Tuesday, February 28, 2006

U.S. Coast Guard officials warned that “many intelligence gaps” prevented them from providing the Bush administration with an accurate assessment of the threat posed by the sale of operation rights at key U.S. ports to a company owned by the United Arab Emirates.

“There were serious concerns raised by a credible source,” said Sen. Susan Collins, Maine Republican and head of the Committee on Homeland Security and Governmental Affairs.

The new information was disclosed at a Senate hearing yesterday with Coast Guard officials investigating the transfer of port operations from the Peninsular & Oriental Steam Navigation Co. (P&O) to Dubai-based port operator DP World (DPW).

“There are many intelligence gaps, concerning the potential for DPW or P&O assets to support terrorist operations, that precludes an overall threat assessment of the potential DPW and P&O Ports merger,” says an internal Coast Guard analysis released by the committee yesterday. “The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities.”

Areas of concern for Coast Guard officials included operations, personnel and foreign influence, although the Coast Guard last night criticized the released excerpts as unrepresentative of the analysis.

“What are the backgrounds of all associated personnel working for or associated with DPW and P&O?” the officials wrote in their initial analysis. “Is there foreign influence on DPW or P&O operations that affect security and other major decisions?”

Coast Guard officials appearing before yesterday’s hearing declined to discuss much of the analysis because most of it remains classified. Committee members reconvened with the officials late yesterday for a classified briefing.

“I am more convinced than ever that the process was truly flawed,” Miss Collins said after nearly an hour and a half behind closed doors.

Sen. Joe Lieberman of Connecticut, the panel’s ranking Democrat, said he too is convinced that the vetting process was flawed.

The Committee on Foreign Investments in the United States (CFIUS) “should have conducted the 45-day investigation in the first place,” he said. “I think they were well-intentioned, but they didn’t finish their job.”

Mr. Lieberman also said Coast Guard officials downplayed their analysis, saying that it was their “early reaction” to the deal and that many of their questions were answered in the process.

Indeed, later in the evening the Coast Guard released a statement saying the excerpts were taken out of context and did not reflect the Guard’s overall view.

“The excerpts made public earlier today, when taken out of context, do not reflect the full, classified analysis performed by the Coast Guard. That analysis concludes ‘that DP World’s acquisition of P&O, in and of itself, does not pose a significant threat to U.S. assets,’ ” said Cmdr. Jeff Carter, a Coast Guard spokesman.

“Upon subsequent and further review, the Coast Guard and the entire CFIUS panel believed that this transaction, when taking into account strong security assurances by DP World, does not compromise U.S. security,” he said.

Sen. Charles E. Schumer, the New York Democrat who introduced legislation yesterday to halt the deal, said the analysis might be “a smoking gun.”

“We need to know why Homeland Security objected and then backed off their objection given this devastating report,” he said. “This vindicates all we have been saying about the need for not only a thorough investigation but also an independent evaluation of whether or not this deal should go forward.”

The White House, meanwhile, said yesterday that a new investigation of the deal will quell the furor over the operations transfer at six U.S. ports — Baltimore, Miami, New Orleans, Philadelphia, New York and Newark, N.J.

“We believe that Congress will be more comfortable and will not object to this transaction moving forward once this review and investigation have come to a conclusion,” White House press secretary Scott McClellan said.

Unlike the earlier 30-day review, the new 45-day investigation requires that the investment committee to submit a report to the president, who then must make a ruling in 15 days. Cabinet and agency officials also will be involved this time, the White House said.

While standing by the earlier review, Mr. McClellan called the new review a “reasonable middle ground.” Still, he said Mr. Bush’s veto threat stands if Congress moves to block the deal.

“The president’s position remains the same,” Mr. McClellan said. “He believes the transaction was closely scrutinized, there are safeguards in place, but we’re pleased that Dubai Ports reached a middle ground with congressional leaders.”

Mr. Lieberman said he hopes the new probe will be more complete. The United Arab Emirates “deserves a fair hearing,” he told reporters yesterday. “They are a great ally in the war on terror. But that doesn’t mean they should get a free pass.”

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