Panel Chairman to Fight Port Deal

James Carafano of the Heritage Foundation testifies before the Senate banking committee on the sale of operations of six U.S. ports to a Dubai firm.
James Carafano of the Heritage Foundation testifies before the Senate banking committee on the sale of operations of six U.S. ports to a Dubai firm. (By Melina Mara -- The Washington Post)
By Jonathan Weisman
Washington Post Staff Writer
Friday, March 3, 2006

The chairman of the House Armed Services Committee said yesterday that "Dubai cannot be trusted" to manage U.S. ports because of what he called its long record of assisting the proliferation of nuclear and chemical weapons.

Rep. Duncan Hunter (R-Calif.) vowed after a hearing to reverse a $6.8 billion port deal expected to be completed today. He also said he will push legislation that would block a second Dubai company's efforts to acquire two U.S. plants that manufacture precision components for military aircraft and tank engines.

A Washington Post report yesterday of Dubai International Capital's $1.2 billion acquisition of the London-based precision manufacturer Doncasters Group Ltd. and its U.S. defense plants further roiled an issue that White House and congressional GOP leaders had hoped would subside.

That deal, now under a national security investigation by the Bush administration, was cited by lawmakers from both parties as evidence that the process used to review a foreign company's purchase of U.S. assets is broken. The issue exploded last month after the administration approved, with no national security inquiry, Dubai Ports World's acquisition of London-based Peninsular and Oriental Steam Navigation Co. and its management operations at six U.S. ports. Political leaders had hoped DP World's request on Sunday for a 45-day national security investigation of the deal would cool political tempers, but it has not.

"While I strongly support our open investment policy and recognize that it is vital to our national economic interest, I do not believe it should stand at any cost," Richard C. Shelby (R-Ala.), chairman of the Senate banking committee, told administration officials yesterday. "Everything in this country can't be for sale."

Stung by such charges, the administration's secretive Committee on Foreign Investment in the United States (CFIUS) opened an inquiry this week into Dubai International Capital's purchase of Doncasters, taking the unusual step of notifying congressional committees to head off another political flap.

But lawmakers -- virtually all of whom learned of the second inquest in the newspaper -- were not assuaged. Rep. John Barrow (D-Ga.), whose district includes a Doncasters plant in Rincon, Ga., called for making security investigations mandatory for all pending and future foreign acquisitions of U.S. businesses involved in international transportation or defense contracting.

"Last week, we learned that a foreign company from a country with ties to 9/11 was getting ready to take over management for a handful of our nation's largest shipping ports. Today, we learn that another company controlled by the same government is looking to take over management of American plants that make parts for our country's military aircraft and tank engines. This is crazy," Barrow said.

Sen. Charles E. Schumer (D-N.Y.), one of the first lawmakers to jump on the port issue, said the investigation of the Doncasters deal only underscores the inconsistency of the CFIUS process.

"It seems to me that port security is every bit as important as the manufacturing of engines for tanks," he said.

For all the bluster, House lawmakers defeated the first vote on a proposal to intervene. Democrats tried a parliamentary maneuver to force GOP leaders to consider bipartisan legislation that would give Congress the right to approve or reject the port deal after the security investigation is completed. The move was defeated 216 to 197, along party lines.

The DP World acquisition of terminals in the ports of New York, New Jersey, Baltimore, Philadelphia, Miami and New Orleans should be completed today or Monday, according to Deputy Treasury Secretary Robert M. Kimmitt. A British judge ruled yesterday that the deal could proceed.

The Treasury Department will convene CFIUS for the national security investigation once DP World refiles papers necessary to begin the process, Kimmitt said.

The port flap has created some uncomfortable politics in Congress. Former Senate majority leader Robert J. Dole has signed on to lobby on Dubai's behalf, prompting Democratic calls for his wife, Sen. Elizabeth Dole (R-N.C.), to recuse herself from votes on the issue. Now conservatives are pointing to a Democratic power couple, former president Bill Clinton and Sen. Hillary Rodham Clinton (N.Y.), who has introduced legislation demanding U.S. ownership of U.S. port operations.

Jay Carson, a spokesman for Bill Clinton, acknowledged that representatives of Dubai reached the former president more than two weeks ago to discuss the port acquisition. In a short phone conversation from India, Carson said Clinton told the officials they should submit the deal for the fullest possible investigation.

Carson said the former president fully supports his wife's legislation.

"This deal should not be approved unless the security of our ports is dramatically improved," Carson said.

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