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Coast Guard: `Intelligence Gaps' Hindered Ports Deal Assessment

Posted on: Monday, 27 February 2006, 21:00 CST

WASHINGTON _ The Coast Guard warned within the past three months that the proposed takeover of some U.S. port operations by a state-owned company in the United Arab Emirates raised "intelligence gaps" that made it difficult to assess the deal's possible threat to national security.

Its cautions, however, didn't trigger a 45-day investigation into the transaction, which would have been required if a Cabinet-level agency had raised such concerns. The Coast Guard is a division of the Department of Homeland Security.

The Senate Homeland Security Committee released the undated, unclassified Coast Guard document Monday. It came one day after the Bush administration accepted an invitation from Dubai Ports World to pursue a new inquiry into the national security implications of its deal to acquire terminals at six major U.S. ports when it purchases a British firm, Peninsular & Oriental Steam Navigation Co.

Because the government of the United Arab Emirates owns DP World, and because the UAE had connections to al-Qaida in the past, a political firestorm erupted earlier this month over fears that the company might make U.S. ports vulnerable to terrorist attack. The Bush administration says such fears are groundless and that the UAE is now an ally in the war on terrorism.

Members of Congress from both parties insisted Monday that Congress gain authority to review such takeovers, a sign that the administration's political troubles over port security aren't over. President Bush has threatened to veto any legislation that blocks DP World from taking over terminal operations at Miami, Philadelphia, New York, New Jersey, Baltimore and New Orleans.

It's unclear when the Coast Guard issued its warning, but it had to have come in the weeks before the administration's review panel finished its work. The Committee on Foreign Investment in the United States, an interagency group that reviews foreign investment proposals for possible national-security risks, is required by law to initiate a formal 45-day investigation if any of its members raise national security concerns.

The Coast Guard isn't a member of the panel, but its parent agency is. Neither the Homeland Security Department nor any other on the committee concluded that the deal would threaten national security. But Stewart Baker, the department's assistant secretary for policy, told senators that he never saw the Coast Guard's admonition because it never circulated outside the Coast Guard.

Administration officials told members of the Senate Homeland Security Committee that any concerns had been resolved by the time that the Committee on Foreign Investment in the United States completed its initial 30-day review in January.

But even after a closed-door session with administration officials, Chairman Susan Collins, R-Maine, said she was "more convinced than ever that the process was truly flawed.

"The national security and homeland security implications of this proposed transaction were such that a 45-day formal investigation, as called for under the law, should have been undertaken," she said.

The document, prepared by the Coast Guard's Intelligence Coordination Center, said the intelligence gaps included the security environment at DP World terminals, the backgrounds of company personnel and whether there was any foreign influence in the company's operations.

White House officials had hoped that DP World's weekend decision to accept a new 45-day closed-door investigation through the Committee on Foreign Investment in the United States would allay congressional fears.

"We think this is a good middle ground that has been found," White House Press Secretary Scott McClellan said.

Meanwhile, a group of Republican and Democratic senators introduced legislation that would require Congress to review the deal before it can proceed. The legislation's chief sponsors are Sens. Charles Schumer, D-N.Y., and Norm Coleman, R-Minn. Co-sponsors include Tom Coburn, R-Okla.; Olympia Snowe, R-Maine; and Rick Santorum, R-Pa.

"The findings from this review, I hope, will provide Congress with the requisite information to make an informed decision regarding the national security implications of a Dubai-backed company owning and operating terminals at six U.S. ports," Coleman said.

Sen. Hillary Rodham Clinton, R-N.Y., introduced separate legislation that would ban foreign governments from taking over any U.S. port operations.

Rep. Mark Foley, R-Fla., usually a reliable Bush ally, said the administration displayed a political tin ear in approving the deal without consulting Congress. "The threat of a veto, that really took my breath away," he said. "This is a public relations and political nightmare for the administration. I'm not sure that in 45 days people will think this is a good idea."

Several more Republican committee chairmen plan to hold hearings this week on the issue. The House Armed Services, Senate Commerce and Senate Banking committees all have scheduled hearings.

DP World is set to complete its $6.8 billion acquisition of Britain's P&O global operations Thursday, but said it would suspend its takeover of operations in the U.S. ports until after the 45-day review.

In the House of Representatives, Rep. Ileana Ros-Lehtinen, R-Fla., whose district includes the Port of Miami, will hold a subcommittee hearing too. One of her scheduled lead witnesses is Frank Gaffney Jr., a top defense official under President Reagan and a vocal critic of the Dubai Ports deal.

"The 45-day review is certainly a step in the right direction but more transparency is needed on this deal," Ros-Lehtinen said Monday.

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Source: Knight Ridder Washington Bureau

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