Thursday, March 9, 2006

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Well, I feel much safer

I, for one, feel much safer that Dubai Ports World won't be operating port terminals at six American ports. Yes, even though shipping experts and homeland security experts agreed that there was little risk in having DPW take over P&O, I'm glad an American company will be running things.... even if U.S. capital might be more efficient at doing something else.

I feel particularly safe because even though DPW has pledged to divest its ownership of American operations, Knight-Ridder reports that Congress isn't taking any chances:

Senate Democrats pressed ahead with attempts to block DP World's takeover, and House leaders weighed whether to proceed as well.

Critics of the original deal weren't backing away from congressional action.

"I'm skeptical," said Rep. Mark Foley, R-Fla. "I'd prefer (legislation) go through because it gives us a safeguard."
Likewise, Rep. Jerry Lewis, R-Calif., the chairman of the House Appropriations Committee, said he didn't intend to remove the ports provision from an emergency spending bill for hurricane relief and the war in Iraq.

Rep. Ileana Ros-Lehtinen, R-Fla., added: "Congressional plans are to move forward with the appropriations language next week which kills the transaction. Just to make sure."

And might I finally add that I feel ultrasafe upon hearing word that the US Trade representative is planning to postpone talks for a USA-UAE free trade agreement. We sure sent the proper signal to foreign investors -- and it's not like the UAE could retaliate or anything.

With just a little more effort, I'm convinced that U.S. lawmakers can convince everyone in the Middle East that it doesn't matter how much you try to buy into the U.S.-promoted liberal economic order, no one will really trust you.

[Snarked out yet?--ed.] Yes, that felt good.

Whatever you think of the ports deal, this has been a major foreign policy f$%#-up. The UAE is the closest thing we have to a reliable, stable, Westernized ally on the Arabian peninsula, and both official Washington and the American public just pissed on their leg.

There is a lot of blame to go around here on this one, but I must reluctantly conclude that the Bush administration should shoulder most of it. Bizarrely, this is a case where I think they got the policy right but royally screwed up the politics. Both the failure to keep Congress in the loop after the CFIUS approval and the veto threat without consultation guaranteed a Congressional revolt.

I can't blame Congressmen too much for acting like short-sighted glory hogs driven by electoral considerations -- that's their job. So I'll join the crowd and blame Bush.

posted by Dan on 03.09.06 at 08:45 PM


I would love to see if the Congress-people from Washington and Illinois are excited by this move. I have a hard time believing that Emirates HUGE order for Boeing aircraft will go through...

posted by: Man Who on 03.09.06 at 08:45 PM [permalink]

To add one more thing...
If I were the UAE Trade Rep sitting across from the USTR, why would I negotiate knowing that there is a good chance the deal will fall through in Washington (admittedly for a variety of reasons). This screw-up, no matter where blame goes, will harm our free-trade and political/economic interests in the Middle East for quite a while to come. Terrible decision and even worse timing.

posted by: Man Who on 03.09.06 at 08:45 PM [permalink]

I'm not above speculating that the whole veto threat thing was a ploy. It is doubtful that Bush had a whole lot invested in the deal - at least in terms of policy. I think maybe he got the politics right by letting congressional Republicans do the whole defy their sitting president dance. Let them assert their independence where it doesn't really matter. Because in the end does it really matter who collects the check for running the cranes and forklifts?

posted by: Stephen Macklin on 03.09.06 at 08:45 PM [permalink]

The veto threat was a mistake. Everyone in Washington has got to know by this time that President Bush doesn't have the belly to veto any legislation, let alone a really popular bill. Making an empty threat to nervous people only made them mad.

But the consultation issue is different. In theory, yes, a deal like this with political risks should have been flagged beforehand and hand-walked through Congress before the public controversy erupted. In practice, first of all, this is easier said than done. You have to know which deals the clearances provided for in the CFIUS process plus the lobbyists hired by a savvy company like DPW will not be enough to get through Congress well in advance, and you have to know what else is needed.

Secondly -- to be very frank -- you need to be able to get members of Congress interested. Most of these guys are so busy raising money, campaigning and otherwise goofing off that the only way to get them interested in a relatively arcane subject like port security may be to hit them over the head with a media circus like this one. In my world, regular, detailed consultation with Congress and the oversight of executive branch activities that goes with it are Good Things. They make the government work better generally and help make it possible for the government to do things that an uninformed public left to itself might not approve. The Bush White House decided long ago that consultation was a nuisance and a distraction from what it really wanted to do. Congress -- continuing a historical trend going back a good 20 years -- decided the same thing.

