The president on Tuesday defended his administration’s earlier approval of the sale of London-based Peninsular and Oriental Steam Navigation Co. to Dubai Ports World, despite concerns in Congress it could increase the possibility of terrorism at American ports.

The pending sale — expected to be finalized in early March — puts Dubai Ports in charge of major shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. “If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward,” Bush said.

“It sends a terrible signal to friends around the world that it’s OK for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world,” Bush said.

Assurances on security
To assuage concerns, the administration disclosed some assurances it had negotiated with Dubai Ports. It required mandatory participation in U.S. security programs to stop smuggling and detect illegal shipments of nuclear materials; roughly 33 other port companies participate in these voluntarily. The Coast Guard also said Tuesday it was nearly finished inspecting Dubai Ports’ facilities in the United States.

A senior Homeland Security official, Stewart Baker, said this was the first-ever sale involving U.S. port operations to a state-owned company. “In that sense this is a new layer of controls,” he said. Baker added that U.S. intelligence agencies were consulted “very early on to actually look at vulnerabilities and threats.”

Bush sought to quiet a political storm that has united Republican governors and Senate Majority Leader Bill Frist of Tennessee with liberal Democrats, including New Jersey governor Jon Corzine, and New York’s two Democratic senators, Hillary Rodham Clinton and Charles Schumer.

Frist has ‘serious questions’
Frist said Tuesday, before Bush’s comments, that he would introduce legislation to put the sale on hold if the White House did not delay the takeover. He said the deal raised “serious questions regarding the safety and security of our homeland.

House Speaker Dennis Hastert, R-Ill., asked the president for a moratorium on the sale until it could be studied further. “We must not allow the possibility of compromising our national security due to lack of review or oversight by the federal government,” Hastert said.

“We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure they are addressed to the benefit of all parties,” said Ted Bilkey, the company’s chief operating officer, in a statement released Thursday night.

According to the statement, DP World will delay taking over management of the U.S. ports “while it engages in further consultations with the Bush administration and, as appropriate, congressional leadership and relevant port authorities to address concerns over future security arrangements.”

The announcement came on the heels of comments from the second in command at the Pentagon, who said Thursday that people who publicly oppose allowing a Middle Eastern company to take over management of some U.S. ports could be threatening national security.

Deputy Defense Secretary Gordon England told the Senate Armed Services Committee that blocking the deal could ostracize one of the United States’ few Arab allies.

“The terrorists want our nation to become distrustful,” England said. “They want us to become paranoid and isolationist, and my view is we cannot allow this to happen. It needs to be just the opposite.” (Watch: Can the UAE be trusted?)

England joined several administration officials in defending their approval of a deal in which DP World, which is controlled by the government of the United Arab Emirates, would take over British-based P&O. The transaction reportedly is worth $6.8 billion.

Bipartisan opposition to the deal has been strong, with House and Senate leaders threatening to intervene.

Critics of the deal say they oppose putting management of the ports in the hands of a foreign-government-controlled company, especially a government that has had questionable links to terrorists in the past.

The White House said Thursday that President Bush might accept delaying the deal if it would appease Congress, but that an earlier promise to veto any legislation stalling the deal stands.

The merger — which involves ports in New York, New Jersey, Pennsylvania, Maryland, Florida and Louisiana — is scheduled to be completed March 2. (Where are the ports?)

Bush has vehemently defended the deal. But Thursday his top aide, Deputy Chief of Staff Karl Rove, told Fox News Radio that it also was important that Congress be comfortable with the merger before it’s made final.

“What is important is that members of Congress have the time to get fully briefed on this,” Rove said. “They’re going to be coming back next week. We intend to work closely with them in order to give them a comfort level on this.”

Rove also said the sale is far from complete.

“There are some hurdles, regulatory hurdles, that this still needs to go through on the British side as well that are going to be concluded next week. There’s no requirement that it close, you know, immediately after that,” he said.

The merger was given the OK by an administration panel called the Committee on Foreign Investments in the United States.

The committee is led by the Treasury Department but includes representatives of the State, Defense and Commerce departments, England told the committee, adding that intelligence agencies and the Homeland Security and Transportation departments also contributed to the review. (Watch how foreign investment in other industries also raises security concerns — 1:56)

Also Thursday, Bush reiterated that the deal poses no security risk.

