Arab firm agrees to probe of port deal

THE BALTIMORE SUN

WASHINGTON -- Intensifying its efforts to placate critics in Congress, a United Arab Emirates company volunteered yesterday to submit its takeover of some operations at six major U.S. seaports -- including Baltimore's -- to a second Bush administration probe of potential national security implications.

The offer, which emerged from extensive talks among state-owned Dubai Ports World, White House officials and congressional leaders, could turn down the heat on an issue that has opened a huge, and rare, split between President Bush and members of his Republican Party.

Critics of the deal welcomed the offer, which would temporarily put a British citizen in charge of the American facilities. Several opponents of the sale said that the 45-day investigation of DP World's purchase of the British company operating the port facilities could ease their concerns about the deal -- if the Bush administration shares the findings.

"A 45-day full investigation would be a significant step forward. Of course, the devil is in the details," said New York Sen. Charles E. Schumer, a Democrat, on CBS' Face the Nation. "If after the 45-day investigation, it's kept secret, it's given to the president, who, after all, has come out for this deal already, I don't think that's going to assure the American people."

The Republican chairman of the House Homeland Security Committee, Rep. Peter T. King of New York, said he would shelve proposed legislation that would have forced an investigation.

"I don't see any purpose to go forward and force a confrontation with the president, because the main purpose of the legislation is to bring about this 45-day investigation," he said on NBC's Meet the Press.

But King and others warned that they expect full disclosure from the White House as the probe moves forward and refused to rule out congressional action if that doesn't happen. Last month, an administration panel approved DP World's purchase of British-owned Peninsular & Oriental Steam Navigation Co., which holds operational leases at ports in Baltimore, New York, Newark, N.J., New Orleans, Philadelphia and Miami.

Senate Republican leader Bill Frist, who helped negotiate DP World's proposal, said that if the longer review begins, he would recommend that the Senate take no action until after the probe is finished.

In the meantime, the Tennessee Republican said in a statement that he expected "the full and vigorous oversight process by Senate committees" would examine the deal, port security and the best ways to change the process for considering future transactions of this sort, "so that as we go forward, national and homeland security is enhanced."

Administration officials, including Bush, have said that the Committee on Foreign Investments in the United States had rigorously reviewed the deal and found no reason to conclude that DP World posed a security risk. Bush and others have indicated that the strident political opposition smacked of anti-Arab bias.

But many lawmakers in both parties have said the transaction warranted the 45-day investigation required under provisions of the law that govern such transactions. They said it was reasonable to question the motives of the UAE, which they say has a mixed record in counterterrorism efforts.

There is nothing in the law that would have allowed the government to reopen the process. That forced DP World to make a voluntary offer for another round of scrutiny, which it hopes will give critics enough political cover to drop their opposition.

Republican Sen. Lindsey Graham of South Carolina called the administration "incredibly politically tone deaf." He said the White House was paying a price for not telling Congress about the deal -- and allowing lawmakers and local officials to take a beating from irate constituents.

"This process has been flawed from the beginning, and it needs to be fixed. And we need a 45-day investigation," Graham said on CBS. "I hope we don't have to vote to get it. But if we do, I will vote for it."

DP World also promised to create an independent subsidiary to handle its U.S. interests, overseen by a London-based executive, and to put an American citizen in charge of security. The $6.8 billion transaction between DP World and P&O; includes assets around the world.

"We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States," said Ted Bilkey, the company's chief operating officer.

The final step in closing the deal, approval from a British court, is expected Thursday. DP World said its offer would be good until May 1 or whenever the 45-day review is finished.

Bush has faced blistering criticism for threatening a veto of any legislation that sought to block or delay the deal. Yesterday, the president's national security adviser welcomed DP World's offer, which went further than the 30-day cooling off period the company proposed late last week that had failed to mollify critics.

Last night, the Treasury Department released a statement saying that the administration "welcomed" DP World's request for another review and that it would begin quickly.

"We are pleased that DP World reached a middle ground with Congress," White House press secretary Scott McClellan said in a statement last night.

McClellan said the deal was closely scrutinized during the earlier review. "We believe, however, the additional time and investigation at the request of the company will provide Congress with a better understanding ... and that Congress will be comfortable with the transaction moving forward once it does," he said.

Earlier, National Security Adviser Stephen J. Hadley, on CBS, and Frances Fragos Townsend, Bush's homeland security adviser, defended the administration panel's approval of the deal.

"We're satisfied that there's been a complete review of the deal," Townsend said on Fox News Sunday. "We're satisfied that we've addressed the security concerns."

Virginia Sen. John W. Warner, a Republican who has sought to cool the rhetoric on both sides, said on NBC that a compromise is important to avoid sending the wrong message to America's allies in the Middle East.

"We cannot treat this company as a second-class citizen," said Warner, who met with DP World officials over the weekend. "Since 9/11, they've been a full partner in the war on terrorism. We, as the United States, are dependent on countries like the UAE, Qatar, Bahrain, Kuwait, all of them there, to give us the support to fight this war on terrorism. We cannot mess this deal up, and in the eyes of the world."

New York's King, however, said that there were serious issues involved in allowing a company owned by a foreign government into American seaports. He noted that while the UAE has been an ally since the 2001 attacks, it was also one of the few countries to recognize the Taliban and still has to prove it will be a consistent partner in the war on terror.

"I think people who sort of glibly say, 'Well, you know, they're not going to handle security, UAE is a great ally' -- 4 1/2 years ago, they were not an ally," King said. "They were working with the enemy. And if those same people are still there today that were there then, these are real serious issues."

gwyneth.shaw@baltsun.com

The Associated Press contributed to this article.

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