The upshot here, as Dan notes, is that a large company was treated unfairly, one foreign government offended and a strong message of American unreliability sent to many others. It has been a thoroughly unfortunate episode, of the kind one would like to think the government should have been able to handle, given better decisions and more foresight. The possibility must be considered that what one would like to think isn't true anymore.

posted by: Zathras on 03.09.06 at 08:45 PM [permalink]

Given the UAE's abysmal human rights record, a little leg-pissing is hardly uncalled for. We should be doing it far more often.

posted by: KipEsquire on 03.09.06 at 08:45 PM [permalink]

This Congressional Temper Tamtrum will do the following;

1) Increase the number of business lobbyists being hired to stop the next mob lynching. Business wants predictabilty. Nothing predictable here. Therefore, buy some protection

2) Ellers & Co win. Showing that small companies need not honor agreements with foreigners when they can hire lobbyists.

3) The cost of everything that transits Dubai will slowly rise on every American vessel, container and shipment. A worldwide humiliation can only be salved by liberal application of money.

4) What will Congress do about the other Terminals operated by the Chinese, Danes, Brits etc? What will Congress do about the airports run by BAA, a very British company but still a foreigner?

5) This is the start of a very expensive depression. Foreign investment will pull out as America enters a new realm of isolationism.

Where am I wrong?

posted by: Andy on 03.09.06 at 08:45 PM [permalink]

You might want to be a little careful with the sarcasm; you were so realistic I thought you meant it and was wondering if I was wasting my time reading an idiot's blog. Good job.

posted by: billswift on 03.09.06 at 08:45 PM [permalink]

Since a friend told me of your blog some months ago, I am a constant reader. Great job on the port-deal, I really liked this "much safer" post...

posted by: acronius on 03.09.06 at 08:45 PM [permalink]

"The UAE is the closest thing we have to a reliable, stable, Westernized ally" What do you think Australians think about this?

As previously stated, Singapore was the losing bidder. Interested in Congressional reaction.

How many enemies do you want?

posted by: Thomas Esmond Knox on 03.09.06 at 08:45 PM [permalink]

For moi only thing of interest to come out of Dubai debacle is how Democracts are once again seen as unable to capitalise on Bush vulerabilty. Sure, Bush suffers here, that's obvious, but what's also obvious is there's a strong view out there painting opponents of the deal as being irrational, of over reacting/acting. There was a way to go after this deal that did not rely on chauvinism and would have achieved what should have been the prime politcal goal of poking holes in republican claims of being at their best when it comes to security - it was always about a battle of perceptions and once again the dems come off looking insufficent. It reminds one of their performance re Iraq war: they can't seem to get a handle on how to critize it without either sounding defeatist or confused.

posted by: saintsimon on 03.09.06 at 08:45 PM [permalink]

I am tired of people blaming the Bushies for everything, it is just too damn easy. As if Bush kissing up to Congress and explaining that not all Arabs are bad evil people would have had any impact on this xenophobic tantrum.

The information was out there and if Congress put half the time and energy into getting pertinent facts that they put into getting their asses reelected we would not have been listening to the ill informed, short sighted, ignorant and just plain stupid Arab bashing going on in this country over the last few days.

And it was not just Congress.

posted by: Terrye on 03.09.06 at 08:45 PM [permalink]

Daniel, you conclude the bush administration got the policy right but screwed up the politics. Isn't that always the case with this administration? Iraq invasion; defendable policy, but screwed execution. Compassionate conservatism; god policy, but no implementation at all. Reform of social security; good ideas, but no follow-up. Talk about fiscal restrain; great idea, but ...

You get the point. This entire port issue is not a bizarre case, but, unfortunately, normal Bush administration.

posted by: Harmen Breedeveld on 03.09.06 at 08:45 PM [permalink]

"The UAE is the closest thing we have to a reliable, stable, Westernized ally on the Arabian peninsula, and both official Washington and the American public just pissed on their leg."

Westernised? It's a federation of seven absolute monarchies with a helot population of South and Southeast Asians who do all the work while being treated like subhumans. Its human rights record is dreadful. Censorship is written into the law. Detention without trial, execution and flogging are all legal and common. Freedom of expression doesn't exist. Citizenship is virtually unavailable to immigrants, especially non-Arabs. Society is unashamedly racist and bigoted on religious grounds.