“This deal wouldn’t go forward if we were concerned about the security for the United States of America,” he told reporters during a Cabinet meeting.

Administration officials have repeatedly said that though DP World would manage the ports, the company would not handle security. U.S. agencies such as the Coast Guard and the Customs and Border Protection service will be in charge of that, as they are at all other ports, Bush said.

The Department of Homeland Security has released a letter saying DP World will maintain current security arrangements, keep as many U.S. managers in place as possible and take all steps to assist American law enforcement. (Watch what some longshoremen have to say about the deal — 2:11)

DP World COO Bilkey added that U.S. authorities have been given the “sovereign right” to inspect all containers before they’re loaded onto ships.

“Security now in our business is a marketing tool,” he said. “The shipping companies want to know that you run a secure operation.”

The deal raises red flags for some critics because some of the money that funded the September 11, 2001, terror attacks on New York and Washington was funneled through Dubai, which is a major Persian Gulf banking center, and two of the hijackers were from the UAE.

Dubai also was a midway point for the illegal sale of nuclear technology to North Korea, Iran and Libya by Pakistani scientist A.Q. Khan, and the UAE was one of three countries that recognized the Taliban as Afghanistan’s legitimate rulers.

However, the UAE also is a key U.S. ally in the region, a frequent stop for U.S. warships and aircraft, and a supply depot for U.S. troops in Iraq.

Robert Joseph, the undersecretary of state for arms control and international security, said the UAE cut its ties to terrorists after September 11 and decided to “deepen and strengthen their relationship with the United States and to join us in fighting the war on terror.”

Still, that has not been enough to douse the firestorm of criticism on Capitol Hill.

Republican leaders in both the House and Senate have demanded that Bush delay the deal so it can be scrutinized, and Sen. Carl Levin of Michigan, the ranking Democrat on the Armed Services Committee, accused the White House of taking “a casual approach” to its review.

Levin also said the president’s threat to veto legislation that would interfere with the deal demonstrates that the White House is “out of touch” with the public’s concerns.

“It also demonstrates presidential disdain for outside views in general and congressional views in particular,” Levin said.

Sen. Hillary Clinton of New York, who is backing legislation to force a 45-day review of the deal, concurred with her colleague and questioned whether the committee on foreign investments considered security concerns when it approved the takeover.

Deputy Treasury Secretary Robert Kimmitt defended the committee’s process, its deliberation and its consideration of all aspects of the merger, including security concerns.

“They were raised. They were resolved. We moved on,” he said.

Congress’ skepticism over the deal has elicited cries of bigotry.

“If it was an African country or a European country or an Asian country, it would not have been subjected to this kind of scrutiny,” said Abdel Khaleq Abdullah, a political science professor at United Arab Emirates University. “But since this is just purely an Arab country, I think it just stopped some of the lawmakers who are making a big deal out of a purely legitimate business transaction.”

At his Cabinet meeting Thursday, Bush also questioned whether a double standard was being applied to DP World and said it was “interesting” that there was no outcry about a British company managing the ports. (Watch Bush attempt to shoot down the deal’s naysayers — 2:27)

“It’s really important that we not send mixed messages to allies,” he said.

Foreign-owned companies operate many ports in the United States. For example, companies from China, Denmark, Japan, Singapore and Taiwan run docks in Los Angeles, California.

• Funding has increased by more than 700% since September 11, 2001.
• Funding for port security was approximately $259 million in FY 2001.
• DHS spent approximately $1.6 billion on port security in FY 2005.

Following 9/11, the federal government has implemented a multi-layered defense strategy to keep our ports safe and secure. New technologies have been deployed with additional technologies being developed and $630 million has been provided in grants to our largest ports, including $16.2 million to Baltimore; $32.7 million to Miami; $27.4 million to New Orleans, $43.7 million to New York/New Jersey; and $15.8 million to Philadelphia.

Who Secures The Ports:

U.S. Customs and Border Protection (CBP): CBP’s mission is to prevent terrorists and terrorist weapons from entering the United States by eliminating potential threats before they arrive at our borders and ports.

CBP uses intelligence and a risk-based strategy to screen information on 100% of cargo before it is loaded onto vessels destined for the United States. All cargo that is identified as high risk is inspected, either at the foreign port or upon arrival into the U.S.

