Washington – The state- owned Dubai company seeking to manage some terminal operations at six American ports dropped out of the deal Thursday, bowing to a political uproar that swept aside President Bush’s efforts.
The company, DP World, said that at the direction of Dubai’s ruler it would “transfer” to a still-unnamed American firm the leases to manage some of the busiest port terminals in the United States, including some in New York; Newark, N.J.; Baltimore; and Miami.
Under questioning, the company declined to say whether it planned to sell the American operations or had some other transaction in mind.
The action averted a showdown with Congress that Bush was all but certain to lose, as signaled Wednesday by a 62-2 vote of the House Appropriations Committee to reject the deal, because it allowed the sale of terminal operations to an Arab state company.
Sen. John Warner, R-Va., announced the change on the Senate floor, two hours before the Senate had been scheduled to vote on a motion that could have paved the way for a Democratic proposal to scuttle the deal.
Warner made his announcement amid indications that the White House was looking for a way out of the confrontation.
A delegation of Republican congressional leaders told Bush on Thursday morning that his threat to veto congressional action against transferring the ports would not stop Congress from blocking the deal.
The outcome did nothing to solve the underlying issue exposed by an uproar that has consumed that capital for weeks.
A vast majority of containers that flow daily into the United States remain uninspected and vulnerable to security gaps at many points.
Some experts suggested that DP World’s quick surrender might take pressure off the administration, Congress and nations around the world to solve that problem.
DP World announced the decision after the White House appeared to signal that Bush wanted a face-saving way out of the shift by declining to repeat the veto threat.
DP World said the decision had been made by the prime minister of the United Arab Emirates who is the ruler of Dubai, Sheikh Mohammed bin Rashid al Maktoum.
“This was clearly not a business decision made by DP World,” a senior administration official said. “It was a strategic decision made by the UAE, to avoid further damage.”
In Dubai, a senior political official with intimate knowledge of the deliberations said, “A political decision was taken to ask DP World to try and defuse the situation. We have to help our friends.”
The official sought anonymity because he was not authorized to speak for the record. He was referring to Bush, who backed the deal, along with several Republican senators who supported the transfer.
The decision drew sighs of relief from officials in New York and other cities where the transfer had stirred cries of alarm. But the announcement left those officials wondering which American companies might want to buy the American operations.
“If it’s a U.S. company, it should alleviate some of the concerns about security which have been talked about over the last few weeks,” said Charles Gargano, vice chairman of the Port Authority of New York and New Jersey. “I don’t know how successful they’ll be.”
The business of loading and unloading cargo ships has long been dominated by foreign companies, and few American operators remain.
“This is a case where we were arguing about the wrong part of the problem,” said Stephen Flynn, a former Coast Guard officer and port security expert who has argued that the nationality of the company managing port operations had little to do with the gaping holes in security.
“Americans were shocked to learn that the vast majority of port operations in this country are handled by foreign firms. But transportation is a global network, and we’re not going to own all of it.”