Stable? The country's only existed since 1971. Not much of a track record. It has had border disputes with both its neighbours in that time. Most of the population are non-citizens; even the citizens have no legal political parties at all. Pressure cooker, anyone?

Reliable ally? The links between the UAE royal families and the Taliban are a matter of public record. As is al-Qaeda's use of the UAE banking system to handle its finances. AQ also received support from private citizens in Gulf states including the UAE.

The UAE is a nasty little oil state. It's not as nasty as some of the others (such as Saudi) but it's a pretty vicious country, and calling it an ally - in the sense that Britain, France, Germany or Australia are US allies - is a grave mistake.

posted by: ajay on 03.09.06 at 08:45 PM [permalink]

Thomas: The quote was "The UAE is the closest thing we have to a reliable, stable, Westernized ally on the Arabian peninsula"

I figure the Australians would agree, given that Australia isn't on the Arabian peninsula.

posted by: Scotch Drinker on 03.09.06 at 08:45 PM [permalink]

A couple of interesting things were pointed out by Mark Steyn recently concerning this ports mess: 1) There currently is no American company that is capable of running ports operations of this size, which is why all the major ports are run by foreign concerns, which means the gov't will probably have to create one 2) DPW will still run the ports in Canada, so nothing is stopping someone form simply shipping something into Vancouver, and driving it down here.

posted by: Don Mynack on 03.09.06 at 08:45 PM [permalink]

The reaction to this deal was more muted than it would have been if it was the US government taking over the ports rather than the UAE government. All government is bad etc.

The same people who cared little about world opinion in the run up to Iraq, now think internationl capital flows will dry up. Inspite of both events, the US is still a very good place for investing.

posted by: centrist on 03.09.06 at 08:45 PM [permalink]

Through the blizzard of paid punditry and lobbying sponsored by our friend the UAE, I learned so much about what a great place to do business it is! Maybe I should try to buy a business there?
Oh wait!! that bastion of free trade DOES NOT allow foreign majority stake holders in companies outside a small zone near the port!!!

posted by: centrist on 03.09.06 at 08:45 PM [permalink]

How fitting the port charade has been obscured with the figleaf of an American entity. Next Iran will want to create an American entity to undertake reprocessing in Iran and we can all live happily ever after.

posted by: Lord on 03.09.06 at 08:45 PM [permalink]

Bull!!! Once again, the convenient blame on Bush. No, you cannot get away with this here again. Bush is the only one in this fiasco deserving of any respect. The country, the Congress, and the blogs go bananas over nothing, falling under the spell of cable TV, MSM phony, factually challenged reports, and hatemongers on both sides (Michael Savage: cringe; Chuckie Shumer: cringe more). Blaming Bush is CYA for those who reacted in a knee-jerk manner. In today's news environment, President Bush doesn't have a chance to control anything. But on the issues, especially this one, he is right. Pity we will lose him in 2009. Then who will everyone blame everything on? Poor soul.

posted by: Florence Schmieg on 03.09.06 at 08:45 PM [permalink]

Drezner's assessment is correct, although I wouldn't let Congress off so easily. The root causes of this fiasco were American bigotry and the willingness of politicians to appeal to bigotry. These reflect important failings in the our national character and the character of our leaders. It's not part of any governmental branch's "job" nor should it be excused as such. This was "towelhead politics" and nothing else. These Congressmen were no more doing their job than were the pols who supported segregation for political reasons.

posted by: Maalox on 03.09.06 at 08:45 PM [permalink]

I don't care if there is a monarchy in the UAE or not, that does not mean they can not be westernized. Dubai is one big resort/shopping center with a huge business sector. This people do not live in tents and ride camels around all day.

posted by: Terrye on 03.09.06 at 08:45 PM [permalink]

Foreign ownership is not just limited to a few areas near the port. Many free-trade zones have opened across the emirate for different industries/sectors including Media (Media City), IT (Internet City), Education (Guess the name) etc... Ownership of land is still an issue, but is slowly liberalizing with the effect similar to the 100-year leases common in parts of the UK.