Coast Guard: The Coast Guard routinely inspects and assesses the security of U.S. ports in accordance with the Maritime Transportation and Security Act and the Ports and Waterways Security Act. Every regulated U.S. port facility is required to establish and implement a comprehensive security plan that outlines procedures for controlling access to the facility, verifying credentials of port workers, inspecting cargo for tampering, designating security responsibilities, training, and reporting of all breaches of security or suspicious activity, among other security measures. Working closely with local port authorities and law enforcement agencies, the Coast Guard regularly reviews, approves, assesses and inspects these plans and facilities to ensure compliance.

Terminal Operator: Whether a person or a corporation, the terminal operator is responsible for operating its particular terminal within the port. The terminal operator is responsible for the area within the port that serves as a loading, unloading, or transfer point for the cargo. This includes storage and repair facilities and management offices. The cranes they use may be their own, or they may lease them from the port authority.

Port Authority: An entity of a local, state or national government that owns, manages and maintains the physical infrastructure of a port (seaport, airport or bus terminal) to include wharf, docks, piers, transit sheds, loading equipment and warehouses.

Ports often provide additional security for their facilities.

The role of the Port Authority is to facilitate and expand the movement of cargo through the port, provide facilities and services that are competitive, safe and commercially viable. The Port manages marine navigation and safety issues within port boundaries and develops marine-related businesses on the lands that it owns or manages.

A Layered Defense:

Screening and Inspection: CBP screens 100% of all cargo before it arrives in the U.S.- using intelligence and cutting edge technologies. CBP inspects all high-risk cargo.

CSI (Container Security Initiative):  Enables CBP, in working with host government Customs Services, to examine high-risk maritime containerized cargo at foreign seaports, before they are loaded on board vessels destined for the United States. In addition to the current 42 foreign ports participating in CSI, many more ports are in the planning stages. By the end of 2006, the number is expected to grow to 50 ports, covering 90% of transpacific maritime containerized cargo shipped to the U.S.

24-Hour Rule: Under this requirement, manifest information must be provided 24 hours prior to the sea container being loaded onto the vessel in the foreign port. CBP may deny the loading of high-risk cargo while the vessel is still overseas.

C-TPAT (Customs Trade Partnership Against Terrorism): CBP created a public-private and international partnership with nearly 5,800 businesses (over 10,000 have applied) including most of the largest U.S. importers — the Customs-Trade Partnership Against Terrorism (C-TPAT). C-TPAT, CBP and partner companies are working together to improve baseline security standards for supply chain and container security. (We review the security practices of not only the company shipping the goods, but also the companies that provided them with any services.)

Use of Cutting-Edge Technology: CBP is currently utilizing large-scale X-ray and gamma ray machines and radiation detection devices to screen cargo. Presently, CBP operates over 680 radiation portal monitors at our nation’s ports (including 181 radiation portal monitors at seaports), utilizes over 170 large scale non-intrusive inspection devices to examine cargo, and has issued 12,400 hand-held radiation detection devices.  The President’s FY 2007 budget requests $157 million to secure next-generation detection equipment at our ports of entry.  Also, over 600 canine detection teams, who are capable of identifying narcotics, bulk currency, human beings, explosives, agricultural pests, and chemical weapons are deployed at our ports of entry.

UAE/Dubai Ports World Acquisition

DP World will not, nor will any other terminal operator, control, operate or manage any United States port. DP World will only operate and manage specific, individual terminals located within six ports.

• The recent business transaction taken by DP World, a United Arab Emirates based company, to acquire British company Peninsular and Oriental Steam Navigation Company (P&O) does not change the operations or security of keeping our nation’s ports safe. The people working on the docks also will not change as a result of this transaction.
• This transaction is not an issue of controlling United States’ ports. It is an issue of operating some terminals within U.S. ports.
• DP World will operate at the following terminals within the six United States’ ports currently operated by the United Kingdom company, P & O:
  o Baltimore – 2 of 14 total
  o Philadelphia – 1 of 5 (does not include the 1 cruise vessel terminal)
  o Miami – 1 of 3 (does not include the 7 cruise vessel terminals)
  o New Orleans – 2 of 5 (does not include the numerous chemical plant terminals up and down the Mississippi River, up to Baton Rouge)
  o Houston – 4 of 12 (P&O work alongside other stevedoring* contractors at the terminals)
  o Newark/Elizabeth – 1 of 4
  o (Note:  also in Norfolk – Involved with stevedoring activities at all 5 terminals, but not managing a specific terminal.)
  *Stevedoring – provides labor, carries physical loading and unloading of cargo.

