The Great Seaport Snafu?

Or, how to become convinced without the facts


By Dick Tunison

Well haven’t we been whipped into a frenzy over the intended sale of several American ports to the United Arab Emirates?

Most of what politicians on both sides of the aisle, a substantial part of the press and hoards of the public are so caught up in is an example of how little we understand about the matter rather than how thoughtfully we are analyzing it. I included myself among this reactive group of stunned folks – until I really got into the subject.

I started out the week in deep wonderment about the administration’s decision to approve the sale. On its surface it seemed counterintuitive to sell any port to an Arab nation that has a questionable past when it comes to terrorism. I wondered if the Bush administration had made a gigantic potential security blunder, or at least fomented a public relations tempest in a teacup. But then, I had to recognize I knew little about the rhyme or the reason.

I have a natural aversion to allowing foreign countries to own American businesses that are even remotely related to our national security. I was glad the proposed sale of UNOCAL to Cnooc, a Chinese petroleum company was jinxed last year. The idea that we might sell a port to some foreign country seemed to immediately fall into my “restricted category”. The United Arab Emirates is going to buy six American ports? Absurd!

That’s where my prejudice toward the sale began. But during the week I’ve tried to learn more about the details of the transaction. Let me share what I’ve learned - just for your consideration.

To begin with, there’s strong political noise banging behind the scenes. Some people don’t like anything Bush does, so to them this decision was faulty on its face. But why were so many Republicans lined up waving their arms about the deal? Ah, it’s election year and some Republican lawmakers see themselves as vulnerable. It’s not in their interest to stick their heads out too far on matters that might appear to weaken our national security. If the president’s decision to sell something to the UAE smells like a move that will put the country in greater danger, they’re going to keep their distance. In a nutshell, then, there’s a political aspect to the matter.

Another factor relates to how the transaction is described by the press.

Say something over and over again and people will begin to believe it. The first descriptive word repeated endlessly has been “sale,” as in “the United States is “selling” six US ports.” Well, we’re not selling anything, least of all six seaports.

“Port” is the second word that has been misused in all the reporting. Ports are comprised of various buildings, commercial facilities and staging areas in a harbor, among which are terminals. A terminal is a length of pier and ancillary structures that are typically leased by shipping companies that use them as trading hubs or transfer points. Cruise lines, for example, use passenger terminals. Other companies operate container terminals, petroleum terminals or bulk cargo terminals. A British company, Peninsular and Oriental Steam Navigation Co., whose history dates back to Queen Victoria’s England, has operated terminals along our coasts for many years. Currently these are used for loading and offloading sea/land containers.

So how is it we’re “selling” a “port?” The government is simply approving the transfer of ownership of a right to conduct business in several American ports. P&O, as the British company is called, is selling its American terminal operations to Dubai Ports World (DPW). Last fall DPW tendered an offer to purchase P&O’s American operations. Dubai Ports World is owned by Dubai, one of the seven emirates that comprise the United Arab Emirates. (Dubai, by the way, is the country Boeing contracted to sell aircraft to last year valued at $7 billion – with our government’s approval.)

A number of our seaport terminals are operated by foreign companies and governments. Six terminals in the Port of Los Angeles/Long Beach are operated in this way. Among the “owner operators” are China, Japan, Taiwan, Denmark and Singapore. Most U.S. ports are state-owned landlord ports that lease space to shipping companies. The companies and states work together to manage traffic and employ the workers required to run the terminals. When things go right, port operations are financially important to the local community. Some local port departments are huge. An example is the New York Port Authority which operates bridges, tunnels, airports and subway systems as well as the ports themselves.

The issue of security has been raised by almost everyone who has doubts about the sale of the British company’s operations to the United Arab Emirates. The fact is that P&O, the current British operator, has nothing to do with port safety other than understanding and complying with the regulations. Security is the purview of the US Coast Guard, the US Customs Department, and local law enforcement. This will not change.

Some critics have suggested that the UAE could send in enemy agents to infiltrate terminal operations and learn security secrets. But enemy infiltration is possible all around us. Remember the flying schools where the 9/11 pilots learned to fly passenger jets? The answer here is increased diligence on our part.

According to Michael Moore, senior vice president of DPW, the great majority of employees who now manage and operate the P&O terminals will remain in their present positions after the transfer of operational ownership. There is no plan to displace them with foreigners unfamiliar with how the terminals operate.

Besides, we’re quick to forget that the infamous Richard Reid – the shoe bomber – was a British subject, so we do have enemies even among our friends. And as to the UAE, it has been very cooperative with our anti-terrorism actions since 9/11. In fact that government has been instrumental in the arrest of a high ranking al Qaeda official and a leader of the radical Islamic group Harhat-ul-Jihad-e-Islam. This kind of cooperation is imperative in our war on terrorism. Should the transfer agreement be scotched at this point we may end up losing an ally in exchange for the perception of greater safety.

The process that led to the recommendation that the president approve the terminal transaction is based on a procedure that resulted from the creation of the Committee on Foreign Investment in 1975. The review committee is comprised of officials from Defense, State, Commerce and Transportation Departments, along with the National Security Council and other agencies. The committee found no problems resulting from its review and passed the matter along to the president with its positive recommendation.

There is good reason to be concerned about the security of our seaports. A study completed last year by the Coast Guard and the Department of Homeland Security identified 66 of the nation’s 350 ports as being especially vulnerable to terrorist attack. Unfortunately only $630 million of the $18 billion allocated for homeland security has been spent so far on port security. Security systems are so sparse in our seaports that it’s been estimated 11,000 truckers go in and out of the Port of Los Angeles/Long Beach each day with only their drivers’ licenses as identification.

The fact is that only five to ten percent of the six million containers that arrive in this country every day are inspected. To ameliorate this difficult situation, many of the containers are inspected or verified at their ports of embarkation. According to government officials, the UAE has gone out of its way to be cooperative in this effort by allowing our own inspectors to participate at UAE wharfs on a continuing basis.

Before we allow our feet to be cemented in place regarding this very complicated matter, it behooves us to learn all we can about the details and facts. This means, most of all, avoiding the firebrands who talk a lot and think only a little. As the days go by we will hear more complete explanations of the inner workings of transactions between our government and foreign companies. We should open our thinking to the realization that the world economy is far more complicated than it used to be. With huge amounts of money represented in national debts and credits it’s necessary to find new ways to invest surplus funds and pay debts without tipping the scales of international finance. Foreign investments in our economy are vital to our balance of payments. The DPW deal will result in millions of dollars being pumped back into our economy that we have paid to purchase of foreign oil. Such exchanges will reduce some of our high national debt. And that’s not a bad thing either.

As I write this, the latest news is that DPW has offered to extend the closing date of the sale so that many of these concerns may be explored and better understood by Americans. That seems like a good thing to me. I’m convinced we may have built up objections to a reasonable transfer of operating rights out of fear rather than sound judgment.