The Port Deal and Risk Aversion

Potential fallout from Port Deal.

Arab Firms Reassessing U.S. Holdings
Mar 10 11:06 AM US/Eastern
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By JIM KRANE
Associated Press Writer

DUBAI, United Arab Emirates

Gulf investors, feeling scorched by what they see as an anti-Arab backlash in the U.S. Congress, will likely be wary of high-profile investments in the United States after the ports controversy with a Dubai firm.

Analysts said Friday, however, that with Gulf nations awash in cash from oil profits, the United States remains a tempting market to invest. So instead of retreating, over the longer term, Arab investors and governments may campaign to shore up their image among Americans to ensure their money is welcome.

President Bush said Friday he was worried over the message the fallout of the ports controversy will send to the Arab world. On Thursday, Dubai Ports announced that it would give up management of six U.S. ports after an outcry in Congress over security.

In Dubai and elsewhere in the Gulf, the controversy was largely seen as reflecting an anti-Arab bias. Dubai Ports’ concession was likely to solidify that belief.

“It’s a sobering moment,” said Eddie O’Sullivan, Dubai-based editorial director of the Middle East Economic Digest. “People are going to have to be much more careful. There’s a fear they (members of Congress) may move on to other targets in the Arab world. If it happened once it can happen again.”

Investors and businesses in UAE, Kuwait, Qatar and Saudi Arabia reviewing portfolios for U.S. holdings that could spark a similar uproar in Congress, O’Sullivan said.

“I’m sure they will be reviewing their portfolios. Most of them are in dollar-denominated assets. They’ll want to see how vulnerable it is to the U.S. Congress,” O’Sullivan said. “It’ll be more difficult to finalize an investment proposal that involves an American bank or an American asset.”

A short-term backlash could follow: Perhaps a government-owned company will favor European or Asian suppliers over American ones in the future.

Few observers believe it will torpedo giant recent orders by two UAE airlines of Boeing passenger jets. But Boeing may have to look outside the Gulf for future deals, said Youssef M. Ibrahim, managing director of Dubai-based risk consultancy Strategic Energy Investment Group.

“The next deal they will do with Airbus,” the European aircraft consortium, Ibrahim said. “Dubai’s ability to react is constrained. You can’t punish America much if you are so small.”

Last year, Dubai companies invested $5.5 billion in the West, much of that in the United States. In the next five years, the six Gulf countries will have a half-trillion dollars in assets to invest.

They may be more disposed to look to Europe or Asia for investment now _ but in the end, the amount of cash is so huge that only U.S. assets can soak it up, O’Sullivan said.

“The United States represents 50 percent of the world’s economic market, 50 percent of the world’s consumption and 50 percent of the assets in which you can put money,” Ibrahim said. “At the end of the day, there aren’t too many places where you can invest that kind of cash overflow.”

The Emirates is unlikely to retaliate strongly for the slight, for instance by blocking the U.S. Navy and Air Force access to critical bases here, a prospect that has worried top U.S. military leaders.

Governments of other cash-rich Gulf countries like Kuwait, Qatar and Saudi Arabia will be loath to ruffle relations with the United States, analysts said.

Shehab Gergash, chief executive of Al-Daman, a Dubai-based investment bank, said he had seen no drop in investor interest in American products or securities.

“Time will tell whether it has any effect” on Arab investment in the States or Arab purchases of U.S. goods, Gergash said.

Many here blame the controversy on American politicians for playing to a deepening anti-Arab bias in the United States. Dubai-based Gulf News said U.S. Democrats were trying to “score political points” against the Bush administration on national security by ignoring the facts of the case.

“It is deemed better to jump on the bandwagon of anti-Arab, anti- Middle East, anti-Muslim tirade that has been popular since the 9/11 attacks,” the paper’s editorial page said Friday.

Ibrahim said the UAE may move to boost its image among Americans who fear closer ties with the Middle East. It may embark on opinion- shaping ventures that mimic Israel’s deft public relations maneuvers: hosting visits by members of Congress, business leaders and chiefs of unions like the Teamsters, which opposed the deal, Ibrahim said.