• P&O and DP World made a commitment to comply with current security programs, regulations and partnerships to which P&O currently subscribes, including:
  o The Customs-Trade Partnership Against Terrorism (C-TPAT);
  o The Container Security Initiative (CSI);
  o The Business Alliance on Smuggling and Counterfeiting (BASC); and,
  o The Megaports Initiative MOU with the Department of Energy.

• All P&O security arrangements will remain intact, including cargo security cooperation with CBP, compliance with USCG regulations (ISPS and MTSA) regarding port facilities/terminals, and foreign terminal operations within CSI ports.

• Dubai was the first Middle Eastern entity to join the Container Security Initiative (March 2005). As a result, CBP officer are working closely with Dubai Customs to screen containers destined for the U.S. Cooperation with Dubai officials has been outstanding and a model for other operation within CSI ports.

U.S. Recommended Standards for Container Security Initiative (CSI)

The Container Security Initiative consists of four core elements. These are: (1) establishing security criteria to identify high-risk containers; (2) pre-screening those containers identified as high-risk before they arrive at U.S. ports; (3) using technology to quickly pre-screen high-risk containers; and (4) developing and using smart and secure containers.

In order to be eligible to participate in CSI, the Member State’s Customs Administration and the seaport must meet the following three requirements:

1. The Customs Administration must be able to inspect cargo originating, transiting, exiting, or being transshipped through a country.
2. Non-intrusive inspectional (NII) equipment (including gamma or X-ray imaging capabilities) and radiation detection equipment must be available and utilized for conducting such inspections. This equipment is necessary in order to meet the objective of quickly screening containers without disrupting the flow of legitimate trade.
3. The seaport must have regular, direct, and substantial container traffic to ports in the United States.

   As part of agreeing to participate in CSI, a Member State’s Customs Administration and the seaport must also:

4. Commit to establishing a risk management system to identify potentially high-risk containers, and automating that system. This system should include a mechanism for validating threat assessments and targeting decisions and identifying best practices.
5. Commit to sharing critical data, intelligence, and risk management information with the United States Customs Service in order to do collaborative targeting, and developing an automated mechanism for these exchanges.
6. Conduct a thorough port assessment to ascertain vulnerable links in a port’s infrastructure and commit to resolving those vulnerabilities.
7. Commit to maintaining integrity programs to prevent lapses in employee integrity and to identify and combat breaches in integrity.

company owned by the Government of Dubai in the United Arab Emirates (UAE).

FACT: The United States government is in charge of U.S. port security. We will never outsource the security of our ports. The U.S. Coast Guard and Customs and Border Protection are in charge of security of our ports.

MYTH: UAE is a haven for terrorists and allowing a UAE-owned company to control our ports will endanger our national security.

FACT: UAE is a friend and ally of the United States, a partner in the Global War on Terror, and a strong partner in global port security. Partners like the UAE are siding with the international community in the fight against terror. The UAE has been very helpful in the fight against terrorism, especially intelligence sharing and cutting off terrorist financing. The UAE has worked with us to stop terrorist financing and money laundering, including by freezing accounts, enacting aggressive anti-money-laundering and counter-terrorist-financing laws and regulations, and exchanging information on people and entities suspected of being involved in these activities. The UAE has a world class carrier port, and we have more U.S. Navy ships in UAE ports than in any other port outside the United States. The UAE services our ships while in port, refueling them, providing them with food and water, and doing small repairs, among other services. Dubai was the first Middle Eastern entity to join the Container Security Initiative – a multinational program to protect global trade from terrorism.

