Here we go again: another Congressional outrage over a business takeover that is no real threat to American security but appears so if our representatives are willfully ignorant of some basic realities. This time around the outrage centers on a proposal to allow a Dubai-based company operate six shipping port terminals in the U.S. The outrage is coming from all corners of Congress, Republican and Democrat alike. Much to his credit, President Bush is standing his ground on this deal against the Lou Dobbs-fear mongerers of America.
"After careful review by our government, I believe the transaction ought to go forward," Mr. Bush told reporters who were traveling with him on Air Force One to Washington, according to news agencies. "I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a Great British company. I am trying to conduct foreign policy now by saying to the people of the world, 'We'll treat you fairly." '
This outrage is totally illogical. We are trying to send a message that race and origin should not matter when it comes to running companies or anything else, yet Congress goes apoplectic when news comes out that a foreign company would own something domestic. It's yet another moment when Congress lets its adherence to isolationism and xenophobia get in the way of practical policy.
The White House appeared stunned by the uprising, over a transaction that they considered routine — especially since China's biggest state-owned shipper runs major ports in the United States, as do a host of other foreign companies. Mr. Bush's aides defended their decision, saying the company, Dubai Ports World, which is owned by the United Arab Emirates, would have no control over security issues.
This is really the worst part. Foreign companies already own a number of our major ports, but suddenly this becomes an issue when the media gets a whiff of it. Cue Congressional outrage.
Some administration officials, refusing to be quoted by name, suggested that there was a whiff of racism in the objections to an Arab owner taking over the terminals. The current operator of the six American terminals, P&O Port, is owned by the British company that Dubai Ports World is acquiring. The ports include those in New Jersey, Baltimore, New Orleans, Miami and Philadelphia, as well as New York.
I'll say it: it's racist.
Mr. Frist, in a rare break from the Bush administration, declared that "the decision to finalize this deal should be put on hold until the administration conducts a more extensive review of this matter."
He added, "If the administration cannot delay this process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review."
If Bill Frist is on one side, count me on the other. More so than just about anyone else, I disagree with Frist on this issue and everything else he comes up with. This is just another reason.
Representative Edward Markey, Democrat of Massachusetts and a persistent critic of the administration's actions on port security, said in an interview that "this is now a bipartisan posse chasing the president."
Democrats who think that this is a great opportunity to nail the president on a homeland security issue are sadly mistaken. This type of deal is incredibly routine. And even if it was not, what is the real threat? Opposition to this deal seems to be based solely on the idea that this is an Arab-based company. That is racist, by definition.
But firestorm of opposition to the deal drew a similarly intense expression of befuddlement by shipping industry and port experts.
The shipping business, they said, went global more than a decade ago and across the United States, foreign-based companies already control more than 30 percent of the port terminals.
That inventory includes APL Limited, which is controlled by the government of Singapore, and which operates terminals in Los Angeles, Oakland, Seattle, and Dutch Harbor, Alaska. Globally, 24 of the top 25 ship terminal operators are foreign-based, meaning most of the containers sent to the United States leave terminals around the world that are operated by foreign government or foreign-based companies.
"This kind of reaction is totally illogical," said Philip Damas, research director at Drewry Shipping Consultants of London. "The location of the headquarters of a company in the age of globalism is irrelevant."
But the reasoning did not resonate in Washington, where members of Congress from every end of the political spectrum piled on to condemn the deal and to propose emergency legislation to block it if necessary.
"This sale will create an unacceptable risk to the security of our ports," Senator Hillary Rodham Clinton, joined by Senators Frank Lautenberg, Robert Menendez and Barbara Boxer said in a letter Tuesday. On Monday, the Republican governors of New York and Maryland raised the threat of legal action to void contracts at ports in New York City and Baltimore.
Hillary is wrong and is pandering to the worst elements of the Democratic Party. Democrats (and Republicans in a different way) are far too beholden to a xenophobic streak that strangles any efforts to act smartly in a globalized economy. There is no such thing as an "American company" versus an "Arab company" in many markets like this one.
At the Pentagon today, Defense Secretary Donald H. Rumsfeld praised the Arab country as an important strategic military partner.
"Nothing changes with respect to security under the contract," Mr. Rumsfeld said. "The Coast Guard is in charge of security, not the corporation."
This whole debate is a firestorm over nothing. The American public is too ignorant to realize that globalization has dramatically changed the way business works. Congress knows the difference but doesn't have the courage to stand up and say so. It's pathetic.
**UPDATE**: I'll add two comments I saw on The Plank blog over at TNR. They raise good points about why this hysteria is misguided. I'm disappointed that TNR is joining the xenophobic crowd:
What the hell is happening--first CNOOC [the Chinese energy company that unsuccessfully tried to buy the American oil company Unocal in July 2005], now this. Are we turning into some neo-mercantilist economy? Foreigners have always been in US port operations--the company acquired by Dubai Ports was British. Look, this company is going to handle commercial operations. Don't confuse port operations with security: security will ALWAYS be handled by the US. So if we want better port security, we should beef that up, spend more money on inspections, etc., rather than dump on this company.
[T]he outrage over port security should be directed toward the administration's complete lack of action or concern in strengthening cargo inspection. If there's no one there to look at the cargo, who cares who's scheduling the operations?