Dubai Port Company to Divest Itself of American Holdings

Washington Post Staff Writers
Thursday, March 9, 2006; 1:57 PM

The United Arab Emirates company that was attempting to take over management operations at six U.S. ports announced today that it will divest itself of all American interests.

The announcement appears to head off a major confrontation that was brewing between Congress and the Bush administration over the controversial deal.

Sen. John Warner (R-Va.) announced on the Senate floor shortly before 2 p.m. that Dubai Ports World would "transfer fully the operations of U.S. ports to a U.S. entity." Warner, who had been trying to broker a compromise on the issue, said DP World would divest itself of U.S. interests "in an orderly fashion" so as not to suffer "economic loss."

It was not immediately clear how the divesture would be handled or what U.S. company would take over the operation.

Warner's announcement came just hours after Republican leaders from the House and Senate met with President Bush to tell him Congress appeared ready to block the deal.

The GOP leaders gave Bush their assessment of where the deal stood at a private meeting at the White House, according to Amy Call, a spokeswoman for Sen. Bill Frist (R-Tenn.) Although the gathering was a regularly scheduled meeting, according to Call, it was significant because it came only one day after lawmakers took their first formal steps toward killing Dubai Ports World's acquisition of a British-owned company.

The administration had repeatedly said it would veto any attempts to crush the deal, arguing that port security is in the hands of U.S. agencies and would not be put in jeopardy by the takeover. Americans have reacted viscerally to the deal, lawmakers say, driving Congress towards a confrontation with the White House.

"We want to protect the American people," said House Speaker Sen. J. Dennis Hastert (R-Ill). "We've been doing it the last four and a half years. We fought a war in Iraq, fought a war in Afghanistan, stood up to the Homeland Security Department. We will continue to do that. We will maybe have our differences, but we think we're going to continue to" oppose the Dubal deal," he said Thursday morning.

The House Appropriations Committee Wednesday added a measure to block the deal to a must-pass war-funding bill. The vote on the bill was 62-2. A full House vote on the bill is expected to pass overwhelmingly next week.

A knowledgeable Senate aide said the GOP leaders told Bush Thursday that they may be able to stave off a vote today in the Senate to kill the ports deal, but they won't be able to hold it back forever.

Senate Democrats continued to demand a vote on the issue, while Senate Republicans have been hoping they could prevent a vote until the end of a 45-day review of the deal.

The ports deal has sparked an unusual, election-year Republican mutiny against the Bush administration over an issue the president has tried to make his own -- the war on terrorism.

The confrontation over the Dubai-owned company's acquisition of management operations at six major ports, including Baltimore, New Orleans and New York, has more than any other issue in recent years been driven by constituents anxious about terrorism, the war in Iraq and illegal immigration and foreign encroachment, lawmakers say.

Add to that the president's rock-bottom approval ratings and there may have been little the White House could do to beat back the issue.

White House officials have not backed down in the face of the brewing revolt, however. At the same time the GOP leadership was meeting with Bush, White House Press Secretary Scott McClellan repeated Bush's vow to veto any legislation that interferes with the deal. He has made clear the president's position is unchanged.

Republican lawmakers said yesterday that obstinacy has only fueled the rebellion. And GOP members of all ranks objected to the White House's handling of an issue that has proved to be a gift for Democrats.

For Democrats, the issue may be a political windfall, even if Republicans side with them in a confrontation with the White House. About 70 percent of Americans oppose the port deal, and that opposition does not change if they are told port managers do not control security at the ports.

Democracy Corps, a Democratic polling organization, released a memo yesterday saying the Dubai port issue has helped drive down Bush's approval ratings, particularly on national security matters and especially among Republic voters.

The issue appears headed in one of two directions -- a veto confrontation between the president and Congress or a decision by the company to abandon its takeover plans.

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