Dubai Takeover Will Go Ahead Despite US Security Fears, Insists P&O

P&O has insisted its takeover by state-owned Dubai Ports World will go ahead despite growing opposition in the United States.

The ports and ferries group said it had cleared all the correct regulatory channels, but faces a lawsuit intended to block the pounds 3.9 billion deal.

The legal action by Eller & Company subsidiary Continental Stevedoring & Terminals comes amid a growing political storm in Washington over concerns that the acquisition could compromise national security. Senators including Hillary Clinton have called for it to be blocked because it would place control of key ports such as Miami, New York, New Jersey, Baltimore, New Orleans and Philadelphia in the hands of a foreign government.

And Peter King, chairman of the House of Representatives Homeland Security Committee, claimed there were too few safeguards to combat terrorist infiltration.

He added that the terms for approving the transfer of control to the United Arab Emirates were not strict enough.

Eller added to the opposition when it filed for pounds 5.7 million in damages, claiming it was not consulted and would therefore become an involuntary partner with DP World.

But P&O is understood to be confident that the lawsuit will not affect the deal, which was voted through last week by shareholders who will receive their cash by March 16.

It has also been approved by the Department of Homeland Security.

A P&O spokeswoman said: "Clearly, a change of control was a key focus for the due diligence process and we are confident all issues have been satisfactorily addressed."

Michael Seymour, president of the North American arm of P&O, said the company was aware of the lawsuit which was filed in a Florida court late on Friday but had not had time to review it.

He pointed out that P&O was "itself a foreign-owned terminal operator that has long worked with US government officials in charge of security at the ports to meet all US government standards" and added that other foreign companies also operated ports in the US.

DP World said security was "very much at the forefront" of its operations and pointed out it was one of the first companies to sign up to the Container Security Initiative, which puts US customs officials into its offices in Dubai.

A spokesman said: "We intend to maintain and, where appropriate, enhance security and as far as we are concerned it is business as usual for P&O terminals in the US."

P&O has 29 container terminals around the world, including at S outhampton.


Source: Birmingham Post; Birmingham (UK)

U.S. has quiet, cooperative relationship with Persian Gulf ally involved in port controversy
By BARRY SCHWEID
23 February 2006

WASHINGTON (AP) - The United States considers the United Arab Emirates an ally in the war against terrorism, and maintains an important yet politically sensitive relationship with the Persian Gulf country.

Now ensnared in a controversy over whether a UAE government-owned company should run terminals at six major American ports, the country's oil riches, strategic location and willingness to cooperate with the U.S. military have made it an invaluable ally for Washington.

The two countries have worked together, even though the United States has been critical of its friend's human rights standards. In a report last year, the State Department said UAE citizens do not have a right to change their government and the country restricts freedom of speech and of the press.

"The UAE is a good partner in the war on terrorism," Secretary of State Condoleezza Rice said Wednesday in Riyadh, Saudi Arabia, during a Middle East trip. "It has been a stalwart partner. And we believe that this is a deal, a port deal, that serves the interests of the United States, serves our security interests and serves the commercial interest as well."

Rice planned to visit Dubai, the country's business capital, on Thursday.

The world's fifth-largest oil exporter, the UAE is located along the Strait of Hormuz, the narrow passage for shipping in the Persian Gulf and just a short distance from Iran's southern coast.

The U.S. has a "superb" military relationship with the country, Gen. Peter Pace, chairman of the Joint Chiefs of Staff, told reporters this week. He also said U.S. forces use UAE seaports and air fields for logistics support and for training of Air Force pilots.

"In everything that we have asked and worked with them on, they have proven to be very, very solid partners," Pace said.

In 2004, the UAE signed a trade and investment agreement with the United States.

At the same time, the UAE was one of three countries that recognized the Taliban government in Afghanistan before U.S. led-forces overthrew the regime in 2001.

Republican and Democratic critics of the ports deal have claimed the UAE was used as an operational and financial base for some of the Sept. 11 hijackers. Critics also contend the UAE was a transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by the Pakistani nuclear engineer Abdul Qadeer Khan, who ran a nuclear proliferation ring.

Last September, a government-run think tank in Dubai said the al-Qaida network was recruiting and sinking roots in the region. Some terrorism specialists have said Dubai was an ideal logistical hub for Osama bin Laden's network because of its cosmopolitan lifestyle and freewheeling business rules.

"Dubai is a place with few rules, but one of the few things tightly regulated is port security, and that's why the U.S. Navy feels comfortable using Dubai more than any other port in the world," said Patrick Clawson, deputy director of the Washington Institute for Near East policy.

The U.S. relationship with the UAE is so politically sensitive in the Gulf country that the Pentagon does not openly discuss details. Among those that Pace did not mention were:

-- Air Force U-2 spy planes and Global Hawk unmanned surveillance aircraft have been based at al-Dhafra air base, along with KC-10 aerial refueling planes. When a U-2 crashed in the UAE last June, killing the Air Force pilot, American officials did not publicly disclose the location "due to host nation sensitivities."

-- U.S. sailors and Marines regularly make liberty calls at the port of Jebel Ali, near the UAE's largest city, Dubai.

-- In March 2000 the UAE and the United States completed a sales agreement for 80 of the most sophisticated versions of the F-16 fighter jet.