Friday, March 10, 2006

President Bush yesterday said the demise of the ports deal was a bad signal to send to moderate nations in the Middle East that the United States needs in the war on terrorism.

His comments came a day after public pressure forced DP World, a partially state-run company in the United Arab Emirates, to divest itself of management of terminals at six U.S. ports.

“I’m concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East,” Mr. Bush told newspaper executives during a speech in Washington. “In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East.”

Meanwhile, the United States and the United Arab Emirates agreed yesterday to postpone the next round of talks on a bilateral free-trade accord. But U.S. officials said the postponement was not linked to the deal’s demise.

Still, a senior administration official, speaking on the condition of anonymity, said Mr. Bush is worried about a strain of protectionism and isolationism “that lurks beneath the surface” in the United States, and said that was behind the president’s threat to veto legislation from Congress blocking the deal.

“If we’re going to win, we’ve got to be strengthening our partners — modern, basically reform-oriented Arab partners in the Muslim world, in the Middle East — it’s a critical element of us winning,” the official said. “That’s why the veto thing came out. He’s seen this kind of bigger political moment that, it’s permeating itself in different issues in different times. We couldn’t predict this one.”

The president, trying to repair damage done to the U.S.-United Arab Emirates relationship, made a strong defense of the two nations’ working relationship in the war on terrorism.

“They are a key partner for our military in a critical region,” Mr. Bush said, pointing to its role as the biggest service point for U.S. Navy ships outside the United States and its willingness to share information on terrorists.

“I’m committed to strengthening our relationship with the UAE and explaining why it’s important to Congress and the American people,” he said.

But over the past three weeks, members of Congress had said they were worried about the mixed message being sent to voters — who all House members and a third of the Senate will have to face in November.

Republican lawmakers said their constituents had an intuitive negative reaction to the deal and, after telling voters the USA Patriot Act and wiretapping were necessary, voters couldn’t square that urgency on security with this decision.

Top Republicans also questioned how committed the United Arab Emirates was to the war on terrorism, pointing to its support for the Arab League boycott of Israel and links some of the September 11 terrorists had to the kingdom.

Both Congress and the president do agree the Committee on Foreign Investment in the United States (CFIUS), which approved the deal, needs to be revamped.

“I think that that’s definitely going to happen,” said Rep. Deborah Pryce, Ohio Republican and chairman of the House Republican Conference.

The administration official said they already are taking a different approach to CFIUS, and Mr. Bush has told top officials they need to be aware of what projects are on the table.

“I think it’s safe to say that every person who is statutorily a member of the CFIUS board is now very interested in the queue — who’s in the queue, who’s not,” the official said.

As for the trade deal, the U.S. trade representative’s office said yesterday’s announcement represents a delay, not a breakdown.

“The U.S. and UAE are strongly committed to making progress on our [free-trade agreement] negotiations,” said Neena Moorjani, spokeswoman for the U.S. trade representative. “In order to get an agreement that both sides can successfully implement, we need additional time to prepare for the next round of negotiations.”

She said delays are not unusual, and a deal with Ecuador has been postponed three times, Panama twice and Colombia once.

In 2005, the United Arab Emirates was the United States’ 21st largest goods-export market, totaling $8.5 billion. The United Arab Emirates was the 69th-largest exporter to the United States, at $1.5 billion.

The agreement’s delay didn’t bother top congressional Republicans.

“It’d probably be a good time for both countries just to kind of step back and evaluate a little bit. We’ll move on from there,” said House Speaker J. Dennis Hastert, Illinois Republican.

Eddie O’Sullivan, Dubai-based editorial director of the Middle East Economic Digest, told the Associated Press that other Persian Gulf region investors likely will review their deals in the United States for fear they could come under scrutiny as well and may shy away from future investments.

“People are going to have to be much more careful. There’s a fear [members of Congress] may move on to other targets in the Arab world. If it happened once, it can happen again,” he said.

As for the United Arab Emirates, he said, the government was likely to take some steps to show its discontent and assuage its citizens’ anger over what they see as unjust treatment, but that it will not want to hurt ties to the United States by denying U.S. Navy and Air Force access to bases.

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