Officials Debate Impact of Dubai Port Deal

KWAME HOLMAN:

The uproar over who controls six major east coast ports erupted today in Washington and elsewhere. When President Bush defended the deal giving an Arab company control, he stood in opposition to his party's leaders in both houses of Congress.

A British company, Peninsular and Oriental Steam Navigation, has managed the day-to-day operation of ports in New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans.

But last week, Dubai Ports World, a state-run business in the United Arab Emirates, acquired the British firm in a $6.8 billion deal.

After a multi-agency review, the Bush administration approved the new ownership. But the arrangement has triggered security concerns from lawmakers and others from both parties. At least two of the 9/11 hijackers came from the United Arab Emirates, and others used it as a financial base.

New York Sen. Chuck Schumer:

SEN. CHARLES SCHUMER:

The bottom line is very simple, and that is that this company is owned by a country in which there have been significant nexus with terrorists.

KWAME HOLMAN:

But also today, Secretary of Defense Donald Rumsfeld said the United Arab Emirates is an ally.

DONALD RUMSFELD:

It's a country that's been involved in the global war on terror with us. It's a country that we have facilities that we use and it's a country that was very responsive to assist in Katrina, one of the early countries that did that and a country that we have very close military relations, as well as political and economic relations.

KWAME HOLMAN:

Members of Congress have said they'll introduce legislation next week to block the ports deal.

JIM LEHRER:

Now, both sides of the argument, one at a time. First, an opponent: Democratic Sen. Robert Menendez of New Jersey.

Senator, welcome. Senator, do I hear me? Senator — yeah, senator, I guess our audio is not working, so we'll get the other side first, and that comes from Clay Lowery, who is the assistant secretary of the treasury for international affairs.

Mr. Secretary, do you hear me?

CLAY LOWERY:

Yes, sir, I do.

JIM LEHRER:

All right, you do not see this as a national security issue, you and the administration?

CLAY LOWERY:

Well, let me try to make three points on that. First and foremost is the review process itself. The review is through a group of agencies in the U.S. government called the Committee for Foreign Investment in the United States.

This committee does a thorough review of every foreign transaction of an American-operated company, and in this case, it was a British-operated company that operates in the United States. These agencies involve our major national security agencies, including Defense Department, State Department, Department of Homeland Security, Treasury Department, and Justice Department.

The first and foremost position of these agencies is the expertise is prevent — is to try to guard our national security. That is our first and foremost goal.

The second point I would like to make is that this is about port management. It is not about port operation — I mean port ownership or port security. That has been something that has been misconstrued.

People keep thinking we are giving up port security to other countries; that's not the case. There are many port managers in our country that are actually foreign — that are foreign country-owned port managers. These managers do not do our security. Security is based on local authorities in coordination with the Department of Homeland Security, which has the Coast Guard and the Customs under it. And the third point —

JIM LEHRER:

Hold on, hold on, let me just follow up on that second point.

CLAY LOWERY:

Yes.

JIM LEHRER:

You're saying these ports, these six porters, are essentially owned by port authorities, right, and that does not change?

CLAY LOWERY:

That's correct. In fact, actually I would say it is what is port security that has been our port security to date, our port security today and our port security tomorrow will remain exactly the same as was the case prior to any of these transactions.

JIM LEHRER:

All right. Make your third point, sir.

CLAY LOWERY:

And the third point I would like to make is this company itself, DP World, which is Dubai Port World, it is a company that has actually a fairly long-standing relationship with our Department of Homeland Security, both the Customs and our Coast Guard in terms of the way we do port security abroad is you have got to start abroad. You can't start at home.

And we do — we have arrangements with them around the globe and we have arrangements with PNO as well. This is the way we conduct our security, and to date, basically DP World has based a very solid track record, and that is how we looked at this transaction.

JIM LEHRER:

All right, the opponents of this say a couple of things. First of all, they point out that there is a 9/11 connection to Dubai, and the United Arab Emirates through two of the hijackers, and also through some financing. That's not a problem for you?

