Printer Friendly

UAE - Pax Americana Is Changing - Part 19E - Dubai's P&O Acquisition.

Dubai Ports World (DPW), a global ports operator owned by the government of Dubai, has acquired the London-based Peninsular & Oriental Steam Navigation Co. (P&O), for US$6,890m in a deal to be completed by March 2. P&O is the world's third biggest port operator, running 29 container terminals and has a presence in 18 countries. It operates six major ports in the US including the New York harbour. The deal, however, has caused a big storm in the US and a firm operating at the Port of Miami has filed a lawsuit, with powerful senators from both the Republican and Democratic parties campaigning against the fact that Dubai now was to have control over American terminals.

Michael Seymour, president of P&O's North American arm, was on Feb. 21 quoted as saying the company's lawyers would have to examine the lawsuit before he could comment on it. He said his company "is 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, as do other foreign companies that currently operate ports in the United States".

"We are confident", Seymour added, "that the DP World purchase [of P&O] will ensure that our operations continue to meet all relevant standards in the US through ongoing collaboration between the port operators and American, British, Australian and port security officials throughout the world".

US Treasury Secretary John Snow on Feb. 22 said a rejection by US lawmakers of DPW's acquisition would send a signal that foreign investments "from certain parts of the world aren't welcome". The remarks underscored tensions between the White House and US congressional lawmakers across the political spectrum who have condemned on the grounds of national security the Bush administration's decision to approve DPW's takeover of P&O.

Washington insiders were left to guess whether the White House or some of the most prominent lawmakers in Congress, including top Republicans in the House and Senate, would be the first to compromise on the issue after President George W. Bush warned on Feb. 21 that he would veto any legislative effort to block the acquisition deal.

Dubai has launched a lobbying campaign on Capitol Hill amid fears the backlash could undermine discussions about a free trade agreement. Reem al-Hashimy, the UAE's commercial attache in Washington who is handling the free trade talks, admitted surprise at some of the allegations against the UAE.

DPW had been buying shares in P&O heavily as a show of confidence that the deal will not be derailed despite problems in Washington and the strong likelihood that the deal will face a series of local battles with port authorities. An agreement to complete the transaction was due to be approved by a London court on Feb. 27.

The looming showdown in Washington prompted some business lobbyists to voice support for Bush's stance on the issue, emphasising that the US policy on foreign investments should not be politicised and that Congress's backlash against the deal was ultimately grounded in prejudice against Arab companies.

The White House has admitted to some mis-steps in its handling of the deal. But it has continued to defend it. Several US senators have threatened to propose legislation to block the transaction.

Some experts say that, despite the tough rhetoric, the White House might reach a compromise which would allow both sides to claim victory. The Financial Times on Feb. 24 quoted "David Marchick, an attorney who is an expert on US reviews of foreign deals", as saying: "I think the tide is turning on the deal. My sense is that they will be able to figure something out before Wednesday (March 1) that allows the deal to go forward without legislation that will satisfy Congress".

In its editorial on Feb. 16, The New York Times called on the Bush administration to reverse its approval of DPW's acquisition, arguing: "National security experts [in the US} have long warned that the [American] ports are a key point of vulnerability. One of the worst fears about terrorism is that a nuclear device might be shipped from overseas and set off when it arrived in a port in a large city. The federal government should be doing everything it can to ensure that port security is as rigorous as possible, including keeping port management in trusted hands".
COPYRIGHT 2006 Input Solutions
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:United Arab Emirates; Dubai Ports World acquires Peninsular and Oriental Steam Navigation Co.
Publication:APS Diplomat Fate of the Arabian Peninsula
Geographic Code:7UNIT
Date:Feb 27, 2006
Previous Article:UAE - Shaikh Sultan bin Muhammad al-Qassimi.
Next Article:UAE - Islamophobia.

Related Articles
UAE - Pax Americana Is Changing - Part 19C - Dubai & The Other Emirates.
UAE - The Dubai Decision Makers.
Seek real port security.
Sink the Dubai ports deal! Our ports are gateways to America, and it does not make sense to put them under the control of a foreign...
Ports in a storm.
Dubai's Economic Base.
UAE - Dubai - Part 1 - Dubai & The Other Producers.
JCB, ORIX and Majid Al Futtaim Group Establish Joint Venture for Credit Card Business in the UAE.

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters