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Experts Debate the Security of Foreign-Run Ports

February 23, 2006 at 12:00 AM EDT
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PRESIDENT GEORGE W. BUSH: This wouldn’t be going forward if we weren’t certain that our ports would be secure.

MARGARET WARNER: Early today, President Bush again defended the administration’s okay for a United Arab Emirates company to take over management of six U.S. seaports now operated by a British firm.

PRESIDENT GEORGE W. BUSH: What I find interesting is that it’s okay for a British company to manage some ports, but not okay for a company from a country that is also a valuable ally in the war on terror. The UAE has been a valuable partner in fighting the war on terror. A lot of goods are shipped from ports to the United States managed by this company.

MARGARET WARNER: But at a briefing on Capitol Hill by Bush officials who’d initially reviewed the deal, New York Senator Hillary Clinton said her concerns remained.

SEN. HILLARY CLINTON: We’ve heard from numerous administration spokespeople that those of us who are raising concerns are somehow out of place because, after all, it was a British company that was engaged in these activities selling to the Dubai company. For many of us, there is a significant difference between a private company and a foreign government entity.

MARGARET WARNER: The company in question, Dubai Ports World, is owned by the UAE government, and currently manages ports in 12 countries around the world. It has offered $6.8 billion for the British company P&O, which manages twenty-seven port terminals worldwide, including six in the U.S.: In New York and New Jersey, Philadelphia, Baltimore, Miami, and New Orleans.

Politicians from both parties have charged the deal could put the U.S. at greater risk from terror. But Deputy Treasury Secretary Robert Kimmitt said that risk had been fully addressed in the interagency review process known as CFIUS.

ROBERT KIMMITT: We’re not aware of a single national security concern raised recently that was not part of the CFIUS staff review.

MARGARET WARNER: Undersecretary of State Robert Joseph said the UAE is an important ally against terrorism.

ROBERT JOSEPH: And I would just emphasize that the UAE is a longstanding friend of the United States.

MARGARET WARNER: But Democrat Carl Levin pressed the point, noting that renegade Pakistani nuclear scientist A.Q. Khan had used Dubai as a hub for his illicit nuclear trade.

SEN. CARL LEVIN: It was the main — the main transshipment point for A.Q. Khan, who ran the world’s largest nuclear proliferation ring from a warehouse — warehouses near the port, and shipped centrifuge equipment from there to Libya. I mean, can you confirm that or deny that?

ROBERT JOSEPH: Well, I can certainly confirm — and, again, it’s part of the public record — that a number of the centrifuge parts– large numbers of centrifuge parts that were manufactured in Malaysia were shipped and did transit Dubai.

MARGARET WARNER: Clinton and Kimmitt remained at odds on whether this and other national security concerns were ever fully considered.

SEN. HILLARY CLINTON: The process used to review this transaction appears to be cursory at best.

ROBERT KIMMITT: It doesn’t suggest the security concerns were not raised; they were raised, they were resolved. We moved on.

MARGARET WARNER: Clinton said afterwards she will press for legislation imposing 45 days of additional review. And late today, White House adviser Karl Rove made his comments suggesting the president would accept a delay.

MARGARET WARNER: And for more about the management of U.S. ports that’s at issue in the current controversy and how it relates to security we turn to: Stephen Flynn, retired Coast Guard commander and an expert on transportation, border and infrastructure security. A senior fellow at the Council on Foreign Relations, he’s also author of the 2004 book, “America the Vulnerable.” And M.R. Dinsmore, chief executive officer of the Port of Seattle, the eighth largest container port in the U.S. He formerly worked for a private terminal operating firm that’s since been acquired by a foreign company.

Welcome to you both.

Mr. Dinsmore, this Dubai Ports World, that’s commonly referred to as a port operator, what does a company like that actually do?

M.R. DINSMORE: Margaret, thank you. Terminal operators really run the terminal. They lease the terminal from the Port Authority — in our behalf, the Port of Seattle. And if they’re a terminal operator and stevedore, they actually load and unload the containers from the vessel.

