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Friday, March 10, 2006

Congress wins an EagleSpeak Dodo award

Read the editorial titled Happy Now?, add a few more degrees of disgust and cynicism and you'll come close to my feelings on the UAE port terminal operations deal and our Congress's role in it.

And, by the way, could we just insult our moderate Arab allies a little more? Our troops are not having too easy a time trying to build trust... (UPDATE4: CDR Salamander offers up this quote from General Abizaid:
"I am very dismayed by the emotional responses that some people have put on the table here in the United States that really comes down to Arab and Muslim bashing that was totally unnecessary," Abizaid, who just returned from Iraq for meetings in Washington, told reporters.)
As the Post editorialist put it:
But our brave new Congress has achieved more than the irrational spiking of one business deal. It has also sent a clear message to the Arab world: No matter how far you move along the path of modernization and cooperation, Americans may be unable to distinguish you from al-Qaeda. Dubai welcomes hundreds of ship visits every year from the U.S. Navy and allied ships. It has worked with U.S. agents to stop terrorist financing and nuclear cooperation. But none of that mattered to the craven members of Congress -- neither to the Democrats who first sensed a delicious political opportunity nor to the Republicans who then fled in unseemly panic. As to long-term damage to the United States' security, economy and alliances? Not of concern to the great deliberative body.

No one should underestimate the potential damage. Any government in a Muslim-majority country will have to ask itself: Why take the risk of friendship? If governments find no good answer to that question, the fight against radical Islamic terrorism will suffer. Meanwhile, Arab investors may think twice before putting their money in a country where their companies risk expropriation. With the price of oil so high, Arabs are rapidly becoming a major supplier of foreign capital. This isn't a good moment for Americans to discourage foreign investment, given the nation's dependence on foreign capital (see: Congress, drunken spending by). Nor will the message -- that foreign ownership was unobjectionable when it was British but intolerable when it was Arab -- do much to advance U.S. efforts to promote equitable investment rules for its own companies abroad.
It's not often I agree with the WaPo editorial page, but this one they got right.

For their short-sighted and ill-considered actions in this matter, the entire collection of modern "Know Nothings" in the US Congress who decided that the way to "protect" national security was to play politics with it, I award an EagleSpeak Dodo award, with an honorable mention to the members of the press who misrespresented exactly what Dubai Ports World would be operating and how little effect that would have on anything related to US security.


UPDATE: More on potential fallout here:
John Castellani, the president of the US Business Roundtable, has warned that renewed political attempts to block the takeover of port facilities could jeopardise both foreign investment and forthcoming trade negotiations.

The Roundtable, which represents 160 chief executives, used its strongest language yet to criticise Congress, saying the backlash against Dubai Ports World's acquisition of five container terminals was "just another iteration of economic isolationism like the outsourcing debate was".

"It is a big worry if legislation starts being driven by emotion," said a senior logistics manager for a large US consumer products manufacturer. "This economy relies on smooth movement of goods and it would be disastrous if that was disrupted."

Importers such as Wal-Mart and Nike have broadly supported efforts to protect port security and embraced many of the proposals being pushed by senators, including increased federal funding for maritime security and greater rewards for importers who meet stringent security standards.

But delegates at the Long Beach conference feared that the legislation would become tougher as Republicans and Democrats vie for the most populist stance in an election year. "There is concern that some legislators will call for legislation that just won't work," said Michael Laden, the former head of customs brokerage for Target, the retailer, and a government adviser. "There are people on Capitol Hill who are not well educated on this topic."
I certainly agree with the last quote...

And more from the WaPo here:
But foreign firms remain deeply embedded in nearly every major port in the country. And transferring ownership of those operations to U.S. companies could cause serious problems in an industry in which nearly all of the shipping is controlled by foreign interests. An immense amount of capital from those foreigners will be required to expand the nation's port system in coming years as global commerce continues to burgeon.
Because of the Dubai ports flap, the public has learned that the majority of terminals at U.S. ports -- especially big ones such as Los Angeles and Long Beach in California, and New York and New Jersey -- are managed by companies from Singapore, Taiwan, Denmark, South Korea and other countries. And as President Bush pointed out in defending the Dubai Ports World deal, the port-management company targeted for takeover, Peninsular and Oriental Steam Navigation Co., is British.