“They should’ve invited these people here and shown them around, so they had friends who would defend them instead of attacking them without knowing anything about Dubai,” Ibrahim said.

This whole port deal stinks. I’m really disgusted by the irrational (xenophobic) reaction to this deal. This was a step backwards in the war on terror.

What will the Dubai debacle cost us?
Now the deal is done, it’s time for American companies to face the economic consequences of politicians’ public statements.
Fortune Magazine
By Nelson D. Schwartz, FORTUNE Europe editor
March 10, 2006: 10:50 AM EST

NEW YORK (FORTUNE) - So the Dubai ports deal is done, a United Arab Emirates-owned company has backed down, and CNN anchor (and deal opponent) Lou Dobbs is going to have to find something else to talk about. But the after-effects are likely to be felt in boardrooms across America as well as on Capitol Hill and in Arab capitals from Riyadh to Bahrain and Cairo.

That’s because while the decision Thursday by Dubai-based DP World to complete its takeover of the U.K.'s P&O while transferring or selling the U.S. operations may placate opponents on Capitol Hill, it’s likely to worry major American exporters such as Boeing (Research), GE (Research) and other companies that see growing opportunity in the oil and money-rich Gulf.

“Our members are very concerned about what the failure of this deal means,” says Bill Reinsch, president of the National Foreign Trade Council, a Washington trade association that represents large U.S. multi-nationals. “They haven’t wanted to be visible but they’re very concerned about the signals the U.S. is sending out.”

Indeed, The Hill, a Washington newspaper that covers Congress, reported that Dubai’s royal family is “furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal.”

And with Boeing hoping to land a major order for its new 787 Dreamliner with Dubai-based airline Emirates down the road, the stakes are high. Elsewhere in the region, the UAE’s Etihad Airways has already ordered more than $1 billion worth of 777s, and Egyptair and Royal Jordanian are longtime Boeing buyers.

“These are important customers for us in an important, growing market,” says Boeing spokesman John Dern. “We are with these customers all the time. We haven’t seen any impact at this point, and have no indication there will be an impact.” Dern wouldn’t say whether Boeing execs have specifically discussed the ports controversy with potential customers, but he notes that “we’re certainly monitoring the situation.”

Don’t expect news of any public threats or cancelled orders to come from the Gulf in the coming days or weeks. “That’s out of character for the Gulf states,” says Reinsch. “It’s more likely they’ll just act, and suddenly a deal is off.”

Reinsch adds he that the doesn’t think opponents of the deal on Capitol Hill gave much thought to the possibility that blocking the deal could boomerang and end up hurting U.S. companies. “It’s the law of unintended consequences,” he says.

The biggest loser in the short-term, according to Reinsch, is the Bush administration, which has been trying to create a Middle East free trade zone modeled on NAFTA that would extend trade privileges with the United States to countries from North Africa all the way to Iraq by 2013.

Jordan and Morocco have already signed deals with the United States, and Bahrain and Oman are in the final stages of negotiations. “These countries are not without resources and they can’t help but react negatively when they’re thrust into this.”

Now that DP World has given up, the action will likely move behind closed doors, far away from the media attention that made the controversy such a hot topic, especially on the cable gab-fests (including those on CNN, the parent of CNNMoney.com).

Companies like Boeing are likely to work their contacts in the region, and try to patch things up. And former Bush administration economist and American Enterprise Institute Fellow Phillip Swagel says the Gulf states should send emissaries to meet with outspoken port deal opponents like New York Senators Chuck Schumer and Hillary Clinton and explain to them the economic power of the Gulf region.

Not a bad idea but whether Schumer, Clinton and other politicians understand the economic consequences of their public statements, rather than the political benefits, is another matter.

[quote]Moriarty wrote:
This whole port deal stinks. I’m really disgusted by the irrational (xenophobic) reaction to this deal. This was a step backwards in the war on terror.

… [/quote]

Anytime Santorum and Schumer find themselves on the same side of an issue I get scared.