• General Peter Pace, Chairman Of The Joint Chiefs of Staff: “[T]he military-to-military relationship with the United Arab Emirates is superb. … They’ve got airfields that they allow us to use, and their airspace, their logistics support. They’ve got a world-class air-to-air training facility that they let us use and cooperate with them in the training of our pilots. In everything that we have asked and work with them on, they have proven to be very, very solid partners.” (U.S. Department Of Defense, Press Briefing, 2/21/06)
• General Tommy Franks, Former CENTCOM Commander: “I personally believe that we have had no greater ally in seeking a resolution of problems in the Middle East, the Palestinian issue, the Israeli issue, than we have found in the United Arab Emirates.” (Fox News’ “Hannity & Colmes,” 2/22/06)

MYTH: This transaction will make it easier for terrorists to infiltrate America’s ports.

FACT: America’s ports will be just as secure after the DP World transaction as they were before. First, the workers unloading cargo at the Nation’s ports will remain the same ones working today. Any management or other personnel from outside the country will still have to go through the normal visa application process, which includes a very rigorous vetting process that not only does systems checks, but also other background and fingerprint checks. Once in the United States, visa recipients are put through another set of checks to make sure no critical information has changed since the visa was issued. The visa process has been strengthened and improved by the Federal government since the terrorist attacks of September 11, 2001.

MYTH: Because DP World is a state-owned firm, a foreign country will own the ports of six major U.S. cities.

FACT: The ports will remain under the ownership and control of state and local authorities, not DP World. As a port operator, not owner, DP World will manage the physical equipment and movement of containers on and off of ships, not the security related to the shipped containers, which is the responsibility of U.S. Customs and Border Protection. As a result of the transaction, DP World will own and operate terminals at some U.S. ports, which means they will be responsible for physically operating the cranes that move cargo. Ports are publicly owned facilities, typically by State or local authorities. Like all port operators, foreign or domestic-owned, DP World will have to comply with Coast Guard and Customs security regulations. In addition to meeting all these standards, DP World has committed to additional security measures requested by the Department of Homeland Security and signed a letter of assurances making commitments to meet and maintain stringent security standards for the port terminals that they will operate in the United States.

MYTH: No foreign-state-owned firms operate terminals in U.S. ports.

FACT: Several terminal operating companies at U.S. ports are joint ventures or are owned by foreign-state-owned firms. The China Overseas Shipping Company (COSCO), a state-owned firm, has a joint operating agreement with a U.S. stevedoring company at Long Beach, California. Eagle Marine Services – which operates terminals in Seattle, Los Angeles, and Oakland – is owned in part by the government of Singapore. The Yang Ming Marine Transport Company – which operates terminals at Tacoma and Los Angeles – is owned, in part, by the Taiwanese.

MYTH: The CFIUS review process was merely a rubber stamp.

FACT: The CFIUS review process was a rigorous and thorough analysis of the national security implications of the transaction. Well before the transaction was publicly announced, both DP World and Peninsular and Oriental Steam Navigation Company (P&O), a British private company, contacted the Committee on Foreign Investment in the United States (CFIUS) on October 17, 2005, and notified the Committee that they intended to file for a national security review. In reviewing a foreign transaction, CFIUS brings together 12 Federal agencies, including the Department of Defense, the Department of Homeland Security, and the Department of Justice to consider transactions from a variety of perspectives and identify and analyze all national security issues. Each Federal agency conducts its own internal analysis, and in this case, the Departments of Transportation and Energy were also brought in to review the process.

On November 2, an intelligence assessment was requested and a little more than 30 days later, the intelligence community concluded that DP World’s transaction does not pose a threat to the U.S. national security. This assessment was completed before CFIUS’s official review began.

On December 16, the companies made their official filing with CFIUS that began the 30-day review process. During this 30-day period, the Department of Homeland Security negotiated an assurances letter with the companies. Roughly 90 days after first being approached about the transaction and 75 days after thorough review of the transaction began, the CFIUS members decided not to oppose the transaction, and the review closed on January 17. As with any CFIUS decision not to pursue further investigation, the decision was made by consensus. The review process requires any agency that sees a potential credible threat to the national security to raise those concerns.

MYTH: The Administration is ignoring the law.

FACT: Just as was the case under the first Bush and Clinton administrations, the CFIUS process has required a Federal agency to register a security concern before a further investigation can be launched. When there is a consensus of CFIUS members, the transaction does not proceed to an extended investigation. A Committee consensus means that no member saw any national security threat, or there were no unresolved national security concerns to prevent the transaction from going forward.

MYTH: This transaction is only now being made public.