MARGARET WARNER: So what you’re saying is the port is really the geographic area and you may have many terminals within a port, say, New York.

M.R. DINSMORE: I am. Many times I’ve listened to the news and talking about they bought six ports. They clearly haven’t bought six ports. They bought terminals within a port authority.

MARGARET WARNER: Okay. So Stephen Flynn, tell us more about what — the responsibilities of the port or terminal operator versus, say, the shipper or the container companies or the security apparatus — the government security that is involved.

STEPHEN FLYNN: I just want to make it clear what we’re talking about here is the terminal operators are basically acquiring a lease to load and off-load cargo and to move it around the yards and make it available for trains and trucks that come in and out of the port.

It’s a fairly straightforward proposition we’ve got going here much like British Airways wants to have its own terminal in an airport so that it knows there’s a gate for it when its planes show up. Most of our container ships are foreign flags vessels, and ships don’t make money unless they’re at sea, and so they want to turn their sails around as quickly as possible.

So they want to be able to manage the cargo movement operations and by leasing real estate on both sides or all the ports that they may visit at if they can, and so the terminal operator is basically the person who does the coordination for that.

The people are actually in the port picking up the containers, working the cranes, moving the carts around and so forth. These are all longshoremen, and they’re American citizens, and they don’t change no matter who is in charge – who is the owner of the lease in the port.

MARGARET WARNER: So what you’re saying is the port operator’s employees do have proximity to these containers but what, but they’re the same, whoever is actually the terminal or port operator?

STEPHEN FLYNN: Basically the terminal operator often has an office that looks like an industrial park kind of office that you might imagine inside the port, and they’re doing a lot of the paper shuffling and call making and other kinds of things to facilitate — It’s an incredibly complex activity of moving containers from all over the world and getting them to the customers that ultimately end up in our shelves or in our manufacturing plants. Now virtually all those folks are Americans as well.

Typically if it’s a foreign-owned company who leases this terminal, there will be a few senior managers who report from the home office but they’re not having any contact physically with the box. That is done by only the longshoremen. So on the West Coast, those are members of the ILWU, the International Longshore and Warehouse Union. On the East Coast it’s the International Longshore Association. These are pretty red-blooded Americans who get these jobs; they’re in the cranes, they’re driving the carts and basically anything that happens in that terminal is in the union’s hands largely.

MARGARET WARNER: So Mr. Dinsmore, say at the Seattle harbor or port that you oversee, let’s say containers are off-loaded off a ship but they’re — the trucks aren’t there yet to take them off to wherever, Wal-Mart or wherever. Who stores them, and who’s responsible for the security of the storage of those containers?

M.R. DINSMORE: Well as Stephen alluded, to the terminal operator actually puts them in a location within the container yard. They stay there until they either, if they’re inbound, they go out on rail or out on truck. Now, the piece that got left out of Stephen’s overview, I mean, you have Customs, Border Patrol actively involved in all security. You have the U.S. Coast Guard actively involved in all security. You have Port Authority. We’re involved in all security. So his point is very accurate.

The inner movement of the containers in the container yard is done by the terminal operator. If they are stevedores, then they load and unload the ship but it’s a concentrated effort of security by many, many different parties, some of which are federal government.

MARGARET WARNER: So, Stephen Flynn, what would you add to that? In other words, how good is the security at the port and what role the terminal operator plays in that, if any?

STEPHEN FLYNN: Well my overall assessment if I had to rank from one to ten the things I’m most worried about, about port security and I’m somebody who’s quite concerned about the state of port security, about our container security overall in the system in place, I put this near the bottom of my list of my concerns — who owns the terminal.

But the more important questions are: Are there adequate security standards in place that safeguard our interests? Are they sufficient oversight of that? Do the agencies who play this role have enough resources to make sure that people are playing by the rules?

And the central issue is we still haven’t arrived with national – we still don’t have today national standards that define what security should be in terminals, yet we’re delegating to private property owners no matter where they’re from, whether it’s Des Moines or Dubai, saying you take care of the security. We have Port Authority but traditionally there’s not a lot of police. You see almost the same amount of police that you might see at a good commercial bank, totally representing a huge piece of geography.