Shooting down the port deal was a big mistake. Not only is it blatantly anti-Arab it has no effect on security either way.

The local Port Authority is still in charge.

Customs and the Coast Guard are still in place.

If WMD’s are smuggled in the US they will be brought in the same way drugs are. Through Mexico or on a private plane.

The whole idea that the UAE would risk billions of dollars to smuggle WMD’s into the US is silly.

The idiots won this battle.

Sort of related – here’s a great article about how the media generated this controversy:

Media Sparked Firestorm
As Bush Got Snagged
In Bipartisan Criticism
Frist Takes an Early Stand
By GREG HITT and SARAH ELLISON
March 10, 2006; Page A1

On Monday, Feb. 13, as Americans were fixated on media accounts of Vice President Dick Cheney’s weekend hunting accident, CNN commentator Lou Dobbs weighed in on a different story. In a “special report” on his evening program, he asserted that “a country with ties to the Sept. 11 terrorists could soon be running significant operations at some of our most important and largest seaports with a full blessing of the Bush White House.”

That same day, Michael Savage, a conservative radio talk-show host, also attacked the transfer of some American shipping terminals to a company owned by an Arab state. Though the deal had received some newspaper attention before then, Mr. Savage’s angry message raised early concerns inside the Bush White House about trouble ahead.

The broadcasts helped set off a grass-roots brushfire that quickly consumed lawmakers in Washington. Yesterday the ports deal came crashing down. Dubai Ports World, the company controlled by the government of Dubai in the United Arab Emirates, announced that it would sell or spin off its American port operations.

Exactly how that will happen remains unclear. DP World just this week completed its acquisition of London-based Peninsular & Oriental Steam Navigation Co. Terminals at five American ports were a piece of that broader deal. DP World said it will transfer its new U.S. operations to a “United States entity.” The company may then sell the U.S. assets, a spokesman said, or may seek to create a corporate structure under which the U.S. business has no management ties to its parent in Dubai.

The battle over the Dubai ports deal has resonated widely because it touches on concerns far beyond the immediate issue of transferring cargo containers from ship to land. One is the question of whether the Bush administration since 9/11 has sufficiently bolstered overall port security – which is the job of U.S. law-enforcement officials, not terminal operators such as DP World.

The Dubai debate has also inflamed broader fears that America has opened itself up too widely to the outside world. It recalls earlier brouhahas over foreigners taking over U.S. assets, such as the uproar in the late 1980s and early 1990s when investors from a booming Japan bought Rockefeller Center and the Pebble Beach golf course.

Today, the outsourcing of jobs to Asia, the flood of immigrants from Latin America and America’s dependence on foreign investment all feed a sense of vulnerability among some voters. That sense is dangerous for President Bush and the Republican Party, whose biggest advantage for a generation has been voters’ conviction that the party can be trusted to do a better job than Democrats on security and defense.

The media portrayals of the port deal generated a wave of anger from Americans across the country that left lawmakers in Washington – by their own admission – following their constituents much more than leading them. Perhaps the most critical decision to ride the wave was made by Senate Republican leader Bill Frist, who by coincidence was visiting a port just as the heat was rising and decided to speak out against the deal.

Some misperceptions fed the political storm, including the mistaken idea that the Arab company would be responsible for maintaining security at the ports and inspecting cargo. Also, few Americans realized, at least initially, that foreign companies already operate most American terminals. Nonetheless critics argued that although the Treasury Department found no security problems with DP World’s takeover, the company could be used, perhaps unwittingly, by terror groups to get inside information on port procedures and infiltrate the work force.

The story began as a seemingly routine business deal, followed more closely in Britain than in the U.S. Jockeying for control of P&O began last fall, and the proposed sale to DP World was taken up for review by the Committee on Foreign Investments in the United States. The committee is a government body under the Treasury Department that rules on foreign acquisitions with potential national-security implications. It looked at the proposed sale, found no reason for concern and cleared it in mid-January. Midlevel officials made the decision without informing Treasury Secretary John Snow or his deputy, Robert Kimmitt.

