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Many in Congress Insist on Chance to Scuttle Ports Deal

By Paul Blustein
Washington Post Staff Writer
Thursday, March 2, 2006

Members of Congress from both parties yesterday demanded the right to reject the Dubai ports deal after the Bush administration completes a 45-day investigation of the transaction, the clearest sign to date that the controversy may lead to significant changes in the system governing investment from abroad.

The statements by several powerful lawmakers, and the bills they introduced, indicated that Congress will wait until after the review before deciding whether to block the takeover by Dubai Ports World of a British firm that manages container-terminal operations at six U.S. seaports. But giving Congress the right to overturn the deal would be a departure from current rules designed to keep such decisions free of political influence.

The developments on Capitol Hill yesterday showed that the administration has only partially succeeded in quelling the political storm surrounding the approval of the deal by the Committee on Foreign Investment in the United States, an interagency panel responsible for scrutinizing foreign purchases for national security problems.

Bowing to pressure, the administration and Dubai Ports World agreed over the weekend that the approval, which followed a standard 30-day review, would be withheld pending a full 45-day investigation. Such investigations, which end with a presidential ruling on whether to let a deal go forward, are conducted only in a few cases that CFIUS reviews.

But while lawmakers backed away from threats to immediately pass laws barring the transaction, they began to coalesce behind efforts that would ensure the option of a congressional vote in the end. In the House, 81 members led by Rep. Peter T. King (R-N.Y.), chairman of the Homeland Security Committee, supported a bill that would give Congress the right to reverse President Bush's approval of the deal 30 days after he submits his report on the matter to Congress.

King said: "I think an investigation is clearly warranted, and Congress must stand ready to act pending the results of the investigation."

Separately, Sen. Charles E. Schumer (D-N.Y.) said he had bipartisan support for giving Congress "the right of disapproval." Emerging from a meeting of six senators -- including two Republicans -- Schumer said the group was sending a letter to the Senate leadership demanding such a right. If the request is turned down, he said, "we will seek a vote . . . to require it to happen."

Although such a move would be less drastic than a preemptory congressional rejection of the deal, it would substantiate fears among many in the business community that the controversy will erode the political neutrality of the current system for screening foreign investment.

"It's essentially saying, 'We want the right to politicize this, and by implication any other CFIUS review,' " said Edward M. Graham, a scholar at the Institute for International Economics who co-authored a pending book on the committee. "And yet the law was scrupulously framed as to make it a nonpolitical determination."

At a hearing yesterday of a House Financial Services subcommittee, which has jurisdiction over CFIUS, administration officials said that only modest changes in the system are in order. Robert M. Kimmitt, the deputy treasury secretary, reiterated the Treasury Department's promise to consult frequently with congressional leaders on cases pending before the CFIUS, rather than just brief them on decisions that have already been made.

But the officials encountered harsh criticism from many Democrats, and even Republicans warned them that they feel compelled to consider substantial changes in the rules.

"Is CFIUS broken? I think the process is broken," said Rep. J. Gresham Barrett (R-S.C.).

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