CLAY LOWERY:

Well, I think that basically, there are a couple of points to be made on that. The first is the point I think that's been made by the president, by the secretary of state and by the secretary of defense in just the last few days, which is how important our relationship is with the United Arab Emirates and how much they have actually done for us in fighting the war on terrorism since 9/11.

They have been one of our staunch supporters in the Middle East, and given that the secretary of state and the secretary of defense and the president are more eloquent on this issue than I am, have spoken on it, I think that that is pretty — pretty important to note.

JIM LEHRER:

All right, another–

CLAY LOWERY:

But the second — the second point is, I mean, terrorists seem to come from a variety of areas. There are — we've had terrorists that actually their home base was the United Kingdom. And the United Kingdom is our best ally in the world, probably so it's a little bit hard for me to say that just because of where somebody comes from, that means they're a terrorist.

JIM LEHRER:

Do you see this as bigotry against Arabs?

CLAY LOWERY:

I don't want to — look, there are concerns by a lot of people out there, whether it's people in Congress or people in the local authorities, I am not impugning their concerns. I think their concerns are legitimate, and we shall deal with them as best as we possibly can and explain the decision process that we used and the fact that it was a thorough process and a thorough vetting was done of this transaction.

JIM LEHRER:

Now, another point the opponents make is that this is different than other operations because this company is actually owned by a foreign government. It's not like before, the British government did not own this company; it was owned by a private firm in Britain, so this is different. You don't see the difference?

CLAY LOWERY:

No, I didn't say that. The –

JIM LEHRER:

I mean, it's a problem – you don't see this as a problem?

CLAY LOWERY:

No. There are – first of all, there are a variety of ports that – in our country that have management that are from foreign countries, whether it's Singapore, Taiwan, Denmark, the United Kingdom, and in this case we're talking about the United Arab Emirates.

JIM LEHRER:

Excuse me, Mr. Secretary. Excuse me. You're saying that there are other ports managed by companies owned by foreign governments?

CLAY LOWERY:

I don't know that for sure. So I don't want to say that. Basically the Dubai Port — Dubai Port World, excuse me, is owned by the Emirates government.

We have — when we look at a transaction and it is a state-owned entity, we give it extra scrutiny. And in this case, we did just that. In fact, we actually went beyond the 30-day review period, which is usually noted. We went well beyond it, in fact.

In the 30-day review period sorry just for your listeners that don't know this process is based in the law as to what we are supposed to do about looking at foreign transactions.

We went well beyond that 30-day transaction, and this company, we actually gave extra scrutiny, and the Department of Homeland Security actually worked with the company on creating an arrangement so that to enhance the security apparatus that we already have in place with this company because, as I said earlier, it is one that we have built up a track record with.

JIM LEHRER:

All right, Mr. Secretary, thank you very much.

CLAY LOWERY:

Thank you very much.

JIM LEHRER:

And now for the other side we go to Democratic Sen. Robert Menendez of New Jersey.

And, Senator, did you hear what Secretary Lowery just said?

SEN. ROBERT MENENDEZ:

I heard parts of it, Jim.

JIM LEHRER:

Let's start at the top then. Do you see this — is your objection to this deal based on security concerns?

SEN. ROBERT MENENDEZ:

Yes, it is, and to the nature of the fundamental issue that a foreign government should not operate the critical infrastructure of the ports of the United States. I have represented this port, first in the House for the last 13 years, and now in the United States Senate. I know the operations that go on here. And the reality — is —

JIM LEHRER:

Excuse me, the port you're referring to is there in Newark, New Jersey, where you are tonight, right?

SEN. ROBERT MENENDEZ:

Correct.

JIM LEHRER:

All right. Excuse me, go ahead.

SEN. ROBERT MENENDEZ:

And the reality is, is that I understand the nature of the security challenges at a port like the port of Elizabeth in Newark, which is the port of New York and New Jersey.

