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Bush: Ports fallout could hurt war on terror

He said he's worried about the "message this issue could send to our friends and allies," particularly in the Mideast.

Associated Press
Published March 11, 2006

WASHINGTON - President Bush said Friday the collapse of the Dubai ports deal could hurt U.S. efforts to recruit Mideast governments as partners in the worldwide war on terror.

Dubai-based DP World backed away Thursday in the face of unrelenting criticism and announced it will transfer its management of port terminals in major U.S. cities to an American entity.

Separately, in what may have been an aftershock to the failed transaction, a new round of trade talks between the United States and the United Arab Emirates was postponed.

And statements in the Arab media indicate that the ports controversy is also likely to send a chill through Arab businessmen, making them cautious about investing in the United States amid fears of an anti-Arab bias in the world's biggest market.

Bush struck a defiant tone Friday with the Republican-led Congress, whose new willingness to buck him has taken its most dramatic form with the ports controversy.

The president said he is open to improving the government's method of reviewing such transactions, but he insisted that his administration's approval of the deal had posed no security risk - and that the reversal could have the opposite effect.

"I'm concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East," said Bush at a conference of the National Newspaper Association. "In order to win the war on terror, we have got to strengthen our friendships and relationships with moderate Arab countries in the Middle East."

The United Arab Emirates, of which Dubai is a part, is just such a country, Bush said.

It services more U.S. military ships than any other country, shares useful intelligence about terrorists and helped shut down a global black-market nuclear network run by Pakistani nuclear scientist A.Q. Khan, the administration says. This week, though, the State Department's annual human rights report called the UAE's performance "problematic," citing floggings as punishment for adultery or drug abuse.

After weeks of questions from lawmakers of both parties about whether giving a state-owned company from an Arab country control of significant port operations could increase terrorist dangers, the silence from Republicans on Friday was telling. The only statements came from Democrats who sought to keep the issue alive.

Sen. Charles Schumer, D-N.Y., a chief critic of the Dubai deal, said lawmakers need more details on DP World's planned divestiture. It wasn't clear which American business might get the port operations, or how the U.S. entity would be related to the Dubai government.

"Make no mistake, we are going to scrutinize this deal with a fine-tooth comb," Schumer said.

Any backlash against U.S. won't last, analysts say

The Arab backlash against investment in the United States may not be long term: Many analysts said Friday that the United States is too tempting an investment for the oil-rich gulf businesses. But the delay of trade talks between Washington and the United Arab Emirates may be the first sign of discontent.

The United States played down any connection between the delay of the talks - which had been due to start Monday - and the ports controversy. Neena Moorjani, spokeswoman for the U.S. Trade Representative, said both sides just needed more time to prepare.

Reem al-Hashimy, the commercial attache for the United Arab Emirates in Washington, said on CNN that the ports deal and trade talks were "entirely separate issues" and that the postponement of the talks will not delay the overall progress toward a free-trade agreement between the countries.

Still, the development prompted speculation that the UAE government wanted to show its displeasure, at least symbolically.

UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi was quoted Friday in the daily Gulf Today as saying the ports controversy could cause problems with the trade deal. "It is something that doesn't reflect well," he said.

For many in the Persian Gulf region, the dispute is a reflection of what they see as U.S. anti-Arab sentiment and a particular slap to the UAE, a U.S.-friendly nation.

"This anti-Dubai venom is about race, religion and prejudice, not ports, security and politics," Matein Khalid, an investment banker in Dubai, wrote in the Khaleej Times. Blocking the DP World deal "will strip bare our illusion that an Arab, a Muslim, can ever be a friend of America again."

Eddie O'Sullivan, Dubai-based editorial director of Middle East Economic Digest, said the UAE government is likely to take some steps to show its discontent and assuage its citizens' anger over what they see as unjust treatment.

However, O'Sullivan said, any response from the UAE will not be so strong as to hurt ties with the United States. He said the UAE is unlikely to deny the U.S. Navy and Air Force access to bases here, a prospect that has worried U.S. military leaders.

[Last modified March 11, 2006, 01:44:48]

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