

The Treasury Department said Sunday that the review would begin as soon as the request was formally received. Key lawmakers said they expected that the review would be more rigorous than the initial examination of the deal.

“There has to be a real investigation,” said Rep. Peter T. King (R-N.Y.), chairman of the House Homeland Security Committee, who is among a large bipartisan contingent in Congress skeptical of the administration’s contention that there is no security risk in a private British firm’s sale of its U.S. operations to a company owned by an Arab government.

The Bush administration has said the proposed sale was thoroughly vetted and that no further examination was needed.

But administration officials Sunday expressed support for the new review in the hopes that it would calm the political storm and allow the transaction to proceed smoothly.

“Anything that permits there to be additional time so that more people can learn the facts as we learned them is to the better,” White House domestic security advisor Frances Townsend told “Fox News Sunday.” “Once people understand ... that this is really a commercial deal where the security concerns have been addressed, that’s a good thing.”

In requesting the new review, Edward Bilkey, the Dubai company’s chief operating officer, said in a written statement that the company wanted to “assure people that the security of the U.S. will not be harmed” by the takeover.

“We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States,” the statement said.

The Dubai company’s purchase of London-based Peninsular & Oriental Steam Navigation Co., which operates 29 container terminals worldwide, is scheduled to close Thursday. Dubai Ports World announced last week that it would delay taking control of the U.S. facilities included in the $6.85-billion deal until security concerns were addressed.

On Sunday, the Dubai company said it would leave the current management of the U.S. terminals in place and pledged it would not in “any way influence or attempt to influence any operations” at the ports until May 1 or the end of the 45-day review period, whichever comes first.

The U.S. terminal operations will be set up as “a completely separate business unit,” the company statement said.

The review will be conducted by the interagency committee that cleared Dubai Ports World to take over operations of port terminals in New York; Newark, N.J.; Philadelphia; Baltimore; Miami; and New Orleans. The Committee on Foreign Investment in the United States, which includes representatives of the Defense and Homeland Security departments, determines whether national security might be compromised when foreign companies seek to buy or invest in American assets.

Once the recommendations regarding the ports are issued, the president has 15 days in which to accept or reject the recommendations.

On Jan. 17, the 12-member committee reported that it had reviewed the proposed purchase and found no security issues. An objection by a committee member would have triggered the same 45-day review that the company is now requesting.

“The security considerations here have been well addressed,” White House national security advisor Stephen J. Hadley said Sunday on CBS’ “Face the Nation.” “There isn’t a security risk. This needs to be made clear to the Congress and to the American people. And we need a little time to do that.”

The company’s decision to request the review came after late-night meetings and phone calls involving congressional leaders, administration officials and company representatives.

Sen. John W. Warner (R-Va.), chairman of the Senate Armed Services Committee, was at home Saturday night when Dubai Ports World officials called him to float their offer. He met with Bilkey, the firm’s chief operating officer, for about two hours and called Senate Majority Leader Bill Frist (R-Tenn.) to share the details with him. Warner also met Saturday with Pentagon officials, he told NBC’s “Meet the Press.”

“The company really had no choice but to submit to this review because legislation was moving through like a freight train,” said a Senate Republican aide who spoke on condition of anonymity because he was not authorized to speak publicly about the issue. “This was the only logical step that would put the brakes on congressional action to kill the deal.”

Bush has threatened to make such legislation the target of the first veto of his presidency. The president has called the United Arab Emirates an important U.S. ally in the war on terrorism.

But members of his own party have complained about the Middle Eastern country’s record in fighting terrorism. Two of the Sept. 11 hijackers carried UAE passports, and much of the money that funded the plot was transferred through the country’s banking system.

In addition, the UAE was one of three countries that recognized the legitimacy of the Taliban-run government in Afghanistan, which provided safe haven for Osama bin Laden. And the report of the independent commission that investigated the Sept. 11 attacks raised concerns about possible associations between the Al Qaeda leader and UAE officials before the attacks.

“Just because they’re an ally doesn’t mean we can overlook the fact that there could be an emir or a relative of an emir who is very close to Al Qaeda who is still in the government and involved in this company,” King said on NBC’s “Meet the Press.”

But Warner warned on the same program that rejecting the sale could have a serious effect on U.S. efforts to cultivate support in the Arab world. “We cannot mess this deal up,” he said.

Sen. Charles E. Schumer (D-N.Y.) said the review would be “a significant step forward,” but said Congress should still have the opportunity to kill the deal.

“If after the 45-day investigation, it’s kept secret, it’s given to the president -- who after all has come out for this deal already -- I don’t think that’s going to assure the American people,” he said on CBS’ “Face the Nation.”

“On the other hand, if after the 45-day investigation, the report is shared with Congress, the public parts with the American people, and then Congress gets some breathing space to approve or disapprove the deal, that would be just fine. We wouldn’t need legislation. There wouldn’t have to be a confrontation.”

In a written statement Sunday, Frist said he would recommend that the Senate await the findings of the review before determining whether legislation was needed. He added that he hoped the Senate would continue to examine “the best way to reform the [review] process to bring greater transparency and understanding to it.”

Most port terminals in the United States are operated by foreign companies because most shipping firms are foreign-owned.

At the Port of Los Angeles, three of the 36 shipping firms are partially or solely owned by U.S. companies. Thirteen of 14 container terminal operators at the Los Angeles-Long Beach port complex are foreign-owned, including companies from China, Japan, Singapore and Denmark.

Appearing Sunday on “Meet the Press,” Gov. Arnold Schwarzenegger emphasized that the foreign companies “lease space. They don’t own it.”

As for security, he said, “We have the Coast Guard, we have the Customs Service, we have the local law enforcement, we have the Port Authority.... It’s not the Chinese or any other country that controls our security.”

One outcome of the controversy has been new attention on the vulnerability of ports to an attack, stoking efforts to increase funding to tighten security at facilities including the L.A.-Long Beach port complex.

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Times staff writer Deborah Schoch in Long Beach contributed to this report.