U.S. agrees to review Arab deal over ports

WASHINGTON — The Bush administration said Sunday it has accepted a proposal from a Dubai maritime company to conduct a 45-day review of the national-security implications of the company's plans to take control of significant operations at six U.S. ports.

The announcement by Dubai Ports World (DP World), brokered by the White House and Senate Majority Leader Bill Frist, R-Tenn., appears to satisfy demands by many congressional members who had threatened to force a security review if the administration would not conduct one.

The deal also offered pledges to reassure the United States that the ports deal would not pose any threats to American safety and security.

The administration had approved DP World's $6.85 billion purchase of London-based Peninsular and Oriental Steam Navigation (P&O) this month without conducting a security review, after a broad interagency panel that looked at the transaction concluded the takeover of U.S. port operations would not affect the nation's safety.

Members of both political parties had erupted in furor last week, questioning the administration's judgment and promising to delay the deal, if not scuttle it, but President Bush vowed to veto any legislation that would thwart the plans. Sunday's announcement might have headed off a showdown.

"We recognize that there are concerns regarding DP World's acquisition of P&O's U.S. terminal operations," said Edward "Ted" Bilkey, DP World's chief operating officer. "Despite having already obtained approval by the federal government, we continue to take voluntary steps to assure people that the security of the U.S. will not be harmed as a result of this acquisition."

Said White House spokesman Scott McClellan: "We are pleased that Dubai Ports reached a middle ground with Congress. The transaction was closely scrutinized by the appropriate national-security and intelligence officials, and important safeguards are in place. We believe, however, the additional time and investigation at the request of the company will provide Congress with a better understanding of the facts, and that Congress will be comfortable with the transaction moving forward once it does."

The Treasury Department said in a statement that it will begin the review as soon as the company formally files a request. Treasury said the same government panel that investigated the deal earlier but found no reason for national-security concerns will reconsider it.

In a statement Sunday, Frist said he will recommend that the Senate wait for results of the broader review before acting on legislation to delay or block the deal.

Sen. John Warner, R-Va., who supports the deal, said on NBC's "Meet the Press" that the new agreement "spells out unequivocally the willingness of this company to give every means of support to help work this thing out."

Warner called the ports deal diplomatically and economically vital to the United States. "This is going to establish a precedent, and it's got to be done in a way not to choke off other opportunities," he said.

Lawmakers who had threatened to block or delay the deal welcomed a longer investigation. Rep. Peter King, R-N.Y., said the new proposal probably would quell calls for emergency legislation this week. He said a deeper investigation of the company owned by the United Arab Emirates (UAE) is necessary.

Critics of the deal have cited the UAE's history as an operational and financial base for the September 2001 hijackers. The U.S. government also questioned the UAE years ago about its possible ties to al-Qaida leader Osama bin Laden, according to the report by the independent commission that investigated the terrorist attacks. Critics also have noted that the UAE was one of three countries to recognize the Taliban government in Afghanistan before the U.S. overthrow in 2001.

"This was only 4 ½, five years ago that they were very close to bin Laden, they were supporting Taliban," King, who heads the House Homeland Security Committee, said on "Meet the Press." "And unless there's been a complete transformation, I have real concerns."

Sen. Charles Schumer, D-N.Y., another critic, agreed that the delay would forestall immediate action in Congress but emphasized that transparency is vital in the new investigation. "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," he said on CBS' "Face the Nation."

Under terms of the deal announced by DP World, the company would proceed with its takeover of P&O. That deal is to be completed Thursday.

But DP World said it would "guarantee" the independence of operations at the ports of New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans by establishing North American operations as a "completely separate" business unit.

Management of the North American operations would be left in the hands of P&O's chief executive in London, who is British.

The chief security officer of the North American unit will still be a U.S. citizen, unless the Coast Guard approves a change.

"We are confident the further review ... will confirm that DP World's acquisition of P&O's U.S. operations does not pose any threat to Americans' safety and security," Bilkey said.