Friday, February 24, 2006

The gathering storm on Capitol Hill over a proposed takeover of six key U.S. ports by a Dubai-based company — highlighted by calls this week for emergency legislation to ban such ownership and operations of U.S. ports — demonstrates an incoherence in Washington about America’s engagement of and role in the global economy. Raising the specter of national security threats to mask protectionist and isolationist tendencies in Congress is no replacement for a legitimate debate about how America should benefit from and protect itself against the rising tide of globalization.

The Dubai deal is a showcase example of how to deal with important issues confronting America’s disquiet about where it stands in an increasingly integrated world — whether by examining U.S. double standards in trade and protectionism policies, analyzing the internal failures in U.S. government response to provide adequate security at our ports or preventing U.S. reactions from appearing as xenophobic or Islamophobic to our most important Muslim allies. America cannot have it both ways on these issues any longer.

At its heart, the Dubai deal is simply a corporate takeover by one strong company, Dubai Ports World, of another, U.K.-based Peninsular and Oriental. It demonstrates how forcefully capitalism has emerged as the operating platform for nonoil economies in the Middle East and sets an important example for its neighbors to follow. Dubai’s global shopping spree is designed to diversify its economic holdings and to access markets that strengthen its ability to offer greater employment at better wages to its own citizens and residents. The impulses driving radicalism’s modern scourge are thereby reduced.

Critics of the Dubai deal raise the specter that terrorists might somehow infiltrate U.S. port operations. This displays a lack of understanding about what would be involved in Dubai owning and running U.S. facilities.

(1) Port security is not outsourced to Dubai — this will remain the responsibility of the U.S. Coast Guard and Customs Service.

(2) As was made public yesterday, the Bush administration sought and received guarantees management operations would remain controlled as much as possible by U.S. firms already managing the ports.

(3) The ports are being purchased through leaseholds — long-term leases — not freeholds that transfer ownership of a single asset that comprises a U.S. port facility.

The one area of concern — access to sensitive information about how cargo is moved and inspected entering and leaving U.S. ports, could be handled, for example, by having the American subcontractors provide transparent oversight controls over their data to the Homeland Security Department.

If the Dubai controversy helps American lawmakers and the White House craft better policy for every foreign company doing business on our shores, not just the Arab ones, a quantum leap in our security will have been achieved.

Overall port security is an area where the Bush administration has failed the American people, Dubai deal or not. This imbroglio should prompt the administration to speed up technology development — perhaps even in conjunction with Dubai’s innovative investment funding — already under way in U.S. laboratories and at some premier U.S. defense contractors.

For example, pulsed neutron scanning technologies are being developed that can in a few minutes create a CATscan-like report for detecting any illicit (nuclear, chemical, biological, etc.) materials inside a cargo container. Such technologies could over one year raise containers inspected from the current 5 percent to 25 percent or more. Inspection could be done at loading or off-loading terminals. Smart chips are available that would permit Dubai, for example, to seal an inspected container leaving Jebel Ali and track its every movement until it is offloaded in Miami. There are solutions if the political will exists. Blustery rhetoric solves nothing.

The present course charted by congressional head-liners is a recipe for disaster. It demonstrates an arrogance and hypocrisy that do not reflect American economic and political values. We admonish Muslims for not practicing democracy, not embracing capitalism and not fighting terror hard enough. Then we say there’s no room at the table for their capitalist enterprises seeking access to our markets (who could prove the best possible front-line partners against the efforts of a nuclear Iran, for example, to move radiation materials across borders). And that’s not because they can’t do the job but because we suspect them of wanting to commit some terrorist atrocity against us for which we have not a shred of evidence.

Congress’ uproar seeks to deal with America’s place in the globalized economy by erecting barriers and invoking national sovereignty rather than innovating and competing freely.

We would do well to remember that the very same global economy offers our antagonized allies plenty of opportunity to retaliate without bombs and bullets. Did anyone check recently the value of U.S.-dollar denominated stocks and bonds owned by Abu Dhabi and Dubai?

America’s strength is in building bridges that seek to raise the world’s disaffected masses. The Dubai deal was born of a Middle Eastern corporate success story in profitability, global employment and free trade practices that can serve as a model for Muslim societies bedeviled by high unemployment, low literacy rates and bad trade policies. This deal should not be allowed to degenerate into an emblem of fear and mistrust. Such an outcome would only render the U.S. less secure.

Mansoor Ijaz is chairman of Crescent Investment Management, a private equity firm developing homeland security technologies. Crescent Hydropolis Resorts, the firm’s publicly traded property development company, is developing the world’s first permanent underwater living facilities, including a planned location in Dubai.

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