In this highly globalized business, crews typically come from Southeast Asia or Eastern Europe, flags are often Liberian or Panamanian, and few large container ships are owned by U.S. interests. (A 1920s-era law called the Jones Act requires ships plying routes between U.S. ports to be U.S.-owned, but they are minor exceptions.)

There is an important reason why terminals are usually managed by foreigners: The shipping companies themselves are largely foreign, and they have generally sought to control terminals so that they can be certain of having the most reliable, efficient facilities possible for loading and unloading their vessels quickly to reduce costly time in port. That arrangement has suited local port authorities; they want to ensure that their ports will draw enough traffic to generate revenue and employment.

"Why are there so many foreign terminal operators? There are no global American liner companies anymore -- that's really the crux of it," said Peter Shaerf, managing director of AMA Capital Partners LLC, a merchant bank that specializes in transportation.
And, given the way the world works, it is unlikely there will be any global American liner companies. Especially given some of the laws previous Congresses have passed that helped kill them to begin with...

UPDATE2: The NY Times continues the misrepresentation but hopes for a silver lining:
DP World's decision yesterday to transfer a handful of American port terminals, rather than chilling interest in investing in the United States, may actually have made it safer for foreigners by relieving some of the political pressure that was building up against them.

UPDATE3: Decline of the US merchant fleet? See here for an interesting article on the need for more merchant hulls for strategic sealift:
As a result of a national lack of understanding of ships at sea, the United States faces a fundamental crisis at sea. Our US-flag merchant marine is experiencing heavy weather for reasons economic, political, and international. (9:29) The US is the biggest international trader in the world, importing and exporting the greatest volume of goods of any nation. Yet, this maritime nation, biggest of all shippers, has little or no direct control over the transportation used to move its goods. More importantly, providing the strategic sealift required to support our national objectives and interests in time of conflict is steadily declining.

UPDATE5: Maybe it's just me, but I wonder if there is a Maritime Union lurking behind this?
"Thousands of foreign-controlled ships manned by many tens of thousands of foreign personnel visit our many ports and navigable waterways -- many of which are registered under "flags of convenience" with owners, operators, and multinational crews that have no national relationship to the country where the ship is registered," stated Captain Dan Fuller, U.S. Merchant Marine Shipmaster and respected maritime consultant. "More American ships carrying a larger proportion of our foreign trade give the U.S. greater control over our trade, as well as significantly increased security for our ports, waterways, and adjacent communities."

Even more alarming is that with only a skeletal U.S. flag fleet left, the U.S. military has been forced to ship sensitive mission-essential cargo aboard foreign-flagged vessels with foreign crews from countries like the Philippines and Indonesia where there is support for Al-Quaeda and other terrorist organizations. The GAO has concluded, "There may be an increased risk of the equipment being tampered with, seized or destroyed by individuals or groups whose interests run counter to those of the United States, and an increased chance that those weapons or equipment might be used against military or civilian targets."

Many in the industry feel this trend must be reversed. "Laws, regulations, and tax policies must be thoroughly addressed and adjusted as practical and necessary to allow American citizen mariners and American ship owners and operators to effectively compete against foreign counterparts who operate under much lighter legal and tax burdens," commented Captain Fuller.
Get them while they are scared and ignorant, I suppose...

UPDATE6: President Bush suggests that the effects of rejecting the port deal might be harmful to the US here:
"I'm concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East," said Bush during an appearance before a conference of the National Newspaper Association. "In order to win the war on terror, we have got to strengthen our friendships and relationships with moderate Arab countries in the Middle East."

The United Arab Emirates, of which Dubai is a part, is just such a country, Bush said.

Dubai services more U.S. military ships than any other country, shares useful intelligence about terrorists and helped shut down a global black-market nuclear network run by Pakistani nuclear scientist A.Q. Khan, the administration says. This week, though, the State Department's annual human rights report called the UAE's performance "problematic," citing floggings as punishment for adultery or drug abuse.

The president said he would now have to work to shore up the U.S. relationship with the UAE and explain to Congress and the public why it's a valuable one.

"UAE is a committed ally in the war on terror," he said.

En route Friday to a presidential inauguration in Chile, Secretary of State Condoleezza Rice echoed Bush. The failed ports deal "means that we are going to have to work and double our efforts to send a strong message that we value our allies, our moderate allies, in the Middle East," she said.

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