And to have a foreign operator that is controlled by a foreign government — which is much different than just simply a foreign company — I think is a dangerous precedent, especially when, in this particular case, this foreign government I know that I heard the secretary describe them as an ally, but the reality is that there are security concerns here.

Two of the 9/11 hijackers came from the United Arab Emirates. It was one of only three countries in the entire world that officially recognized and supported the Taliban, which gave shelter to Osama bin Laden, who plotted and planned against us.

The 9/11 Commission in its bipartisan report said the sources of financial assistance came from the United Arab Emirates for al-Qaida, and lastly, in the context of port operations, we should be very concerned that A.Q. Khan, the Pakistani scientist — nuclear components through the United Arab Emirates, to Libya, Iran, and North Korea. They couldn't have a security regime in their own country that would seek to stop that. I'm not sure that we should give them the ports of United States to do so.

JIM LEHRER:

Senator, Secretary Lowery didn't say this, but others have said today the objection you and others are raising is a simple bigotry against Arabs. What is your response to that?

SEN. ROBERT MENENDEZ:

Well, Jim, my statement to you is the statement I believe in, that in fact no foreign government should operate the ports of the United States. And I resent those people who try to make this the bashing of any single country or group of people in the world. I don't believe as a proposition that any foreign government should operate the ports of the United States.

You know, this port generates 185,000 jobs and $25 billion of economic activity. Something happens here, the nation's economy will be affected drastically.

If something happens here, and one of those containers where we have a nuclear, biological, or chemical agent, we'll all be very sorry to say we just simply relied upon the administration.

And lastly, the commercial ports increasingly in the United States are used to send defense equipment and goods for our soldiers abroad. Imagine if a foreign company operated and owned by a foreign government decides simply to close down that port operation if we are in conflict with it at some time in the future. Those are risks that the United States shouldn't take.

We can have — we can have diplomatic relations. We have can other forms of trade with Dubai, but we shouldn't be having the ports of the United States operated by that foreign government or any other foreign government.

JIM LEHRER:

So you just simply reject the argument that the secretary gave, which he said that the ports are still going to be run — they're not going to be run by this company. They're going to be — they're owned by the port authority there in New York and New Jersey in your case, the security is still going to be in the hands of the United States government — 185,000 workers, you know, are Americans, and so where's the risk in your — from your point of view — I mean, specific risk that Dubai brings to this situation that when it was owned by a British company was not present?

SEN. ROBERT MENENDEZ:

Well, it's interesting to hear that the secretary said that they took an extended time — not all the time they had, by the way — in the CIFUS review, and that they worked out special security arrangements.

Either a port operator is part of the security operation or it's not, and the reality is, because of the chain of the flow of supplies, both from the port that it emanates from, which Dubai operates in other parts of the world – and the ultimately where it is received, such as the port of Elizabeth in Newark — gives the operator the opportunity to affect the cargo. The reality is, is how can the secretary say that they enhanced and worked out special relationships on security arrangements if in fact they're not part of the security network?

JIM LEHRER:

Finally, senator, the president has threatened to veto this. The two Republican leaders of the Congress, House Speaker Hastert and Senate Majority Leader Frist have taken a position similar to yours. What's about to happen in the Congress?

SEN. ROBERT MENENDEZ:

Well, I certainly had hoped that the president would put this on hold, and if not, to actually negate the process. He has the ability to do so.

In the absence of that, I think Congress should go forward with the legislation that I have offered with Sen. Clinton and others that basically stands for the proposition that the ports of the United States should not be operated by any foreign government. And even though the president has said that he believes that he would veto such legislation, I believe Congress should put it on his desk and let the American people know where the president really stands. I think the president is thinking in a pre-Sept. 11 mindset, not a post-Sept. 11 mindset on this issue.

JIM LEHRER:

Senator, thank you very much.

SEN. ROBERT MENENDEZ:

Thank you.