For the first time in U.S. history, a Middle Eastern-based firm is poised to manage a strategic U.S. port on Florida’s Atlantic coast, rekindling national security concerns inside Congress.
Rep. Duncan Hunter, the California Republican who oversees port security as chairman of the House Transportation’s maritime transportation subcommittee, demanded Tuesday that the Obama administration conduct a full national security review of the decision last month by Gulftainer to sign a 35-year contract with Florida’s Port Canaveral.
The firm is a privately owned cargo terminal operator based in the United Arab Emirates, a confederation of governments friendly to the U.S. but which has also been identified as a source of terrorist funding over the years. The 9/11 commission, in fact, reported that much of the money for the 2001 attacks on New York and Washington flowed through UAE’s open financial sector.
The Middle Eastern company will be operating a U.S. terminal in one of the busiest cruise ports in the world, and not far from the Trident Turning Basin, which the Navy uses to support its fleet of nuclear ballistic missile submarines.
Mr. Hunter wrote Treasury Secretary Jack Lew, urging that the Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews the national security implications on foreign investments, thoroughly review the Port Canaveral deal.
“It is critical that — before this agreement proceeds — CFIUS determines whether a terminal operation agreement with Gulftainer presents any risk or impact to U.S. national security,” Mr. Hunter wrote.
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Less than a decade ago, Congress forced Dubai Ports World, also based in UAE, to abandon plans to enter the U.S. port market after lawmakers cited security concerns and argued that foreign governments should not own strategic assets such as U.S. ports.
Following a 62-2 vote against DP World by the House Committee on Appropriations, the company abandoned its bid and sold off its American port operations.
Gulftainer has promised the Port of Canaveral a $100 million investment in its infrastructure, equipment and people.
Port Canaveral’s chief executive officer, John Walsh, told the Orlando Business Journal that Gulftainer is a major part of the port’s goal to turn its $5 million annual cargo business into a $100 million business. Gulftainer will also help the Port purchase existing Florida East Coast Rail tracks to transport cargo into Central Florida and out of the state.
Mr. Walsh was out of the office Tuesday and unable to return calls to The Washington Times, according to an automated response from his email. Calls to the Port Authority were not returned.
The Florida deal gains Gulftainer a toehold into the U.S. marketplace, which it’s eager to enter. Peter Richards, Gulftainer managing director, told a group of reporters when the Port Canaveral deal was announced in June that his company was in talks with other U.S. ports, which he declined to identify.
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The company had no immediate response Tuesday to Mr. Hunter’s letter.
Last year, Gulftainer solidified its position as the largest terminal operator in the Middle East — in terms of terminals operated — with its majority acquisition of Gulf Stevedoring Contracting Company, a Saudi Arabia-based business.
In addition to its cargo operations, Gulftainer has also established a number of logistics companies, primarily based in the Middle East. Gulftainer operates inland transportation and freight companies in countries with political unrest, such as Pakistan, Turkey and Russia.
It’s also expanding in Iraq, investing in Umm Qasr, Iraq’s gateway to the Persian Gulf, and in a cargo village at Sulaymaniyah airport.
One of its subsidiaries, Momentum Logistics, opened an office in Zakho, northern Iraq, in 2009 to help manage the many trucks that cross the border from Turkey.
According to security experts, the major concern at U.S. ports is not the terminal operators themselves — or which nation owns them — but who screens the containers before they enter the U.S. seaport.
“Smuggling things onto containers happens at various stages — those who load the trucks, the trains, the ships — until the container gets sealed and loaded. The port areas are still very highly vulnerable to these types of scenarios,” said Stephen Flynn, founding co-director of the George J. Kostas Research Institute for Homeland Security. “There’s still massive amount of guns, counterfeit goods and narcotics moving through the container system.”
Indeed, during a press conference following the Nuclear Security Summit in The Hague this year, President Obama said his biggest security concern was not Russia — or any other world power — but “the prospect of a nuclear weapon going off in Manhattan.”
Today, the most likely way for that to happen would be for the device to be hidden in a container on a ship docked at a U.S. port, Mr. Flynn said.
Not that congressional moves to secure the loading and the screening of shipped containers haven’t been made; they just haven’t been enforced.
In 2007, after the DP World deal fell apart, Congress passed a law requiring all overseas cargo containers to be inspected before they’re loaded onto a U.S.-bound ship.
But that law has never gone into effect, said Mr. Flynn.
“It gave DHS five years to comply with the requirement, but built into [the] legislation was an escape clause [that] if it wasn’t workable, a two-year extension could be given,” Mr. Flynn said.
Homeland Security Secretary Jeh Johnson asked Congress this spring for another two-year extension to achieve the goal of screening 100 percent of the items loaded into container ships in countries outside the U.S.
Port Canaveral’s Mr. Walsh told Florida Today in June that Port Canaveral’s deal with Gulftainer was fully vetted and received clearance from DHS, the U.S. Department of the Treasury, the Federal Maritime Commission and the Florida Department of Transportation.
Moreover, Gulftainer said it planned on hiring 95 percent of its staff from Florida — meaning the majority of its employees would be American citizens — and not imported from the UAE.
The U.S. Coast Guard is aware of the deal and is waiting on Gulftainer to submit to them their security plans for review, said Stephen West, supervisor for the U.S. Coast Guard at Port Canaveral.
“We haven’t done much yet [other than] answered some questions so they could design their facility maintenance security,” Mr. West said. “The regulations we impose on port companies are pretty substantial. They are shooting to start operating in March of 2015, and they need to submit to us their security plans at least 60 days before that.”
Some of the security plans required include issuing official U.S. maritime identification cards to those working on the waterfront facility and maintaining a security perimeter around the port so no one can enter the facility without proper credentials, he said. Most of the screening of what’s on board the cargo in the container ships happens before the vessel is docked, Mr. West said.
Still, Mr. Hunter has his reservations — as did his father, Duncan L. Hunter, who, as a member of Congress, opposed the DP World deal and introduced legislation requiring American ports and other strategic assets to be returned to American hands while he was in office.
“It is my understanding that the agreement marks the first time a Middle Eastern company will fully operate a U.S. cargo terminal,” the younger Mr. Hunter, who took on his father’s seat in 2009, wrote Mr. Lew.
“Understanding that companies based in other countries and global regions undertake port responsibilities mirroring the agreement with Gulftainer, a review by CFIUS, as being requested, is not for the purpose of immediately terminating the agreement but rather making the appropriate determinations in the interest of U.S. national security.”