Critics Unload on Port Deal

An Arab company’s bid to take over management of cargo terminals at half a dozen U.S. ports has become a rallying point for critics seeking tougher port security and greater scrutiny of foreign investment.

But trade and security experts said criticism of the deal involving government-owned Dubai Ports World was misguided because the U.S. government, not terminal operators, was responsible for security at the ports. In addition, they said, foreign companies already control a large share of the U.S. cargohandling business.

The target of congressional critics is Dubai Ports World’s $6.8-billion deal to purchase Britain’s Peninsular & Oriental Steam Navigation Co., which runs cargo operations in New York; Newark, N.J.; Philadelphia; Baltimore; Miami; and New Orleans. They said the Bush administration failed to investigate the deal and should have reported its findings to Congress.

Detractors say the government of Dubai, one of the seven emirates that make up the United Arab Emirates, deserves greater scrutiny because of its connections to some of the terrorists involved in the Sept. 11 attacks. Dubai Ports World will be the third-largest port operator in the world if its purchase of Peninsular & Oriental Steam Navigation Co. is completed.

But trade and security specialists said U.S. criticism was unjustified, given Dubai’s support for the Bush administration’s anti-terrorism campaign and its close connections to the U.S. military. Dubai is a primary staging base for the U.S. Navy in the Persian Gulf.

They emphasized that the globalized nature of the shipping industry meant that it was dominated by foreign companies that would play an essential role in helping the U.S. secure shipping containers and ports, particularly overseas, where the U.S. has minimal oversight.

“The fear-mongering is that a bunch of Middle Easterners are going to come over and work on the docks, and nothing is farther than the truth,” said Robert Bonner, a former commissioner of U.S. Customs and Border Protection.

President Bush has threatened to veto any attempts to block Dubai Ports World’s acquisition, which was approved by a panel of U.S. officials charged with reviewing whether transactions by foreign companies might compromise national security. At a White House briefing Wednesday, administration spokesman Scott McClellan said the transaction wouldn’t raise the terrorism threat in any way.

“This transaction, if blocked, would not change security at ports one iota,” he said.

Before getting the approval of the Committee on Foreign Investments in the United States, Dubai Ports World agreed to enforce the existing security standards at U.S. ports, maintain personnel and share operational information such as security measures and employee backgrounds with the U.S. government, U.S. Trade Representative Rob Portman said during a news briefing. But the interagency panel didn’t impose other routine restrictions, including requiring the company to keep copies of business records on U.S. soil, Associated Press reported Wednesday.

Foreigners are already major operators in U.S. ports. Thirteen of 14 container terminal operators at the Los Angeles-Long Beach port complex are foreign-owned, including companies from China, Japan, Taiwan, Singapore and Denmark.

Ports pose a security concern because only a portion of the more than 14 million containers that arrive in the U.S. every year are inspected. Many fear that the containers could easily be used to smuggle weapons, such as so-called dirty bombs, into the country. Efforts to install U.S. inspectors in foreign ports are just beginning and funding for port security, which has increased 700% since the Sept. 11 attacks, lags behind aviation security funding.

P.J. Crowley, domestic security expert at the Center for American Progress in Washington, said that insufficient security at America’s ports was the nation’s “greatest single vulnerability,” and the federal government had provided insufficient resources to prevent the “nightmare scenario” of a nuclear device being smuggled into the U.S. in a shipping container.

But Crowley and other security experts didn’t see the Dubai Ports World purchase as a threat because of the way U.S. ports operated. The transaction wouldn’t alter security procedures or the makeup of the unionized workforce on the ground.

Dubai Ports World has a reputation as an efficient port operator with a good security record, including early participation in the U.S. Container Security Initiative, which places U.S. customs agents overseas to screen and secure cargo. Dubai Ports World’s chief operating officer, Edward H. Bilkey, is an American, and the Bush administration recently nominated a former Dubai Ports World executive, David Sanborn, to be the U.S. maritime administrator.

“There are significant areas of concern in the area of port security, but this one company is not a significant security threat,” said Joseph J. Bouchard, executive director of domestic security and defense at Zel Technologies in Virginia.

Representatives at the Dubai Ports World’s headquarters in Dubai couldn’t be reached Wednesday for comment.

It would not own the ports in question, but would operate cargo terminals there, taking on responsibility for moving goods and ships in and out of the areas.

Terminal operators generally hire security firms to police their facilities, and there was some question whether a change in the lease holder would require the submission of a new security plan for federal approval.

U.S. Customs and Border Protection would still bear responsibility for checking cargo throughout the ports, although the Coast Guard would still be responsible for general port security, said Leah Yoon, a customs spokeswoman.

The dockworkers who haul cargo on and off the containers would not be affected. They are hired through the International Longshoremen’s Assn., a powerful union that negotiates with terminal operators and shippers over who does the work. Port officials say the union’s members will probably be U.S. citizens.

“Who’s leasing the terminals on paper is one thing, but it doesn’t have much to do with who controls the day-to-day operations,” said Rachel Campbell, a spokeswoman for the Port of Los Angeles.

“You’d be hard pressed to do it any other way,” Campbell said, pointing out that there was only one major U.S. shipping company still in business. “They’re all foreign operators.”

*

Times staff writer Deborah Schoch contributed to this report.

*

(BEGIN TEXT OF INFOBOX)

UNITED ARAB EMIRATES

Population: 2.5 million

Area: 32,000 square miles (about the size of Maine)

Religion: 96% Muslim

Government: Seven emirates make up a federation; powers split between the federal and emirate governments.

Recent political history: It is a U.S. ally in the Middle East and in the war on terrorism, the Bush administration says. It has called for a complete Israeli withdrawal from the West Bank and the establishment of a Palestinian state. The CIA says the nation is a drug transfer point for traffickers and is vulnerable to money laundering. Dubai, one of the seven emirates, was the focus of an investigation into its banking practices in 1999 after it was alleged that Al Qaeda was moving money through the Dubai Islamic Bank. The country’s banks were also used to funnel money to hijackers who flew planes into the World Trade Center.

*

Sources: CIA World Factbook; Agence France Presse; Times reporting. Graphics reporting by Tom Reinken and John Tyrrell