- The Washington Times - Tuesday, March 7, 2006

The Dubai company trying to purchase operations of six U.S. ports is on the leading edge of the tiny emirate’s efforts to solidify its position in the world economy, according to international economists and foreign policy analysts.

As a financial center for the Middle East’s oil industry, Dubai is prospering with the other six sheikdoms of the United Arab Emirates.

Oil prices bouncing between $55 to $65 a barrel are likely to earn Mideast oil countries $320 billion from petroleum exports this year. The Dubai stock market index rose 132.4 percent last year, lifted largely by soaring oil revenue.

“They have a surplus of capital, and they’re doing quite well,” said James Zogby, president of the Arab American Institute, a Washington advocacy group.

Dubai’s investments in U.S. port operations are merely another business move by the country, Mr. Zogby said.

“You have some smart business people looking for places to invest,” he said.

Dubai’s ruling Maktoum family is using its wealth to diversify its investments into tourism, real estate, financial institutions, manufacturing and ports.

About 800 U.S. corporations have regional headquarters in Dubai, including Microsoft, Hewlett-Packard and Cisco Systems. Dubai also is a port of call for U.S. Navy warships.

The country of 1.4 million citizens has investments that include the $400 million purchase last year of New York’s Essex House hotel, a $1.2 billion stake in automaker DaimlerChrysler AG, the $1.5 billion purchase of Madame Tussauds British wax museum, office buildings in financial capitals around the world and apartment complexes in Sun Belt states.

This month, Wall Street investment house Morgan Stanley said it will open an office in Dubai.

“The general idea that we would want the UAE to invest here and diversify is correct,” said Michael O’Hanlon, a foreign policy expert for the Brookings Institution, a public policy foundation. “They have a history of being good traders.”

Dubai’s Emirates airline has placed $37 billion in orders for airplanes from companies including Boeing Co. and France’s Airbus.

International engineering companies including Fluor Corp. and Bechtel Group are participating in construction projects sprouting up throughout the oil-producing states.

One of projects is a $20 billion development that includes 30,000 new homes, an upscale hotel and a luxury residential tower that is expected to be the world’s tallest building when it is completed in 2009.

The emirate’s port operations are led by DP World, which is acquiring Britain’s Peninsular & Oriental Steam Navigation Co. for $6.8 billion. The British company operates U.S. cargo terminals in Baltimore, New York, Philadelphia, Miami, New Orleans and Newark, N.J.

The transaction is undergoing another review by the Treasury Department’s Committee on Foreign Investment. Opponents in Congress vow to block the deal as a risk to national security from terrorists who could infiltrate U.S. port operations.

Dubai’s acquisition of port operations in 15 countries shows that it has become a “sophisticated” investor, said Peter Morici, an economics professor at the University of Maryland and former chief economist for the International Trade Commission during the Clinton administration.

Until recent years, Dubai invested more heavily in international finances, or “paper assets,” rather than business operations, or “direct investments,” Mr. Morici said.

“Direct investments provide them with more of a stake in the future, rather than paper assets that are more easily seized,” he said.

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