In late January, a small Florida company began sowing the seeds of trouble in Congress. Eller & Co., a Fort Lauderdale stevedoring firm that is a partner at the Port of Miami with P&O, feared its business would be harmed by the DP World takeover. An Eller executive asked Joe Muldoon, a former drug-industry lobbyist, to work the halls of Capitol Hill. Mr. Muldoon came out of what he calls “semiretirement” to take the job, and quickly cloaked the issue in patriotic themes. “It’s about foreign control over critical infrastructure – during wartime,” he says.

The early going was tough. “I didn’t find anyone who was aware of this,” Mr. Muldoon says.

On Friday, Feb. 10, a rival Singaporean bidder for P&O withdrew from the race and DP World declared victory. The story got some coverage, including in The Wall Street Journal, but mostly in the inside pages.

Reframing the Debate

Over the weekend, though, the Associated Press framed the debate in a new way: “A company in the United Arab Emirates is poised to take over significant operations at six American ports as part of a corporate sale, leaving a country with ties to the Sept. 11 hijackers with influence over a maritime industry considered vulnerable to terrorism.”

The AP called New York Sen. Charles Schumer, a Democrat, for comment, and he was quoted in the story criticizing the deal. The story also quoted ports experts saying security shouldn’t be an issue. Democratic Rep. Rahm Emanuel says he called Mr. Schumer upon seeing the story and told him: “Chuck, you have something here. Stay after this.” The senator assured him he was already planning to, Mr. Emanuel recalls.

Then Mr. Dobbs got on the story. The CNN commentator, who has redefined his career by editorializing against outsourcing, illegal immigration and big business, aired his initial report in which he expressed incredulity that the deal was being allowed to go forward. That report was followed by 15 others in the following 17 of his shows.

The issue began to pick up steam, despite some cautionary stories making points such as the fact that overseas companies already operate many U.S. terminals. On Feb. 14 National Public Radio ran a segment quoting Stephen Flynn, a former Coast Guard commander who is now at the Council on Foreign Relations. Mr. Flynn called it “distressing” that there is “so little understanding within the U.S. government and within the American citizenry” about how port security works.

Once the Dubai deal became an issue, though, it revived longstanding complaints that the Bush administration was failing to give port security enough attention in its effort to improve America’s defense against terrorism. Critics said the U.S. needed to spend more money on scrutinizing cargo – although that could be done regardless of who operated the terminals.

Mr. Schumer, joined by several House and Senate Republicans, convened a news conference in the Capitol on Feb. 16 – his second in three days – to condemn the deal. He urged the Treasury Department to suspend it and conduct a deeper investigation. Leaders of the Senate Banking Committee from both parties sent a letter to Treasury complaining that the review completed in January was only “cursory.”

The issue made for unlikely bedfellows. In quick succession, the editorial pages of the conservative Washington Times and the New York Times criticized the deal.

Mr. Schumer spent part of the long Presidents Day weekend trying to gather more attention. He held a news conference in New York with families of Sept. 11 victims. As work resumed on Tuesday, Feb. 21, he held another with Rep. Peter King, a New York Republican, who vowed to introduce legislation suspending the deal.

That day proved to be a watershed moment, for politicians and the press. As it happened, Mr. Frist, the top Senate Republican, had embarked on a fact-finding tour to study port security and immigration issues. He was arriving at the big port in Long Beach, Calif., and knew he’d be asked about the Dubai deal.

Mr. Frist, an avid BlackBerry user, had been peppered with concerns by his staff, lawmakers and constituents for several days, and aides said he felt he needed to jump out in front of the issue if he had any hope of ultimately controlling it. So he jumped directly into the fray – on the side of slowing down the deal.

“The decision to finalize this deal should be put on hold until the administration conducts a more extensive review of this matter,” Mr. Frist said. “If the administration cannot delay this process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review.”

That declaration – from a leading Republican, an ally of President Bush and a likely presidential contender in 2008 – was a signal to other Republicans that it not only was acceptable to oppose the port deal but also perhaps politically wise to do so.

