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Port delay offered

THE BALTIMORE SUN

WASHINGTON -- A state-owned company in the United Arab Emirates volunteered late yesterday to delay part of its $6.8 billion takeover of most operations at six U.S. ports.

The surprise announcement eases a standoff between President Bush and many in a Congress controlled by his party who had threatened to try to block the deal over concerns about security.

Under the offer coordinated with the White House, Dubai Ports World said it would agree not to exercise control or influence the management of the U.S. ports pending further talks with the Bush administration and Congress. It did not indicate how long it would wait for those discussions to be held.

"It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed," Dubai Ports said in a statement to the Associated Press.

Bush's top political adviser had signaled earlier yesterday that there might be room for a delay.

In an interview on Fox Radio, White House deputy chief of staff Karl Rove was asked whether Bush would accept a delay in the takeover by Dubai Ports World of British-owned Peninsular & Oriental Steam Navigation Co.

"Yes," Rove said on The Tony Snow Show. "Look, there are some hurdles, regulatory hurdles, that this still needs to go through on the British side as well that are going to be concluded next week.

"There's no requirement that it close, you know, immediately after that."

Conciliatory tone

Rove's tone was more conciliatory than the comments earlier in the week, when Bush vowed to veto any effort to stall or block the transaction.

"What is important is that members of Congress have the time to get fully briefed on this," Rove said. "We intend to work closely with them in order to give them a comfort level on this."

A delay could help defuse the furor over the state-owned company's planned purchase of P&O;, which runs some operations at ports in Baltimore, New York, Newark, N.J., Philadelphia, Miami and New Orleans. News that an administration panel had approved the deal has infuriated politicians from both parties and prompted a broad public outcry.

At least one of the deal's critics said more time without a broader investigation into the sale was unacceptable.

"A simple cooling-off period would not allay our concerns," Sen. Charles E. Schumer, a New York Democrat, said in a statement released by his office. Schumer is pressing for legislation that would force the administration to reopen its internal review of the sale.

Slowing down the deal would have to involve action by Congress or the two companies because the administration no longer has the power to stop it. Dubai Ports World has the approval it needs to assume ownership of P&O;'s contracts in the United States and the blessing of its shareholders.

The deal lacks only the approval of a court in the United Kingdom. That step, expected March 2, is considered a formality.

Analysts in the United Kingdom say the company could sell its stake in the United States, but company officials seem determined to add the U.S. ports to its holdings. They have expanded their lobbying ranks to include former Sen. Bob Dole and have pledged to work with lawmakers to allay their concerns.

"We're disappointed," Edward H. Bilkey, Dubai Ports World's chief operating officer, told the Associated Press. "We're going to do our best to persuade them that they jumped the gun. The UAE is a very solid friend, as President Bush has said."

Bush offered assurances yesterday that the sale would not endanger Americans.

"People don't need to worry about security," Bush said after a morning meeting with his Cabinet. "This wouldn't be going forward if we weren't certain that our ports would be secure.

Bush thanked those in his administration who were dispatched to Capitol Hill to explain the details behind the government's approval of the sale, saying that they brought "a sense of calm to this issue, as people understand the logic of the decision."

Elsewhere, legal steps aimed at impeding the deal began. The Port Authority of New York and New Jersey planned to file suit in a New Jersey court today to cancel P&O;'s lease at the Port Newark container terminal because of concerns about the government evaluation.

At an unusual briefing before the Senate Armed Services Committee yesterday, 10 administration officials -- representing the Treasury, State, Homeland Security and Defense departments -- labored to explain how the Committee on Foreign Investments in the United States came to approve Dubai Ports World's purchase of P&O.;

They stressed that the panel, which serves as a proxy for the president, had carefully examined the potential national security implications of the sale, and that after input from intelligence agencies, diplomats, and others inside the administration, nobody objected to it.

Deputy Treasury Secretary Robert M. Kimmitt said the committee -- which includes representatives from 12 federal agencies, including the National Security Council and the Pentagon -- began looking into the deal in mid-October, when the two companies met informally. He said port security was immediately flagged as a primary area of possible concern and that the issue was referred to Homeland Security.

An intelligence assessment from the office of the Director of National Intelligence was requested Nov. 2, Kimmitt said, and in early December, the committee met with representatives of Dubai Ports World and P&O.; The formal notice of the pending deal was filed Dec. 16.

Conditions set

As part of the negotiations, he said, the committee sought and received a letter from the companies agreeing to several conditions, including that Dubai Ports World would comply with the same security procedures that P&O; does, he said. The committee concluded its review Jan. 17, Kimmitt said, with a unanimous agreement that the deal would not compromise national security.

Two Democrats on the committee, Sen. Carl Levin of Michigan and Sen. Hillary Rodham Clinton of New York, challenged Kimmitt about whether the committee had complied with the law that governs the way such investigations are conducted. They argued that the law requires a longer, 45-day investigation for any deal that could affect national security.

"Is there not one agency in this government that believes that this takeover could affect the national security of the United States?" Levin asked. "Is that what you're telling us?

Kimmitt said no longer investigation was conducted because, under the long-standing interpretation of the law, agreement from the panel made it unnecessary.

"It doesn't suggest that security concerns were not raised," Kimmitt said. "They were raised, they were resolved. We moved on."

Other officials emphasized that the UAE has been a U.S. ally in the war on terror, helping American officials with investigations there and becoming the first nation in the Middle East to join an initiative aimed at improving cargo security on international ships.

Deputy Secretary of Defense Gordon R. England implied that scuttling the deal might hurt national security by sending a negative message to Arab nations that have joined with the United States in the war on terror. The UAE is an important port, he said, and hosts large numbers of U.S. ships and military personnel.

"The terrorists want us. They want our nation to become distrustful, they want us to become paranoid and isolationist," he said. "And my view is we cannot allow this to happen. It needs to be just the opposite."

In his radio interview, Rove made the same point, reaffirming a message the White House has returned to all week, that the port deal has raised objections because Dubai Ports World is owned by an Arab government, not because it is a foreign company.

"We need to win the hearts and minds of moderate Muslim governments and Muslims around the world," Rove said. "And this just sends a very bad signal that a partner of the United States would be ill-treated, unfairly treated, particularly when the concerns, from our perspective, are not justified."

Levin noted that the UAE has had a "mixed history" with regard to counterterrorism, especially before the Sept. 11, 2001, terrorist attacks. He pointed out that the 9/11 Commission labeled the country a problem.

Committee Chairman John W. Warner, a Virginia Republican, said he hopes a compromise could be reached. But he also told Kimmitt that he wants to see minutes from the review committee's meeting and as much background information on the panel's deliberations as possible.

gwyneth.shaw@baltsun.com

Sun reporters Siobhan Gorman and Robert Little contributed to this article

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