FACT: DP World announced its intent to purchase P&O on November 29, 2005. Even before the official announcement, the press was reporting on the possible transaction as early as October 30. Between October 2005 and January 2006, there were at least 162 mentions of the transaction in the press.

- President Bush, 2/21/06

“[T]he military-to-military relationship with the United Arab Emirates is superb. … They’ve got airfields that they allow us to use, and their airspace, their logistics support. They’ve got a world-class air-to-air training facility that they let us use and cooperate with them in the training of our pilots. In everything that we have asked and work with them on, they have proven to be very, very solid partners.”

- General Peter Pace, Chairman Of The Joint Chiefs Of Staff, 2/21/06

The United Arab Emirates (UAE) Is A Longstanding Friend And Ally Of The United States. The United States and UAE have a longstanding alliance. The UAE is a key partner of the United States in the War on Terror, helping to advance Middle East peace efforts. The UAE is also a vibrant trading partner and has provided critical support in the wake of Hurricane Katrina.

The UAE Is A Key Partner In The War On Terror. The UAE provides U.S. and Coalition forces unprecedented access to its ports and territory, overflight clearances, and other critical and important logistical assistance. Today, the UAE is providing assistance to the missions in Afghanistan and Iraq, combating terrorists by cutting off their financing, and enhancing America’s homeland security by actively participating in initiatives to screen shipments and containers.

• UAE Ports Host More U.S. Navy Ships Than Any Port Outside The United States. The UAE provides outstanding support for the U.S. Navy at the ports of Jebel Ali – which is managed by DP World – and Fujairah and for the U.S. Air Force at al Dhafra Air Base (tankers and surveillance and reconnaissance aircraft). The UAE also hosts the UAE Air Warfare Center, the leading fighter training center in the Middle East.
• The UAE Is A Partner In Shutting Down Terror Finance Networks. The UAE has worked with us to stop terrorist financing and money laundering, including by freezing accounts, enacting aggressive anti-money-laundering and counter-terrorist financing laws and regulations, and exchanging information on people and entities suspected of being involved in these activities.
• The UAE Is An Established Partner In Protecting America’s Ports. Dubai was the first Middle Eastern entity to join the Container Security Initiative (CSI) – a multinational program to protect global trade from terrorism. Under CSI, a team of U.S. Customs and Border Protection officers is permanently stationed inside Dubai’s ports, where they work closely with Dubai Customs to screen containers destined for the United States. Cooperation with Dubai officials has been outstanding and a model for other operations. Dubai was also the first Middle Eastern entity to join the Department of Energy’s Megaports Initiative, a program aimed at stopping illicit shipments of nuclear and other radioactive material.
• The UAE Is A Critical Partner In Afghanistan. The UAE extends vital military and political support to Operation Enduring Freedom in Afghanistan and substantial financial and humanitarian support to Afghanistan and its people.
• The UAE Is Supporting The New Iraqi Government. The UAE has provided significant monetary and materiel support to the Iraqi government, including a pledge of $215 million in economic and reconstruction assistance.

The UAE Is Supporting Middle East Peace Efforts. The UAE is a moderate Arab state and a long-time supporter of all aspects of Middle East peace efforts. The U.S. and the UAE are also working together to create a stable economic, political and security environment in the Middle East.

The UAE Provided $100 Million To Help The Victims Of Hurricane Katrina. The UAE was one of the first nations to offer financial aid to the U.S. after Hurricane Katrina struck the Gulf Coast. UAE’s $100 million donation was one of the largest by any nation.

- President George W. Bush, February 21, 2006

President Bush Strongly Supports The Decision To Move Forward With The DP World Transaction

The Administration, As Required By Law, Has Reviewed The Transaction To Make Certain That It Does Not In Any Way Jeopardize National Security. Under the process conducted by the Committee on Foreign Investment in the United States (CFIUS), officials carefully reviewed the national security issues raised by the transaction and its effect on our national security. Twelve Federal agencies and the government’s counterterrorism experts closely and carefully reviewed the transaction to make certain it posed no threat to national security.

DP World Has Provided Strong Security Assurances To The United States. DP World has signed a letter of assurances making commitments to meet and maintain security standards for the port terminals that they will own and operate in the United States. There are a number of safeguards that are in place in the agreement, and the American people should feel confident that the transaction will in no way harm the security of the Nation’s ports.

