The Dubai Ports Deal May Not Be Dead!

Sunday, March 12, 2006
"But Frist, R-Tenn., acknowledged that if an American buyer is not found, and the Bush administration determines there are no security risks, a deal for DP World to manage and operate major U.S. ports still could go through.”

http://chron.com/disp/story.mpl/front/3718381.html

This is what I wrote two days ago:

“I am going to make a bold prediction. The Dubai World Ports agreement will ultimately be approved. What, am I some sort of crazy person? Didn’t the company officially pull out? I suspect the devil is in the details. It only said that it would turn over the managerial functions over to an American firm. There is a major problem with this option: there are no companies in the United States ready to handle these responsibilities! And especially to do so profitably. We are going to see all hell break out in the next few days. The majority of the American public can be persuaded that this deal is not a security threat. Much of its fear and outrage was based on bigotry and misinformation. These decent Americans will soon start to feel ashamed of themselves.”

YARGB - Flares into Darkness: Dubai has Lost Face---How Might it Retaliate?

It is rumored that Dubai World Ports paid a huge price for the terminal agreements. This is a serious factor that cannot be ignored. If this is correct, why would any American company be willing to buy them out? The terminal business is not particularly lucrative. Only the highly experienced can earn a decent return. Common sense therefore dictates that the original deal will likely be approved. But won’t there be a lot of screaming and yelling within the halls of Congress? No, not really. The majority of American people were already beginning to understand that they initially overreacted. Sadly, bigotry played a major role. The shamefulness of their earlier response is starting to sink in.

8 comments:

gumshoe1 said...

david -

you need to have a bit more confidence
that your fellow yargbies
would remember and congratulate you,
should your prediction come true.

David Thomson said...

There is also a decent chance that I will want everyone to forget this bold prediction. Those who dare go against the conventional wisdom often make fools of themselves. We will see.

The key to my theory is the supposed difficulty of earning money in the port business. It is not the place for a company that doesn't already have its act together. I can’t see how an American firm can dare jump into this mess---if indeed the Dubai folks paid a premium price.

gumshoe1 said...

i don't understand the level of
political leverage the unions hold
over the terminals...

i've read several comments in passing that several foreign ports are modernized
- in a way the unions reject -
that provides for faster cargo thru-put AND better security screening.

i'm not anxious to see people thrown out of jobs,but my sense is this is
a part of why american firms don't want to buy in.

David Thomson said...

I’m only going by rumors---and have no hard facts to offer. A number of supposedly knowledgeable people, however, claim that this deal makes no sense for a company requiring training wheels. Only an experienced entity should consider taking the plunge. I will add another prediction: the Democrats will demand that the federal government take over the contract.

The Daily Kos may have a lot to do with the recent uproar. His folks were criticizing the Dubai deal days before the crap hit the fan. My guess is that the Kos supplied Senator Chuck Schumer with the pertinent information.

Rick Ballard said...

gumshoe1,

What might be a better question is why P & O stuffed the American ports in the deal in the first place. The American ports represented about 10% of the value and there is really no reason why they could not be severed and sold separately. Unless, of course, they are a real dog of an operation (which they are) so why not stuff them in and be rid of them? The deal could still be consummated on that basis and then we would all find out that the 'Ransom of Red Chief' has a business counterpart.

I don't think that the UAE would be upset in the least if the US bit was severed and tossed back for separate sale - except the total deal is consumated and now the UAE has to flog the albatross - or stick Uncle Sugar for its stupidity. Hand the bill to Hillary and Chuck - they are the wunderkind (along with Rep. King) who queered the deal. Let them pay the differential.

terrye said...

gumshoe:

Remember back a few years ago when people were worried about getting Christmas gifts for the kids because of a Longshoreman strike on the west coast?

The point then if I remember correctly was that the shipping companies etc wanted to automate the facilities such as the ones in Singapore and the Unions did not like that. That in turn meant the politicians did not like it.

I wondered from the outset if the US would end up buying the terminals and set up some kind of half assed nationalized structure withing DHS. The whole thing is just silly.

David Thomson said...

Is there a possibility that Dubai World Ports is looking for an excuse to opt out of the American aspect of the deal? They might be even laughing in private. Still, they cannot be pleased by the insults.

gumshoe1 said...

terrye -

i didn't catch that west coast/longshormens'
christmas problem...
sounds like it may have been on Billary's watch,tho.

and may have been around the time the PROC bought the terminals in CA
as well.