Tuesday, February 21, 2006

In two weeks time, the ports of New York and New Jersey, Miami, Baltimore, Philadelphia and New Orleans will go under contract to a government-owned company in the United Arab Emirates. This must not stand. It’s plainly obvious that a government-owned company from a hostile region should not operate American ports, whatever the assurances about security and however limited its involvement in day-to-day operations. What can be done?

The most immediate thing Congress can do is ask that President Bush put a hold on the deal and order the Committee on Foreign Investment in the United States to conduct a 45-day investigation of Dubai Ports World. Mr. Bush yesterday vowed, with a certain heat, to veto a ports bill; firm congressional action may nevertheless lead him to reconsider. There is a chance the deal would dissolve with the tougher 45-day review — this has happened to previous reviews by the foreign investment committee — and in this case it is clearly warranted. Last week, it emerged that both Dubai Ports World and Peninsular and Oriental Steam Navigation Co., the seller, specified that an agreement by the U.S. government not to make a formal investigation as a condition for the deal. This is exceedingly odd; this is enough to persuade Congress to push the review.

One of the most reasonable proposals comes from Sen. Charles Schumer, New York Democrat, who presented a bill yesterday with Rep. Peter King, New York Republican, to mandate a hold on the deal and obtain a better security review. He seeks a congressional up-or-down vote on the deal — an open challenge to the closed and apparently lax security-review process the foreign investment committee ran for Dubai Ports World. The challenge is warranted. The Bush administration has not adequately considered the questions raised by this deal. A struggle between Congress and the White House over this deal would be the second-worst outcome. Permitting the contract to stand would be the worst.

There’s much more needed than a review and a show of anger by Congress. Congress must compare the mandate of the foreign investment committee to what it has done. The committee was charged with handling national-security reviews by a 1988 law commonly called the Exon-Florio provision, which restricts foreign direct investment on the basis of national-security criteria. It requires the president or his designated agent — the foreign investment committee — to consider “the control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the U.S. to meet the requirements of national security.” How well did the committee perform in this case? And in others? In its entire history, only a handful of proposed transactions have failed the foreign investment committee test.

Should there be a stronger process? That’s a question Congress should be asking. What would a stronger foreign investment committee look like? For one, it might take a cue from the George H.W. Bush administration. Fourteen years ago, something called “passive ownership” entered the Exon-Florio debates, and it could help considerably here. In 1992, the state-owned French firm Thomson-CSF sought to purchase a missile unit from U.S. defense contractor LTV. Citing the obvious national-security concerns, Deputy Secretary of Defense Donald Atwood said that Thomson-CSF would have to prove that its ownership would be “passive” — meaning no operational involvement and no exposure to sensitive facilities, technology and information. It couldn’t do that, so it withdrew the offer and eventually entered into a “passive” arrangement with a U.S. company.

The parallels here are striking. Dubai Ports World cannot help but be “active” in any deal for the ports contracts. (One difference is that in 1992 there were no French jihadis looking to strike at the heart of the United States.)

We hope this dispute won’t rise to the level of intra-party acrimony we saw during the controversy over the Harriet Miers nomination. We finally have robust bipartisan agreement on an important national concern. Both Democrats and Republicans, conservatives and liberals, are outraged. This won’t blow over, Mr. President. It’s time to reconsider a bad idea.

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