DP World’s Bid For The London-Based Peninsular And Oriental (P&O) Steam Navigation Company Was Announced Last Fall. DP World, a UAE-based commercial entity, is purchasing the U.S. subsidiary of the London-based P&O Steam Navigation Company. The announcement of DP World’s bid for P&O was made in November 2005, and the news was widely reported in the press and international financial trade publications. The formal CFIUS process was set into motion in December, and the Federal government conducted a thorough review to ensure that port security would in no way be compromised by the deal.

The Administration Has Taken A Principled Position Based On The Security Of Our Nation And Careful Review Of The Transaction. The President has made clear that he stands firmly behind the decision to allow the DP World transaction to move forward. Preventing this transaction by a reputable company to go forward after careful review would send a terrible signal to friends and allies that investments in the United States from certain parts of the world are not welcome.

The Port Security Of the United States Is The Administration’s First And Foremost Concern

The Department of Homeland Security (DHS) Is Always In Charge Of The Nation’s Port Security, Not The Private Company That Operates Facilities Within The Ports. Nothing will change with this transaction. DHS, along with the U.S. Coast Guard, U.S. Customs and Border Protection, and other Federal agencies, sets the standards for port security and ensures that all port facility owners and operators comply with these standards.

The Transaction Is Not About Port Security Or Even Port Ownership, But Only About Operations In Port. DP World will not manage port security, nor will it own any ports. DP World would take on the functions now performed by the British firm P&O – basically the off- and on-loading of cargo. Employees will still have to be U.S. citizens or legal permanent residents. No private company currently manages any U.S. port. Rather, private companies such as P&O and DP World simply manage and operate individual terminals within ports.

Background On The CFIUS Process

The CFIUS Process Was Rigorously Followed, And CFIUS Agencies Carefully Reviewed The Transaction. Ensuring the protection of our national security is the top priority of all members of CFIUS. In reviewing a foreign transaction, CFIUS brings together 12 Federal agencies with diverse expertise to consider transactions from a variety of perspectives and identify and analyze all national security issues.

• The Department of the Treasury, which chairs CFIUS, receives notices of transactions, serves as the contact point for the private sector, establishes a calendar for review of each transaction, and coordinates the interagency process.
• During the initial 30-day review, each CFIUS member agency conducts its own internal analysis of the national security implications of the transaction under review. CFIUS also consults with the intelligence community. In this case, the Departments of Transportation and Energy were also brought in to widen the scope and add to the expertise of the CFIUS agencies involved in the review process.
• All CFIUS decisions are made by consensus of the entire committee. The review process allows any agency that sees a potential credible threat to the national security to raise those concerns.
• In the course of the review of this transaction, DHS reached an agreement with DP World to mitigate security concerns.

  DP World Has Played By The Rules, Has Cooperated With The United States, And Is From A Country That Is A Close Ally In the War on Terror. The United Arab Emirates (UAE) has been a solid partner in the War on Terror. The UAE has been extremely cooperative on counter-terrorism and counter-proliferation and has provided considerable support to U.S. forces in the Gulf and to the governments and people of Iraq and Afghanistan.

• The UAE Is A Partner In Shutting Down Terror Finance Networks. The UAE has worked with us to stop terrorist financing and money laundering, including by freezing accounts, enacting aggressive anti-money-laundering and counter-terrorist financing laws and regulations, and exchanging information on people and entities suspected of being involved in those actions.
• The UAE Is An Established Partner In Protecting America’s Ports. Dubai was the first Middle Eastern entity to join the Container Security Initiative (CSI) – a multinational program to protect global trade from terrorism. Dubai was also the first Middle Eastern entity to join the Department of Energy’s Megaports Initiative, a program aimed at stopping illicit shipments of nuclear and other radioactive material.

  Port Security Begins Abroad. U.S. Customs and Border Protection (CBP) created the CSI to enable CBP to inspect 100% of high-risk containers at foreign seaports before they are loaded onboard vessels destined for the United States. Dubai was the first Middle Eastern entity to join CSI. Cooperation with Dubai has been outstanding and a model for other operations.

• DP World currently manages 19 container terminals and has operations in 14 countries. The United States government has a strong working relationship with DP World.

