By Jim VandeHei and Jonathan Weisman
Washington Post Staff Writers
Thursday, February 23, 2006
Faced with an unprecedented Republican revolt over national security, the White House disclosed yesterday that President Bush was unaware of a Middle Eastern company's planned takeover of operations at six U.S. seaports until recent days and promised to brief members of Congress more fully on the pending deal.
One day after threatening to veto any attempt by Congress to scuttle the controversial $6.8 billion deal, Bush sounded a more conciliatory tone by saying lawmakers should have been given more details about a state-owned company in the United Arab Emirates purchasing some terminal operations in Baltimore and five other U.S. cities.
"This is one where we probably should have consulted with or briefed Congress on sooner," White House spokesman Scott McClellan told reporters.
But congressional Republicans renewed their vow to prevent the sale from being finalized next month and warned Bush, sometimes in taunting terms, that an overwhelming majority of lawmakers will oppose the sale on national security grounds. "Dear Mr President: In regards to selling American ports to the United Arab Emirates, not just NO but HELL NO!" Rep. Sue Myrick (R-N.C.) wrote to Bush in a one-sentence letter.
The administration on Jan. 17 approved the sale of a London-based company that manages terminals at the U.S. ports to Dubai Ports World, owned by the United Arab Emirates.
The U.S. government reviews business transactions with national security implications and decided after a 23-day review by mid-level officials that Dubai Ports World posed no threat . McClellan said Bush learned about the sale in recent days, after it had been widely reported.
In seeking to assuage critics, administration officials noted that the local or state ports authorities and the U.S. Coast Guard would be responsible for security at the six ports -- not Dubai Ports World, which would be responsible for running terminal facilities and loading and unloading ships and storing the containers they transport.
All dock workers are union members who must undergo background checks, officials stressed. Bush said that those attacking the sale were holding a Middle Eastern company to a different standard than the British port operator that is being acquired by Dubai Ports World.
Senate Majority Leader Bill Frist (R-Tenn.) and House Speaker J. Dennis Hastert (R-Ill.) rejected Bush's call to allow the sale to go through early next month and they remain committed to delaying it, their spokesmen said yesterday.
Republican lawmakers have been flooded with phone calls and letters from constituents encouraging them to fight Bush over the port deal, even at the expense of GOP unity on combating terrorism -- possibly their best political issue. As a result, Bush and Republicans are divided over a national security issue as never before and bracing for a possible showdown that could force Bush to either delay the sale or veto a Republican bill against it, according to congressional and White House officials.
With the president's ratings mired around 40 percent approval, some Republican lawmakers who face tough reelection bids in November have been looking for ways to distance themselves from Bush without appearing to be soft on terrorism. The president, who once enjoyed near unanimous support from GOP allies on Capitol Hill, has seen a steady rise in Republican criticism over Iraq, Iran, warrantless domestic spying and now the port deal.
House Homeland Security Committee Chairman Peter T. King (R-N.Y.) said political pressure from constituents is driving the debate. Lawmakers, he said, are "responding to incredible local political pressure."
In a bid to defuse the controversy, Bush has instructed aides to brief members of Congress on Dubai Ports World, its operations and the intelligence community's findings that the firm poses no risk to national security. The briefings began yesterday.
Some of the big names on K Street have joined the Dubai Ports World fight on the side of the United Arab Emirates-owned company.
These include former Senate majority leader Bob Dole (R-Kan.), and a Democratic power couple in Washington, former representative Tom Downey (D-N.Y) and Carol M. Browner, former head of the Environmental Protection Agency. Dole's law firm, Alston & Bird LLP, led the effort by Dubai Ports World to steer its proposed acquisition of Peninsular and Oriental Steam Navigation Co. through the U.S. government approval process.
A senior White House official, who discussed internal strategy under the condition of anonymity, said Bush realizes that Republicans are dug in and that he may have to compromise. "We are sensitive to the fact that people have taken firm positions," the official said. But that effort was complicated by the disclosure that Bush and Treasury Secretary John W. Snow were unaware until this week about the purchase agreement and the administration's approval of the transaction last month.
Snow, whose department chairs the secretive executive branch panel that reviewed the proposed sale, told reporters in Torrington, Conn., that "I learned of this transaction probably the same way as members of the Senate did, by reading it in the newspapers."
Scores of lawmakers have complained that the transaction was not sufficiently scrutinized. Some lawmakers said Snow's comments reinforced the image of a quick and easy approval process.
At the Treasury Department, the Committee on Foreign Investments in the United States (CFIUS), which includes Cabinet officials and White House aides, examines sales with potential national security risks and usually attracts little attention.
Administration officials did not consider the sale of port terminal management to a Middle Eastern company dangerous or potentially controversial, White House aides said. Foreign-owned companies including a Chinese operation have controlled terminals at various U.S. ports for years -- and lawmakers have rarely complained. The White House said intelligence officials reviewed the sale and raised no concerns.
In a private briefing for House aides late yesterday, administration officials from the departments of State, Defense, Treasury and Homeland Security said the CFIUS met only once during a 23-day review of the sale and that the few objections raised were quickly addressed.
A Homeland Security official, for instance, argued successfully that the UAE company should be required to open its books without the threat of subpoena, participants said. Dubai Ports World agreed. Administration officials said they were trying to get a copy of that agreement to provide to lawmakers. The Associated Press reported last night that the administration, before approving the ports deal, secretly required the firm to cooperate with future U.S. investigations.
Under a 1993 amendment to the law that helped create the review panel, a more rigorous 45-day investigation is automatically required if "the acquirer is controlled by or acting on behalf of a foreign government" and the acquisition "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."
Patrick Mulloy, a member of the government-appointed U.S.-China trade commission and a critic of the approval process, said that Treasury officials throughout the Clinton and Bush administrations have routinely ignored the 1993 language.
"The culture of the department is to oppose [the longer review] as an impediment to foreign investment," he said.
Joseph King, who headed the customs agency's anti-terrorism efforts under the Treasury Department and the new Department of Homeland Security, said national security fears are well grounded.
He said a company the size of Dubai Ports World would be able to get hundreds of visas to relocate managers and other employees to the United States. Using appeals to Muslim solidarity or threats of violence, al-Qaeda operatives could force low-level managers to provide some of those visas to al-Qaeda sympathizers, said King, who for years tracked similar efforts by organized crime to infiltrate ports in New York and New Jersey. Those sympathizers could obtain legitimate driver's licenses, work permits and mortgages that could then be used by terrorist operatives.
Dubai Ports World could also offer a simple conduit for wire transfers to terrorist operatives in the Middle East. Large wire transfers from individuals would quickly attract federal scrutiny, but such transfers, buried in the dozens of wire transfers a day from Dubai Ports World's operations in the United States to the Middle East would go undetected, King said.
But Robert C. Bonner, a former top U.S. customs official, said that the security concerns surrounding the purchase agreement have been "greatly exaggerated."
"The reality is the major terminal operators are all foreign-owned," Bonner said. "This one happens to be owned by Dubai, but Dubai . . . has been very supportive in the counterterrorism efforts."
Staff writers Jeffrey H. Birnbaum, Paul Blustein and Walter Pincus contributed to this report.