- The Washington Times - Wednesday, February 22, 2006

The secretive U.S. government committee that approved a $6.8 billion deal allowing a United Arab Emirates company to take over six key U.S. ports has the conflicting responsibility of protecting the country’s national security while preserving the confidence of foreign investors.

Chaired by Treasury Secretary John W. Snow, the Committee on Foreign Investment in the United States (CFIUS) — established in 1975 — is an interagency group whose 12 members include the secretaries of state, defense and commerce, the attorney general and the director of the Office of Management and Budget.

Treasury spokesman Tony Fratto said the full CFIUS panel consented to the port transaction with the company in the United Arab Emirates, although it was not clear yesterday if the members actually attend meetings or send representatives.

Mr. Snow said he learned of the deal after reading about it “in the newspapers” and Defense Secretary Donald H. Rumsfeld said on Tuesday he learned of the proposed purchase “over the weekend.”

Bipartisan concern about the deal arose shortly after it was learned that Dubai Ports World (DPW) sought to run the ports in New York, Baltimore, New Orleans, Miami, Philadelphia and Newark, N.J. Capitol Hill lawmakers have raised homeland-security concerns about the plan.

Mr. Snow yesterday said the proposal had been vetted by CFIUS, which concluded that it did not present national security risks, adding that the “implication of failing to approve this would be to tell the world that investments in the United States from certain parts of the world aren’t welcome.”

The panel said it had “thoroughly reviewed the potential transaction” and had no objection based on national security concerns. The deal would allow DPW to purchase the British firm Peninsula and Oriental Steam Navigation Co., which operates the ports.

The 9/11 commission said the United Arab Emirates served as a conduit for funds and as a transit point for al Qaeda operatives involved in the September 11, 2001, attacks, that two of the hijackers were United Arab Emirates nationals, and that nine of them passed through Dubai on their way to the United States.

Mr. Bush can order CFIUS to conduct another full, formal 45-day investigation into possible national security concerns, although he has defended the United Arab Emirates as an ally in the war on terror and vowed to veto any effort by Congress to kill the deal.

While the U.S. vigorously has advocated an open investment policy and encouraged the free flow of capital, Congress passed the Exon-Florio amendment in 1988 to give the president the power to suspend or prohibit any foreign acquisition deemed a national security threat.

According to CFIUS guidelines, the committee reviews proposed purchases for any national security threat and can refuse a deal based on “credible evidence” showing that a foreign entity “might take action that threatens national security.”

Only one of 1,536 proposed CFIUS transactions has led to a presidential decree prohibiting the sale.

a U.S. oil and gas company. It also effectively quashed the acquisition of U.S. telecommunications company Global Crossing by a Hong Kong-Singapore partnership.

• Rowan Scarborough and Jeffrey Sparshott contributed to this article.

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