You have the Coast Guard and Customs but they didn’t get a whole lot of new bodies after Sept. 11 for port security. This wasn’t our biggest emphasis. There’s a lot that has been done to improve the situation because we started from virtually nothing before. It was almost a state of nature and we should be having a conversation about that. Setting the standards, make sure the resources are in place, we have the best practices in place.

Most importantly, this is a global network and a lot of the of our effort is trying to do things overseas to try to avert problems before they arrive on our shores was a bit too late and we have to, therefore, work with the foreign-owned companies there obviously and their environment.

It’s a total system; it’s a very complex system but let’s be clear here that in terms of owning a terminal, owning a lease inside a terminal, is not something that is basically owning the port and operating the port. As Mr. Dinsmore made clear, the Coast Guard is there, the Customs is there. I’d make the case they just need a lot more resources to do this job a good bit better, given the stakes.

MARGARET WARNER: And so, Mr. Dinsmore, in terms of foreign ownership of these leases and particularly what seemed to bother many members of Congress now is that it’s foreign government ownership in the case of this Dubai company — how unusual is either of those factors in terms of at American ports and at American terminals right now?

M.R. DINSMORE: Margaret, let me start by saying I concur with Stephen’s comments and in answer to your question, I believe strongly that the U.S. government, this administration needs to do a good job of due diligence in making sure there isn’t any loopholes on behalf of any company coming in to be a terminal operator.

Now, that being said, in our port, there’s three major terminal operators. One is SSA Marine, a very large U.S. corporation, very large customer. Another is American President Lines, NOL, Singaporean company and part of that company is owned by the government. And another is HanJin Shipping, and they’re a terminal operator, and that is a South Korean company. I think after we do our due diligence, we need to move on and make sure that issues like this do indeed go forward and ultimately get approved.

MARGARET WARNER: And Stephen Flynn, what would you add to that in terms of foreign government ownership? You could hear from the questions today they seemed to be worried about the possibility that this one Dubai company would control the point of origin in Dubai and the point of off-loading. I mean, is there any way in which the ownership of the terminal operator could increase the risk of terror?

STEPHEN FLYNN: Like with any company, if you have an insider who basically penetrates, has access to the information base and has some access to some of the controls, they should be wary, which is all the more reason why the standards we’ve put in place need to be global standards and we need to put teeth in them and we need to have essentially government people who are overseeing them and that’s where I think what we’ve been doing breaks down.

We don’t have a very good system for all the information we should have, an effective screening system for cargo when it’s loaded. The kind of thing that would help address this issue, for instance, is a pilot that’s underway in Hong Kong right now where every container coming into the busiest container terminal in the world, Hong Kong International Terminal, the trucks are driving through, an image, a gamma image to take an x-ray basically what’s inside, radiation signature, to see if there’s no radioactive material, taking a picture of the back and top and capturing the numbers and putting them in a database — 300 truck as hour is being put into a database.

It’s possible to do this kind of thing but it takes some resources. And it takes U.S. government leadership setting the standards. And if you actually have somebody back in North Virginia in a targeting center could sit there and look at any box it’s worried about, it wouldn’t matter who owned it.

So this is why it’s so important I hope that the conversation moves away from this narrow ownership issue and says, well, I think the core projection is that Americans should be concerned about this. This is national security infrastructure; it’s in areas of cities particularly in Seattle where Mr. Dinsmore is from. I mean, the city is right on top of that port. These are vital assets, so you don’t just want to rely on the private players to take care of themselves and not give them any standards.

What we need to do is to raise the bar on the standards and make sure that we have adequate resources. And we need to push those borders out; we need to get other countries to play by these rules.

MARGARET WARNER: All right.

STEPHEN FLYNN: That will take a lot of U.S. leadership and we haven’t had that much of it yet frankly in this area.

MARGARET WARNER: All right. Stephen Flynn, M.R. Dinsmore, thank you both.

STEPHEN FLYNN: Thank you.

M.R. DINSMORE: You’re welcome. Thank you.