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Dubya & Dubai
No better example of the three C's occurred this week than the coverage of the stock acquisition agreement between two foreign entities, one of which was owned by the leader of the seven-part federation called the United Arab Emirates (UAE) and the other of which had operating contracts for seaport terminals in the United States. The subsequent coverage was sufficiently rushed, confusing, agenda-driven and biased that a collection of accurate facts is needed before the congressional hearings next week. UAE Background In the 19th century, the United Kingdom executed treaties with the Trucial States of the Persian Gulf granting Britain control of defense and foreign affairs. The British ruled a set of poor principalities dependent on fishing and trading ports until oil was discovered in 1950. With Iraq's fluctuating production, UAE is now the third largest producer after Saudi Arabia and Iran. In 1971 a federation was formed and independence from Britain achieved. The seven members - Abu Dhabi, Dubai, Ajman, Fujairah, Ras al Khaimah, Sharjah, and Umm al Qaiwain - retain a great deal of independence. The UAE functions as a federation of city-states governed by a Supreme Council made up of the seven emirs who appoint the prime minister and the cabinet. Governed by hereditary rulers, the federation has never experienced elections. UAE is known for its foreign policy moderation and generosity to its neighbors. The capital is in the rich and cosmopolitan city of Dubai. The total population of UAE is listed as 2.6 million residents. Foreigners - British and American managerial expats and workers from India, Pakistan and Bangladesh - account for at least 1.6 million residents. The late Sheikh Zayed, president of the UAE at its inception, was adamant that the UAE re-invest its oil profits in ways that would sustain the nation when the oil ran out. Since 1962, the economy has been transformed. Revenues have been invested in healthcare, education and infrastructure. Considered the Hong Kong or Singapore of the Middle East, UAE has made substantial investments in business and tourism. All the Emirates are known for their interest in making money, not involvement in radical Islamic politics. DPW Background Dubai Ports World (DPW) is a private for-profit company whose stock is owned by the city-state of Abu Dhabi which is governed by the Emir and therefore a sort of sole proprietor. If its acquisition of the 165-year old Peninsular & Oriental Steam Navigation Co. (P&O) privately-owned and publicly-traded stock is completed, DPW will become the third largest ports operator in the world. It already operated 22 marine terminals in 15 countries including China, India, Venezuela and Australia. In addition, the company has trucking and airport operations plus freight transportation logistics services. It enjoys a stellar reputation and is highly-respected in the shipping business community. The cascade of doubts is not about the company but the government that owns it. The new $6.8 billion sale would also give DPW interests in Vancouver, British Columbia, Buenos Aires and selected locations in Britain and France plus several Asian countries. Terminal agreements are much like renting a warehouse in an industrial park. The park is owned by someone else. Competitors have warehouses next door. Management authority only extends to the physical area being rented. In the U.S., terminals are mostly owned by city, regional or state governments. Security is in the hands of the local police and the Coast Guard. Inspections are run by the Customs Service. Participation in security protocols is mandatory. DPW would provide stevedoring, freight loading and unloading and terminal operating services such as temporary storage and scheduling of truck and train pick up and delivery. The actual work is usually performed by local unionized longshoremen. The majority of DPW senior management is British and American. The proposed acquisition covers cancelable leases from port authorities in eight U.S. locations, not six. The six often mentioned are commercial terminals at ports in New York, Philadelphia, Baltimore, New Orleans, Miami and Newark, New Jersey. Usually going unreported is the P&O agreement with the U.S. Army to manage the movement of heavy armor, helicopters and military materiel through the ports at Beaumont and Corpus Christi, Texas. Considerations It is easy to say that the deal should not have been approved. The fact is that it has been approved by a 12-member inter-agency commission and will go into effect March 2nd absent an executive order, veto override or a signature from President Bush on a congressional action. Fantasy hearings on what might have been are a waste of time. The question is no longer approval but the consequences of dis-approval. Slapping the face of a friend in the Middle East creates a ton of issues, none of them much fun and some of them very dangerous. UPDATE: On Thursday evening, Feb. 23, DPW announced that it will delay portions of its agreement with
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Tom Huheey has more than four decades of experience in writing, editing and publishing books, magazines and newsletters. He has been actively involved with the national political scene in Washington since 1971, the second term of Richard Nixon. From time to time he has been a member of the adjunct faculty of George Washington University. He writes from a non-partisan but distinctly libertarian viewpoint. |
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