Port Deal's Political Fallout Not Over
House GOP Drafting Bill to Require Hill Oversight of Foreign Acquisitions

By Jonathan Weisman
Washington Post Staff Writer
Saturday, March 11, 2006

House Republican leaders will unveil legislation as soon as next week demanding a congressional role in reviewing the acquisition of U.S. businesses by foreign buyers, suggesting that the controversy over a now-abandoned Dubai port deal will continue to roil congressional relations with the Bush administration.

House Majority Whip Roy Blunt (R-Mo.) is drafting a bill to require congressional oversight as the administration reviews such foreign acquisitions, a role Congress has not played since the Committee on Foreign Investments in the United States (CFIUS) was created three decades ago.

A day after United Arab Emirates-based Dubai Ports World abandoned its bid to control terminal operations at six major U.S. seaports, lawmakers and President Bush made it clear that the issue was not going away. In remarks to newspaper editors, Bush said he is "concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East."

"In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," Bush said. "UAE is a committed ally in the war on terror. They are a key partner for our military in a critical region."

Secretary of State Condoleezza Rice, speaking to reporters while flying to Chile, said: "Of course I think you have to be concerned about the perception and the message that this might send. It means that we are going to have to work and double our efforts to send a strong message that we value our allies, our moderate allies, in the Middle East."

U.S. Trade Representative Rob Portman announced that trade talks between the United States and the UAE, set to begin Monday, will be postponed. Spokeswoman Neena Moorjani said both sides need more time to prepare.

Flush from what they see as a victory, members of Congress appear determined to insert themselves into matters of national security that they had previously left exclusively to the president. But their aggressive response has left administration officials -- and even some colleagues -- concerned that the longer the controversy drags out, the more likely it will alienate foreign allies, dampen investment in the United States and even slow the economy.

On Capitol Hill, lawmakers from both parties pledged to revise the review process for business acquisitions by foreigners while moving swiftly on legislation to bolster port security.

Critics of the congressional attack on the port deal said DP World's withdrawal will not make the six U.S. ports any safer from terrorist attacks. But lawmakers say the controversy will spark action on measures to tighten security that have languished in Congress. Both the Senate and House homeland security committees said they will draft legislation in a matter of weeks.

House leaders have decided to push ahead next week with a full House vote on legislation to kill the port deal. The House Appropriations Committee had approved the measure 62 to 2 on Wednesday, but rank-and-file members outside the committee have asked to go on record with their opposition.

Democrats demanded that the White House release all documents related to DP World's acquisition of London-based Peninsular and Oriental Steam Navigation Co., including the administration's review of the deal and documents pertaining to a Coast Guard memo that said investigators could not say whether the transaction would heighten terrorist threats.

Despite the assurances of congressional Republicans and the president, some Democrats also questioned whether DP World really committed to shedding its U.S. port assets Thursday when it pledged to "transfer" them to a U.S. entity. Bush himself said the Dubai-owned firm has "made the difficult decision to hand over port operations that they had purchased from another company."

But company spokesman Mark Dennis again refused to elaborate yesterday on the company's official statement, leaving it unclear whether a transfer of assets meant a loss of ownership or just management responsibilities, and Democrats remain skeptical. Even one knowledgeable House Republican aide suggested that the language could mean the company might maintain ownership if a buyer could not be found at the right price. "The port deal's not dead," said Rep. Dennis J. Kucinich (D-Ohio).

Officials from both parties warned that if the statement's intent proves to be less than full divestiture, Congress will move swiftly to kill the deal. "If nothing else, the company will ignite a thermonuclear explosion for itself and the emirate if it falls short of a sale," warned one Republican Senate aide.

Even if DP World sells its assets at the ports of Baltimore, New York, Newark, Philadelphia, Miami and New Orleans immediately, the underlying issues raised by the controversy will remain at the top of Congress's political agenda.

Blunt could release his CFIUS legislation as early as next week, a highly unusual move for a senior House leader with no seat on the committee with jurisdiction. Blunt spokeswoman Burson Taylor said the majority whip plans to work with House Republican Conference Chairman Deborah Pryce (Ohio) and House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) on a final bill. But senior House GOP aides, speaking on the condition of anonymity for fear of crossing the whip, said Blunt is driving the issue as well as the language.

A Senate measure, being drafted by Sen. Richard C. Shelby (R-Ala.), chairman of the banking committee, could encroach on the administration's turf even further. Committee spokesman Andrew Gray said Shelby's bill, due to be completed the week of March 27, would give Congress the authority to pass a resolution of disapproval, even if the administration has given a deal the green light.

Administration officials struck a conciliatory tone on such legislation. "This process for review I think can be done better, and we're going to be working with Congress, with people like Chairman Shelby of the banking committee, to make sure that we improve the process," Treasury Secretary John W. Snow said on MSNBC.

But administration officials and some congressional allies said Congress should not be allowed to go too far. The CFIUS review process was set up to be confidential and beyond Congress's reach specifically to insulate sensitive business investments from political forces, they said. Last week, Oxley raised the same concerns when he said the review process "is not -- nor should it be -- political in nature. That is a slippery slope, and it would be a mistake to take that step."

Even Sen. Charles E. Schumer (D-N.Y.), one of the fiercest critics of the port deal, said language must be found to ensure that Congress could scuttle a deal only in "egregious situations." He added: "We have to figure out a way where it's not routine."

Staff writer Glenn Kessler contributed to this report.

View all comments that have been posted about this article.

© 2006 The Washington Post Company