Friday, March 3, 2006

The Republican chairman of the House Armed Services Committee yesterday said he’ll push legislation that would not only kill a Dubai-owned company’s bid to operate in U.S. ports, but would kick out any foreign-owned company that owns U.S. terminals or other key infrastructure.

The move is in direct opposition to the position of President Bush, who has repeatedly vowed to veto any legislation that blocks DP World’s $6.8 billion bid to purchase terminal operations in six major U.S. ports from a British company.

“I think we should kill this deal,” said Rep. Duncan Hunter, California Republican, who plans to introduce a bill next week to do so. “Dubai cannot be trusted.”

His bill would require 100 percent inspection of all incoming cargo and would mandate that, over time, all ports and other critical U.S. infrastructure, such as power plants that are owned by foreign entities be sold back to Americans.

Many legislators have concerns with allowing a government in the United Arab Emirates, a country with ties to terror leader Osama bin Laden, to run terminals in U.S. ports. Mr. Hunter said those concerns are justified, noting that in 2003 — despite U.S. protests — United Arab Emirates customs officials allowed sixty-six American high-speed electrical switches, used for detonating nuclear weapons, to go to a Pakistani businessman with ties to the Pakistani military.

He also pointed to a report that 70 tons of heavy water, a component of nuclear reactors, were sent from China to India and Argentina via Dubai.

Initial approval of the ports deal two weeks ago by an interagency committee caught the Bush administration and legislators off guard, and it is now under a new 45-day review.

But Mr. Hunter said that once Mr. Bush and congressional leaders learn of the various security incidents, they’ll probably agree to block the deal.

Before Mr. Hunter’s panel yesterday, Edward H. Bilkey, chief executive officer of DP World, continued to stress that the United Arab Emirates has helped the U.S. fight the war on terror and said he was not aware of the security incidents cited by Mr. Hunter and others.

Company officials said the deal should be completed as soon as next Monday or Tuesday, after Britain’s High Court yesterday temporarily approved the takeover of a British shipping company by DP World, despite a last-minute objection by a U.S. company.

Meanwhile, lawmakers from both parties yesterday demanded changes to the interagency panel that approved the deal and others involving foreign companies — known as the Committee on Foreign Investment in the United States (CFIUS).

“The manner in which the Dubai transaction was handled only reinforces this committee’s earlier findings that the system is seriously flawed and that corrective measures — legislative measures — are required,” said Senate Banking, Housing and Urban Affairs Committee Chairman Richard C. Shelby, Alabama Republican, during a hearing on the issue.

Senators on the committee complained that CFIUS — led by the Treasury Department — shies away from thoroughly investigating many of these cases, should focus more on national-security implications of such deals and does not adequately notify Congress.

“This system is broken, I think all of us agree,” said Sen. Christopher J. Dodd, Connecticut Democrat.

Deputy Treasury Secretary Robert M. Kimmitt stood by the approval of the deal, but admitted the process can be improved. He and other top administration officials didn’t know about the deal until after the fact, and he said that must change, along with better communication with Congress.

“I think it’s pretty clear the committee is going to come up with new CFIUS legislation,” he said.

Lawmakers also complained yesterday that they were not told that the government is investigating two other foreign-company business deals, including a second Dubai-owned entity that wants to buy a British company with plants in Georgia and Connecticut that make engine parts for military aircraft and tanks.

On the DP World deal, members have been pushing to find out the extent to which terminal operators are involved in port security.

Stewart A. Baker, assistant homeland security secretary for policy, told the banking committee that a terminal operator has “three assets” — a pier, a crane and a parking lot to store cargo. He said that the Coast Guard controls security and can inspect cargo as it sees fit and that terminal operators must comply with the Coast Guard’s security plan.

But other lawmakers have said the administration is downplaying the role the terminal operators would play at the ports in Philadelphia, Miami, New Orleans, Baltimore, New York and Newark, N.J.

Sen. Lindsey Graham, South Carolina Republican, has a memo from the director of the Port Authority of New York and New Jersey that says terminal operators hire security guards and control who enters and leaves the port facilities and therefore play “an intimate role” in the movement and scheduling of cargo.

“To say that’s not an important function just belies the facts on the ground,” Mr. Graham said.

• This article is based in part on wire service reports.

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