The political and media focus instantly grew more intense. House Speaker Dennis Hastert soon echoed Mr. Frist’s complaints. Then Mr. Bush, on his way back from a speech in Colorado, met with reporters traveling on Air Force One and vowed to veto any legislation intended to reverse the deal. The president was digging in against top members of his own party. The hardening positions on both sides made it hard to find a face-saving compromise.

In the blitz of cable TV and Internet coverage that followed, critics of the deal seized the offensive. They had the more startling sound bites: The United Arab Emirates, which includes Dubai, was described as an Arab country that had ties to some 9/11 hijackers. The critics pointed out suspicions that the U.A.E. has been a site for terrorism money transfers and noted its relatively friendly ties with Iran. The administration couldn’t break through with its counter-arguments that the U.A.E. was providing crucial port and airfield facilities for the U.S. military and that it had tightened up its tracking of suspicious money transfers.

Groundswell of Opposition

The coverage was producing a groundswell of opposition back home, and members of Congress were hearing it. Republican Sen. Trent Lott got an earful at home in Mississippi. Rep. Hastert went on a fund-raising trip and got similar complaints from friendly audiences. Dubai was crowding out other issues.

Lawmakers said the negative response from constituents was overwhelming. Congressional offices on Capitol Hill were deluged by phone calls and emails protesting the deal, and congressmen told of being pulled aside wherever they went in their districts. Rep. Don Manzullo, a Republican from Illinois who is chairman of the House subcommittee on small business, said he hadn’t seen this level of negative reaction in his district for at least a decade, and he got more feedback overall than he did during Bill Clinton’s impeachment. “I got stopped all over the place,” he said. “People are big-time upset.”

Even seemingly neutral news coverage of the deal cut against the administration. A CNN report from Dubai showed articulate and Western-educated Dubai leaders offering assurances that they would strictly maintain security at any port facilities they operated in the U.S. But aides to House Republican leaders reported that the sight of men in Arab dress saying they would handle port security only made the calls of complaint come in faster.

A Feb. 24 item from Rasmussen Reports, a public-opinion polling firm, said only 17% of Americans believed DP World should be allowed to purchase operating rights at U.S. ports, with 64% opposed. The report said that even before the deal was announced, President Bush was falling below Democratic congressmen in measures of who is trusted on national-security issues.

‘The Deal Is Dead’

Such news stoked the deepest fears of Republicans, who have long held an edge in that area. On the Internet, conservatives normally supportive of Mr. Bush channeled those fears and fed the flames of opposition. Commentator John Podhoretz, citing the Rasmussen data, posted his analysis on National Review Online: “The deal is dead. … Congressional Republicans have no choice but to be extremely aggressive and nasty toward the president and the White House, because they will be properly terrified of looking like Bush’s lapdogs on a hugely unpopular matter that goes to the heart of the Republican Party’s political advantage in the United States.”

In an attempt to halt the tide, the White House released details of unusual arrangements to which DP World had agreed. The ports operator would allow U.S. antiterror officials to examine company records without a subpoena and check the background of any of its employees. It also promised to separate its U.S. port terminal operations from the rest of the company.

Finally, DP World agreed to undergo a new, 45-day U.S. government security review of the acquisition so all the questions could be considered again. The White House hoped that would buy time to cool the political passions. But as legislators from both parties continued to push measures to stop the deal, the White House strategy fell apart. Yesterday, DP World said it would shed the U.S. terminal operations.

Messrs. Dobbs and Savage still aren’t satisfied. “I think it’s far to early to say whether this is a bona fide and sincere withdrawal,” Mr. Dobbs said in an interview. Said Mr. Savage: “I’m doubtful.” Both said they plan to keep pushing the issue.

Write to Greg Hitt at greg.hitt@wsj.com and Sarah Ellison at sarah.ellison@wsj.com

[quote]Zap Branigan wrote:
Moriarty wrote:
This whole port deal stinks. I’m really disgusted by the irrational (xenophobic) reaction to this deal. This was a step backwards in the war on terror.

Anytime Santorum and Schumer find themselves on the same side of an issue I get scared.