BEIJING – Dubai Ports World has received approval to build a container port in China, a news report said Friday, a year after the United Arab Emirates company’s planned purchase of U.S. port operations caused a political uproar.

DP World is to invest 3.5 billion yuan ($450 million) in the facility in Qingdao on China’s northeastern coast, the official Xinhua News Agency said, citing a city government spokesman.

The terminal was scheduled to begin operating in 2008 or 2009, the report said.

DP World is one of the world’s largest port operators, with terminals in 24 countries.

It dropped a plan last year to buy operations at six U.S. ports after critics said it might endanger American security. They cited the UAE’s history, noting that money to finance the Sept. 11, 2001, terror attacks moved through its banking system and the government’s past support of Afghanistan’s Taliban government before the attacks.

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Hutchison is about to build a brand new port at Punta Colonet, a Baja California cove located just two hours south of the US border.  In the event of a conflict with China, a Chinese built and controlled port so close to the US could potentially function as a staging area for hostile activities.  Also, the US should keep an eye on Huchison’s remarkably friendly relationship with the Mexican government.

Hutchison Ports Holding, part of the Hutchison Whampoa group, runs 35 ports including the Bahamas, Buenos Aires, and two in the Panama Canal. And again, it is owned by Li Ka Shing, China’s most influential billionaire who is known as “The Superman of the Orient.” In 2003 Forbes magazine ranked him fifth among the world’s ten “most powerful” billionaires, behind Bill Gates, Warren Buffett, Silvio Berlusconi and Rupert Murdoch.

A 1998 declassified Army intelligence report stated “Li Ka-shing, the owner of Hutchison Whampoa [Limited] … is directly connected to Beijing and is willing to use his business influence to further the aims of the Chinese government.” 

During the public debate over the Panama Canal turnover in 1999, several members of Congress expressed concern about Hutchison’s control of ports on both sides of the Canal.  The critics argued that Hutchison’s involvement essentially meant that control of the strategic waterway was being handed over to the communist Chinese government.

Admiral Thomas Moorer told The New American magazine that “The Chinese penetration of Panama has been effected primarily through an entity known as the Panama Ports Company, a front corporation for Hutchison-Whampoa Limited, a Communist Chinese-controlled company owned by Hong Kong billionaire Dr. Li Ka-shing. Dr. Li’s business empire has long been intertwined with enterprises that front for the Communist military and intelligence arms of the People’s Republic of China. Ten percent of his Panama Ports Company is owned by China Resources, the commercial arm of China’s Ministry of Trade and Economic Cooperation.” 

If Hutchison Whampoa is connected to the Chinese government, the US should take notice of this company’s plans to build a new port in Baja California.  The new port would be located two hours south of the US border, at a remote location called Punta Colonet.

The area is desolate, totally empty, far from populated areas, and prying eyes could easily be kept out.  All infrastructure, railways, roads and port facilities would need to be constructed from the ground up.  During construction, it would be reasonable to cordon off the construction area and keep people out for security reasons.

The Chinese could quietly erect “special” installations disguised as something else, unnoticed amongst the massive construction project.  Then Chinese ships could unload cargo items directly into the dual-purpose installations, or send presents to the US via the connected railway.  Viola! A Chinese military base 200 miles from the United States.

The ability to pull off such a maneuver would require enormous political clout in Mexico, which Hutchison already has.  Tijuana politician Jaime Martinez Veloz has alleged that Hutchison has a track record of power mongering and insider maneuvering in Mexico.

Martinez said that Hutchison obtained the concession to operate the Lazaro Cardenas port using a method that Martinez described as “a vile swamp of transnational, governmental and business corruption.”  He added, “the favoritism and partiality of the Mexican port authorities towards the oriental consortium Hutchison has ‘inexplicable’ reasons, but one day they will be known.”

Martinez also mentioned that Hutchison’s owner, Li Ka Shing, might have a track record of making enormous donations to political parties in various countries.

Former Baja California governor Ernesto Ruffo is now functioning as Li Ka Shing’s Mexican front man, promoting the port in conjunction with rich local partners.  The permits for the project are not in place, and there are pending lawsuits, but the Chinese victory already looks like a done deal.

Anyone concerned about a possible conflict with China should take a close look at the plans for the new Punta Colonet port, since the project could provide a bit more than what was bargained for.

SOURCE: Mexidata