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Showdown looms over U.S. ports deal
Edward Epstein, Chronicle Washington Bureau
Thursday, February 23, 2006
Full story:
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/02/23/MNG89HDFTG8.DTL
Washington -- The Bush administration and a key congressional ally tried
today to quell the outcry against the contract for a firm owned by the
United Arab Emirates government to manage six major U.S. ports, but in the
Senate their efforts ran up against a testy exchange over the meaning of the
word "shall."
At the end of the day, it appeared President Bush and congressional critics
from both parties remain headed for a legislative showdown next week, with
Bush promising to veto a bill that would try to derail the port contract.
Ten sub-cabinet level administration officials trooped today to Capitol Hill
for an extraordinary, 2 1/2-hour event that combined a briefing for Senate
Armed Services Committee members and a press conference. The meeting -- the
first public defense by the administration to Congress about the contract
approval -- was the idea of the committee chairman, Sen. John Warner, R-Va.
Warner is trying to defuse what has become a hot button issue dividing Bush
and members of both parties in Congress who say securities concerns make the
port deal hard to accept in a post-Sept. 11 world.
"As a result of consultations, I hope these things can be resolved,'' Warner
said at today's hearing.
But the committee's ranking minority Democrat, Sen. Carl Levin, D-Mich.,
showed in an exchange with Deputy Treasury Secretary Robert Kimmitt that the
fight is far from abating.
At issue is the wording of a 1992 statute that says the interagency
Committee of Foreign Investment in the United States "shall'' extend its
investigation into a foreign government-owned company's bid to buy a
business "where the takeover could affect the national security of the
United States.''
Kimmitt, backed up by all nine other administration officials at today's
meeting, said the administration's security concerns were satisfied after
the company, Dubai Ports World, agreed to cooperate fully with all federal
requests to assist the war on terrorism at the six ports -- New York,
Newark, Philadelphia, Baltimore, Miami and New Orleans. Dubai Ports,
controlled by the government of the United Arab Emirates, plans to take over
management from Peninsular & Oriental Navigation Co. of Britain in a $6.8
billion deal.
Kimmitt said the administration spent three months looking into the port
contract.
"We're not aware of a single national security concern raised recently that
was not part of" the three-month review, he said.
Or as Deputy Homeland Security Secretary Michael Jackson put it, "We have no
national security interest concerns to this going forward.''
Levin was incredulous. "Is there not one agency in this government that
believes this takeover could affect the national security of the United
States?" he asked.
As Levin saw it, the administration was ignoring the law by not undertaking
a formal additional 45-day review.
"An ambiguity has been found in a statute that's unambiguous,'' Levin said.
"It's clear even by your own actions that additional requirements were
imposed that this transaction could affect national security.
"If the executive branch doesn't like it come to Congress and change it.
Don't ignore it,'' Levin said.
But Kimmitt said the position of the White House under two administrations
since 1992 has been that the 45-day review is begun only if an agency raises
national security objections during the committee's deliberations.
To back up his assertion, he said that in the final five years of President
Bill Clinton's administration, the inter-agency panel considered 21 cases
involving foreign government-owned companies buying U.S. firms. None went to
the added 45-day review.
In Bush's first administration, there were 43 such cases, he said, and four
required the additional 45 days.
"We take the position that it's triggered only when concerns about potential
harm to national security aren't resolved,'' Kimmitt added.
The administration officials also denied charges that they operated in
secret or that they rushed the deal through. In fact, they said, the Dubai
Ports and P&O first approached the administration last October, setting off
a process that involved five Cabinet departments and dozens of agencies
within those departments.
"The Department of Defense review was not cursory or casual,'' said Deputy
Defense Secretary Gordon England. At the Pentagon alone, England said, 17
agencies participated.
He also praised the United Arab Emirates as a valuable ally in the war on
terror. Its ports are heavily used by Navy ships and it's a popular spot on
leave for U.S. personnel.
"The terrorists want us to become distrustful, paranoid and isolationist. In
my opinion we cannot allow that to happen,'' England said.
But critics pointed out that the country has had a mixed record. It was one
of only three governments that recognized the Taliban regime in Afghanistan.
Al Qaeda used banks in the United Arab Emirates for money laundering and it
was a center of operations for Pakistani nuclear scientist A.Q. Khan, who
was involved in nuclear proliferation to Libya and Iran.
Sen. Hillary Clinton, D.-N.Y., one of several members of Congress who has
proposed legislation mandating the additional 45-day security review, said
after today's hearing that she will move ahead next week when the Senate
returns from its recess.
"The 45-day bill will be very broadly supported,'' she said. "I would
predict it will be on the floor next week unless the administration changes
its position.''
At the White House, Bush sounded conciliatory, to a point. "The more people
learn about the transaction that has been scrutinized and approved by my
government, the more they'll be comforted that our ports will be secure,''
said Bush, who has vowed to veto any legislation delaying the contract.
In a FOX News interview, White House deputy chief of staff Karl Rove said a
slight delay might be possible in the March 1 effective date of the United
Arab Emirates' firm taking over because he said British regulators have yet
to give final approval to the sale.
Rove's suggestion drew praise from another critic of the deal, Sen. Charles
Schumer, D-.N.Y.
"A small delay is an excellent idea and would give a chance for a solution
amiable to all sides to follow. We hope the administration is serious about
this suggestion," Schumer said in a statement.
Many terminal operators at U.S. ports are foreign companies and some are
owned in part by foreign governments.
E-mail Edward Epstein at
eepstein@sfchronicle.com
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