It ain't over yet

Dan Drezner has been on top of the Dubai Port deal and notes a change of heart in Glenn Reynolds:


When the story first appeared, bloggers were overwhelmingly negative. My own reaction, on Feb. 12, was "color me unimpressed." Other bloggers were more pungent, but the story got little attention in the national media, which were mostly preoccupied with the Cheney quail-hunting story. ... Some bloggers, meanwhile, were having second thoughts. One of them was me: Although my initial reaction was negative, I started getting emails from readers -- some of them longtime correspondents -- who had experience with the UAE. One had served alongside troops from the Emirates in Afghanistan; another had spent time in Dubai. Some had worked with UAE ports officials. All were positive. ... As I write this, it's not clear where the rest of the debate is headed, but there are already some useful lessons for the White House. First, blogs make an excellent early warning system. The White House, unaccountably, seems to have been blindsided by the furor over this deal, though most people's gut reaction was negative. As with the many bloggers like me who changed their minds, gut reactions can be overcome by evidence -- but the White House should have taken advantage of this early warning to have its arguments in order. It didn't. That's the second lesson: The White House should not only have read blogs, but responded to them with information and arguments, rather than waiting for blog readers to weigh in.When the story first appeared, bloggers were overwhelmingly negative.


Today Drezner discussed a story in the Washington Post:

The process began on Oct. 17, when representatives of the Dubai company informally approached the Treasury Department to disclose that they were planning to purchase the British firm, Peninsular and Oriental Steam Navigation Co., according to testimony by administration officials at a Senate hearing last week. Treasury officials directed them to consult with Homeland Security because of the port security question.

The executives of Dubai Ports World -- several of whom are American -- well understood that they might face extensive scrutiny.

"You don't have to do this, but I brought a small team here [from Dubai] to meet with the CFIUS agencies in early December," said Edward H. "Ted" Bilkey, the company's chief operating officer and former U.S. Navy officer. The idea was to give the panel plenty of time even before the company formally filed to start a standard 30-day review.

Homeland Security officials, especially in Customs and Border Protection, had high regard for the company, which is owned by the government of Dubai and operates terminals in 19 ports in Asia, Europe and South America. It was the first in the Middle East to participate in a post-Sept. 11 program in which Customs agents are posted overseas to screen containers before they are loaded onto U.S.-bound ships. U.S. intelligence agencies -- who were asked on Nov. 2 for any information they had on the company -- produced nothing "derogatory" about it, Baker said.

Even so, the department had enough qualms to insist on a number of legally binding conditions for approving the deal -- a frequent CFIUS practice. The company pledged to maintain its participation in the Customs program, "and they agreed to open their books, and give us access to records, without any formal legal process," Baker said.

The department also wanted to ensure that the personnel at the U.S. terminals to be taken over by the company would remain almost entirely American. So it extracted a pledge that the company intended to keep the current management of U.S. operations in place.

Given the concessions obtained through the CFIUS process -- DPW's participation in the Customs initiative, the transparency of DPW's books, the continuance of the current management team for the U.S. ports -- is there any rational reason to get exercised about this deal? Is Mickey's assertion that jihadists would have a better opportunity to infiltrate DPW's ports a valid one, given the layers of American management involved?

The Post story also aleviates the other small concern I had about this deal -- that the Bush administration bollixed up the process. The New York Times story I cited in my first post on this topic asserted:

The administration's review of the deal was conducted by the Committee on Foreign Investment in the United States, a body that was created in 1975 to review foreign investments in the country that could affect national security. Under that review, officials from the Defense, State, Commerce and Transportation Departments, along with the National Security Council and other agencies, were charged with raising questions and passing judgment. They found no problems to warrant the next stage of review, a 45-day investigation with results reported to the president for a final decision.

However, a 1993 amendment to the law stipulates that such an investigation is mandatory when the acquiring company is controlled by or acting on behalf of a foreign government. Administration officials said they conducted additional inquires because of the ties to the United Arab Emirates, but they could not say why a 45-day investigation did not occur.

VandeHei and Blustein have a different desription of the process in the Post story:

[O]nce Dubai Ports World had agreed to the conditions required by Homeland Security, none of the agencies on CFIUS objected to the transaction when the 30-day review was completed on Jan. 17. If even one agency had objected, the matter would have gone to a 45-day investigation -- which would have required a presidential decision at the end. Moreover, a single dissent would have meant bringing the matter before higher-ranking officials in each department.

But instead, the matter stayed with assistant secretary-level officials, who told the company the transaction could go forward.

Drezner also discusses the doubts of pundits such as Mickey Kaus and Charles Krauthammer who seem to think this situation creates an unnecessary risk.

Well my feelings are that they are not the people making the decision so as private citizens they have a right to their opinion, but killing a deal between two private companies because one of them has Arabic speakers is just not good enough. As far as getting secret details about our security, there is no reason to believe that will happen, nor is there any reason to believe that it is impossible for it to happen no matter who is running what company.

After all Tim McVeigh was not an Arabic speaker or a Muslim.