TOPICS > Economy

UAE and the United States Work to Mend Fences after the Failed Ports Deal

March 30, 2006 at 12:00 AM EDT


RAY SUAREZ: When it became public knowledge that Dubai Ports World, a company in the United Arab Emirates, was buying the operations of terminals at six American ports, it created a firestorm of protest because of that country’s involvement with terrorism prior to September 11th.

SEN. CHUCK SCHUMER (D), New York: How could we turn over one of the most vital areas of homeland security to a company run by a country that has a nexus of involvement with terrorism?

Its banks have laundered terrorist money. Two of the hijackers were UAE citizens. And no matter how good the head of the UAE might be, how do we know about infiltration?

RAY SUAREZ: The uproar subsided only after the company announced it would sell off its ownership of the terminals at the ports.

SEN. JOHN WARNER (D), Virginia: Because of the strong relationship between the United Arab Emirates and the United States, and to preserve that relationship, D.P. World has decided to transfer fully the U.S. operation of P&O Ports North America to a United States entity.

RAY SUAREZ: In the aftermath, President Bush expressed concern that other countries, particularly in the Middle East, might be more reluctant to strengthen their ties to the United States.

GEORGE W. BUSH, President of the United States: I’m concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East. In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East.

RAY SUAREZ: The United Arab Emirates is a small federation of seven oil-rich emirates, or states, on the Persian Gulf, including Dubai. It has a population of less than three million people and invests billions of dollars all over the world, including the United States.

Recently in Washington, the UAE’s minister of economy and planning, Sheikha Lubna al-Qasimi, has been assessing the damage and mending fences. We talked to her late last week.

Did anyone in your government, did anyone involved with Dubai Ports World have any inkling that something like this could happen? Was this a shock to your government?

SHEIKHA LUBNA AL-QASIMI, Minister of Economy and Planning, UAE: It was a surprise, because I think, at the end of the day, this was looked at purely as business. You know, they looked at the deal as a business.

And if you look at the sequence of what DP World had done, I think it stood out for a company with a good spirit of cooperation and knowing that this is, you know, a country that’s a friend.

Most people here, unfortunately, keep looking at prior to September 11th, but I think it’s much more important and pertinent on the relationship between the two is to look post-September 11th.

In terms of, you know, any of these environments, there are a lot of measures that had taken place, not with the emirates, but worldwide. And we are port of a strong group of the war against terror in a global forum with the United States. So there have been certain measures taken, you know, towards combating terror.

RAY SUAREZ: What kind of things have you done?

SHEIKHA LUBNA AL-QASIMI: Many people here are not aware that some of the people, the most critical people within al-Qaida, was actually caught with the help and the assistance of the United Arab Emirates. So there’s been a great assistance on that side.

When we look at, in terms of the collaboration on defense, there are troops in the U.S. in the air base, actually, in the emirates.

Also, if you look at the ports, parts of it, the United Emirates was the first country that signed the Container Security Act, and this is in particular the ports in Dubai. And it was actually announced by the U.S. government that these are the only ports that actually can have the U.S. Navy and a lot of the big ships actually to go through.

We have 600 U.S. Navy ships that go through Dubai, so this is probably the most (inaudible) foreign ports worldwide outside the USA.

RAY SUAREZ: Many in Congress were concerned about the UAE’s participation in money laundering prior to September 11th.

SHEIKHA LUBNA AL-QASIMI: The UAE had worked very closely with the U.S. Treasury on the anti-money laundering act. The UAE is actually considered as a good benchmark in the Middle East now for combating against money laundering. So that’s very, very important, in the aspect of a total environment of the war on terror.

UAE still continues to, you know, cooperate very closely with the U.S., In terms of military support in Afghanistan and Iraq through the emirates. So that’s a very strong relationship that it’s important to actually be understood here.

RAY SUAREZ: The emirates are said to be in negotiations with another British company after P&O — that is Doncasters’ purchase of that military hardware supplier. Its parts go into American fighter jets, and now there are some members of Congress who want to look at this deal.

Are you worried about this? Is it enough to put a stop to the deal?

SHEIKHA LUBNA AL-QASIMI: The issue here, really, is about security. And as you go through a process of accepting or approving of companies, you will have some investment that is outside the scope of security. So it’s the understanding on our side that we have to make sure that there are a process, a review process for this particular deal to go through.

And there are questions at play; they should be asked.

RAY SUAREZ: But does this cause people in your part of the world to wonder whether it’s safe to invest in the United States or whether political considerations, as you suggest, might interfere with the normal flow of investment?

SHEIKHA LUBNA AL-QASIMI: Within the UAE, I am quite sure that this will not impact the relationship, in terms of trade, in terms of other investments coming, you know, through here.

But the question is, when you have emerging markets competing for foreign investment, not just in the U.S., but worldwide, I’m not looking at UAE in particular to assess in that process and see whether this consideration is worthwhile or not. But you have a lot of other countries that may start looking at that.

So the healthier part of this, which is more important, is to make sure that, when you have foreign investments coming into the country, that it has an easy process to go through.

It is important to go through a review. It is important to understand the process of the deal itself. But the more you create entry barrier, the more difficult it is, I think, for some country to actually look at investments in here, when you have competitive market that’s much easier to actually invest in.

So this is — you know, today, there are markets like China, India, for example, the U.K., and the E.U., some of the countries there actually look for these investments. Australia looks for these investments.

So today global trade is actually a much larger scale than just the U.S.

RAY SUAREZ: But to see if I understand you, you’re saying the United Arab Emirates aren’t going to be scared away from the U.S. market, but others might be if there’s too much…

SHEIKHA LUBNA AL-QASIMI: Yes, it is a challenge. Yes, it is — in global trade, it is a challenge.

RAY SUAREZ: Minister, thanks a lot for your time.


JIM LEHRER: This week, a state-owned Dubai airline said it will continue to buy U.S.-made Boeing airliners. The Dubai ports flap will not cause it to switch to European rival Airbus.