Yes, the human rights abuses are bad and need to be challenged, but the overall situation for many TCNs is significantly more positive in the Emirates than is the case in Saudi Arabia or Kuwait. Yes, the UAE may play some silly semantic games when it comes to Israel, but at least they are (or were) trading with them until the all the attention was placed on this ports deal. Parts of the Al-Makhtoum family may have been close with parts of the Taliban, but thats par for the course in the region. It is an issue to fret about, but a much more effective response would to be to signal the benefits of liberalization through trade than closing the door, esp. when the country has been so cooperative in the last few years.

posted by: The Man Who on 03.09.06 at 08:45 PM [permalink]

It is important to realize that the UAE is not only an ally, but also a model for what President Bush hopes the middle east will look like in the future. Especially regarding the media city.

posted by: Dan Joseph on 03.09.06 at 08:45 PM [permalink]

1. US Congress expresses bigotry
2. Islamic streets rage against Europe
3. Invasion of Iraq about to involve us in their civil war
4. President defies law and ignores Judicial branch wiretapping US citizens
5. Democracy in the Middle East elects radical Islamists
6. Slight hopes for peace process shattered.
7. Iran to develop nuclear weapons

Who's is winning the War on Terror
I don't feel so safe myself

posted by: Alan on 03.09.06 at 08:45 PM [permalink]

Part of the trouble for Bush here is that Bush
did too good of a job of convincing Americans
that Arabs are the bad guys. Bush and his
adminstration didn't think about showing
distinction between different Arab States and
people. Bush used the terror club so offen he
lumped all Arabs in American's minds as the 'bad'
guys somehow always willing, if the time was right,
to do terror on America.

If a person looked Arab, profile. Possible terrorist.

If a person sounded Arab, profile. Possible terrorist.

If a person had any dealings in the Middle-East,
profile. Possible terrorist.

Muslim? Possible terrorist.

Bush was 'hoisted' by the very petard Bush made

THAT'S bad leadership.

posted by: James on 03.09.06 at 08:45 PM [permalink]

The UAE is only an 'ally' because the US taxpayers spend billions of dollars each year in a protection racket for its Emir and all those other Gulf Arab states. The name of the racket is 'The Fifth Fleet'.

The smart move would be to invest government resources in companies like Ballard Power, who are devising technology that will get us of the oil habit. Once that happens, these Gulf states will go revert to their proper importance in US foreign policy calculations. I.e. close to zero. That's not to say Dubai will not be prosperous -- it seems to have a history as a prosperous trading post in the mid-east. It is to say that it won't be of such importance that the US has to subsidize its defense.

Disengage, disengage, disengage!

posted by: Mitchell Young on 03.09.06 at 08:45 PM [permalink]

Who were the 2 congressman that voted against blocking the deal?

posted by: dp on 03.09.06 at 08:45 PM [permalink]

Well, I guess they'll keep talking to you in the faculty lounge, since your substantive views will be forgiven as long as you repeat the deep insight of the chattering classes that everything is Bush's fault. We're in bed with the Saudis! We're in thrall to the Israelis! The Bush administration only thinks about politics, not sound policy! The Bush administration doesn't think about the politics of the issues! It's all true.

posted by: y81 on 03.09.06 at 08:45 PM [permalink]

DD: The UAE is the closest thing we have to a reliable, stable, Westernized ally on the Arabian peninsula, and both official Washington and the American public just pissed on their leg.

Do you REALLY not understand that the U.S. policy of sucking up to some middle eastern countries (e.g., Saudi Arabia) and kicking the butts of others (e.g., Iraq) is part of the reason "they hate us?"


posted by: deb on 03.09.06 at 08:45 PM [permalink]

Scotch Drinker: My expression was inexact. (btw I don't think Dubai is on the Arabian Peninsula).

There is no opposition to Dubai Ports taking over P&O's stevedoring operations in Australia.

We are too smart for that. We'll take their money, their employment and their business.

Some of the 9/11 terrorists entered the U.S. via Canada. Looking forward to the U.S. closing the Canadian border.

posted by: Thomas Esmond Knox on 03.09.06 at 08:45 PM [permalink]

Dubai is definitely on the Arabian peninsula. I mistakenly thought it was on an island near the AP.

Will Congress ban Sheik Makhtoum from the Keeneland 2yo sales on April 18? Or will Sheik Makhtoum be welcomed?

posted by: Thomas Esmond Knox on 03.09.06 at 08:45 PM [permalink]

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