Shooting down the port deal was a big mistake. Not only is it blatantly anti-Arab it has no effect on security either way.

The local Port Authority is still in charge.

Customs and the Coast Guard are still in place.

If WMD’s are smuggled in the US they will be brought in the same way drugs are. Through Mexico or on a private plane.

The whole idea that the UAE would risk billions of dollars to smuggle WMD’s into the US is silly.

The idiots won this battle.[/quote]

Agreed.

A Major Victory for Al Qaeda
March 13, 2006:

In the past three weeks, there has been a political firestorm caused by misreported facts about the purchase of P&O by Dubai Port Works, and scurrilous attacks on the UAE by pundits, which has led to the betrayal of America’s most loyal and useful an ally in the Persian Gulf. The fallout from this betrayal will make it difficult to recruit future allies in the war on terror. The attacks on the UAE have the potential to do what Osama bin Laden has not been able to do with over a decade of bombings, the hijacked airliners, and fatwas.

Just take a look at the UAE’s track record. As part of the coalition to liberate Kuwait in 1991, the UAE has also supported the United States in the war on terror. This includes, among other things, providing access to a deep-water port that can accommodate aircraft carriers, use of a training facility for air-to-air combat training, airfields, and logistics support. It is a country that has proven largely inhospitable to al Qaeda (instead, the focus is on business), the UAE sent forces to Afghanistan to protect the construction of a hospital that they donated and built. They also has sent humanitarian assistance to Iraq while also providing a location for training Iraqi police. In 2002, the UAE also captured a major al-Qaeda figure, Abd al-Rahim al-Nashiri, who was involved in the attack on the USS Cole in 2000, and handed him over to the United States despite threats from the terrorist organization. Both Secretary of Defense Donald Rumsfeld and General Peter Pace have described the relationship the United States has with the United Arab Emirates as “very close” and “superb”. General Tommy Franks gave the UAE credit for providing valuable intelligence prior to the liberation of Afghanistan, and his successor, General John Abizaid, also described the UAE’s contributions as vital. The reward the UAE got for its support of the United States was to be smeared by pundits like Michelle Malkin as “demonstrably unreliable” or worse. The UAE is not perfect, but it is highly doubtful that the critics of the port deal could find one country that hasn’t made mistakes ? or pursued a policy it has come to regret ? in the past.

Contrary to the claim Malkin made in her blog that the extent of UAE retaliation would be a pullback from potential airline deals with Boeing, the UAE’s retaliatory options could also include a reduction in cooperation in a number of strategic areas. It needs to be noted that outside of Dubai, the closest facility that can conduct major repairs on an aircraft carrier is Guam. The United Arab Emirates has also been sharing intelligence with the United States ? and is better equipped in the area of human intelligence against terrorism from Islamic extremists (due to being in the same neighborhood that many major al-Qaeda figures come from) than the United States.

It is also worth noting what happened the last time the United States screwed over an ally in the Persian Gulf. In 1979, the United States made a series of decisions that led to Mohammad Reza Pahlavi being losing power in Iran. The result of that decision included the takeover of the American embassy in Iran, along with 25 years of state-sponsored terrorism, and a grave threat to the stability of the Middle East.

There is a cost to the United States for abandoning or abusing allies. When people assist the United States of America, and take risks doing so, they are owed some loyalty. To dump on an ally, like the UAE, instead of showing some respect, other potential allies take note.

This was a controversy with two winners; al Qaeda and Iranian President Mahmoud Ahmadinejad. The United Arab Emirates is a critical ally of the United States in the Persian Gulf, and a decline in what has been a strong relationship over thirty-four years is good news for the theocratic regime in its pursuit of nuclear weapons, and Islamic terrorists everywhere.

? Harold C. Hutchison (haroldc.hutchison@gmail.com)

[quote]hedo wrote:
A Major Victory for Al Qaeda
March 13, 2006:

In the past three weeks, there has been a political firestorm caused by misreported facts about the purchase of P&O by Dubai Port Works, and scurrilous attacks on the UAE by pundits, which has led to the betrayal of America’s most loyal and useful an ally in the Persian Gulf. The fallout from this betrayal will make it difficult to recruit future allies in the war on terror. The attacks on the UAE have the potential to do what Osama bin Laden has not been able to do with over a decade of bombings, the hijacked airliners, and fatwas.

