Dubai presses on with port takeover

By Dayan Candappa

DUBAI (Reuters) – Dubai Ports is pressing ahead with a
takeover that gives it control of six major U.S. ports despite
a Congress committee vote to block the deal, sources familiar
with the deal said on Thursday.

Government and company officials in the United Arab
Emirates declined comment on Wednesday’s vote by U.S. lawmakers
to block the deal on the grounds that handing the ports over to
a Gulf Arab state-owned firm would threaten U.S. national
security.

But the sources said the vote had not taken Dubai Ports any
closer to relinquishing the six ports at the center of a
political firestorm.

“The vote in the House of Representatives has not change
anything in that respect. We are not at that point,” one
Dubai-based source said.

Analysts said the political furor was bound to provoke
businesses in the world’s biggest oil exporting region, which
is an increasingly important source of financing for the huge
U.S. current account deficit.

“It’s American double standards. Do you think that
businesses and governments here won’t react and even
retaliate?” said Wadah Al Taha of the National Bank of Abu
Dhabi.

He said the issue was likely to feature prominently in
trade talks later this month between the United States and the
UAE, a federation of seven emirates that includes Dubai.

The Dubai Ports row has reinforced fears in the Middle East
that investments in the United States have become politically
risky for Arabs and Muslims. Some Arabs say the U.S. opposition
to the deal smacks of racism.

SECURITY FEARS

Some U.S. politicians say the UAE has in the past been
sympathetic to Islamist militants, noting that two of the
September 11 hijackers came from that country.

President George W. Bush, however, says the UAE is a
staunch ally in the U.S. war on terrorism and he has vowed to
veto any legislation that would block the ports deal.

Wednesday’s 62-2 vote, by the House Appropriations
Committee, will be followed next week by another vote by the
full House of Representatives.

Dubai Ports officials said they were pushing ahead with
plans to integrate British ports group P&O which runs the U.S.
ports. A Dubai Ports spokesman said the company would soon
announce the de-listing of P&O now that shareholders had
approved the $6.8 billion takeover.

Dubai Ports Chairman Sultan Ahmed Bin Sulayem and Chief
Executive Mohammed Sharaf fly to London this week to discuss
integration of the two companies which make up the world’s
third largest ports group.

“We are evaluating the situation,” Bin Sulayem said.

The UAE is a close ally of Washington and a frequent port
of call for American warships. Concerns are growing that the
fallout from the ports row will affect U.S. economic ties with
the Gulf.

UAE Economy Minister Sheikha Lubna al-Qassimi said last
week the furor could prompt other countries to divert funds
away from the United States.

American businesses in the UAE warned on Wednesday that
trade worth more than $8 billion between the United States and
the United Arab Emirates could be in jeopardy.