Just take a look at the UAE’s track record. As part of the coalition to liberate Kuwait in 1991, the UAE has also supported the United States in the war on terror. This includes, among other things, providing access to a deep-water port that can accommodate aircraft carriers, use of a training facility for air-to-air combat training, airfields, and logistics support. It is a country that has proven largely inhospitable to al Qaeda (instead, the focus is on business), the UAE sent forces to Afghanistan to protect the construction of a hospital that they donated and built. They also has sent humanitarian assistance to Iraq while also providing a location for training Iraqi police. In 2002, the UAE also captured a major al-Qaeda figure, Abd al-Rahim al-Nashiri, who was involved in the attack on the USS Cole in 2000, and handed him over to the United States despite threats from the terrorist organization. Both Secretary of Defense Donald Rumsfeld and General Peter Pace have described the relationship the United States has with the United Arab Emirates as “very close” and “superb”. General Tommy Franks gave the UAE credit for providing valuable intelligence prior to the liberation of Afghanistan, and his successor, General John Abizaid, also described the UAE’s contributions as vital. The reward the UAE got for its support of the United States was to be smeared by pundits like Michelle Malkin as “demonstrably unreliable” or worse. The UAE is not perfect, but it is highly doubtful that the critics of the port deal could find one country that hasn’t made mistakes ? or pursued a policy it has come to regret ? in the past.

Contrary to the claim Malkin made in her blog that the extent of UAE retaliation would be a pullback from potential airline deals with Boeing, the UAE’s retaliatory options could also include a reduction in cooperation in a number of strategic areas. It needs to be noted that outside of Dubai, the closest facility that can conduct major repairs on an aircraft carrier is Guam. The United Arab Emirates has also been sharing intelligence with the United States ? and is better equipped in the area of human intelligence against terrorism from Islamic extremists (due to being in the same neighborhood that many major al-Qaeda figures come from) than the United States.

It is also worth noting what happened the last time the United States screwed over an ally in the Persian Gulf. In 1979, the United States made a series of decisions that led to Mohammad Reza Pahlavi being losing power in Iran. The result of that decision included the takeover of the American embassy in Iran, along with 25 years of state-sponsored terrorism, and a grave threat to the stability of the Middle East.

There is a cost to the United States for abandoning or abusing allies. When people assist the United States of America, and take risks doing so, they are owed some loyalty. To dump on an ally, like the UAE, instead of showing some respect, other potential allies take note.

This was a controversy with two winners; al Qaeda and Iranian President Mahmoud Ahmadinejad. The United Arab Emirates is a critical ally of the United States in the Persian Gulf, and a decline in what has been a strong relationship over thirty-four years is good news for the theocratic regime in its pursuit of nuclear weapons, and Islamic terrorists everywhere.

? Harold C. Hutchison (haroldc.hutchison@gmail.com)

[/quote]

Good post. The nativism and xenophobia on the right on this issue is even more appalling than the rank opportunism on the left.

I really couldn’t believe that this deal got so much attention. I mean, the ports were already controlled by a British firm, but as soon as an Arab-controlled company buys said British firm people shit bricks. If that’s not subtle racism at its finest my sorry ass isn’t from Africa.

[quote]Ren wrote:
I really couldn’t believe that this deal got so much attention. I mean, the ports were already controlled by a British firm, but as soon as an Arab-controlled company buys said British firm people shit bricks. If that’s not subtle racism at its finest my sorry ass isn’t from Africa. [/quote]

Don’t think it was subtle at all.

I still think the argument can be made that vital national interests should not be farmed out in any capacity… which is perhaps the only way to avoid the appearance of anti-arab sentiment in this issue.

However, I hope some folks will let the knee-jerk aspect of what has been done alert them to other knee-jerk reactions in the past or future.