Dubai Ports World, now a global player in the business of port management, has run into trouble in the United States. This is because its recent $6.8 billion purchase of P&O, the venerable British ports operator, would give it control of 6 ports along the US coast, including such major terminals as New York, New Jersey and Miami.
The thought of an Arab-owned company managing a major US asset of great strategic importance has caused alarm in Washington. Leading members of the American Congress, both Democrat and Republican, are threatening to pass emergency legislation to block the deal.
They include Hillary Clinton and Charles Schumer, Democratic senators from New York, and Bill Frist, the Republican majority leader in the Senate. Several other members of the Congress seem ready to leap on the bandwagon. The governor of New York state, George Pataki, has also voiced his concern.
The main argument used to justify this opposition is that the DP World deal would constitute a grave breach of American security. The New York Times has claimed that there are "troubling connections" between the UAE and anti-American terrorism. "Putting port management in the hands of a country with such a mixed record in the war on terror is a step in the wrong direction," it declared.
In view of the outcry, it now looks as if the deal has only a 50-50 chance of success. Such is America's defensive mood that it will require a great deal of diplomacy and of lobbying to get it accepted.
Greatly embarrassed by the anti-Arab backlash, US President George W. Bush has threatened to veto any law that cancels or delays the deal. He has no wish to arouse further Arab anger, already at dangerous levels because of the war in Iraq and America's uncritical support for Israel.
There are a number of other important issues at stake. Bush claims that Michael Chertoff's Department of Homeland Security has carefully investigated all the security aspects of the deal and has found nothing to worry about. But Chertoff is already under attack for his less than effective handling of the Katrina disaster in New Orleans. Is he to be trusted with the security of American ports? The DP World affair gives Bush's critics another stick with which to beat the Administration.
America is currently in the grip of a paranoid fear of terrorism, fuelled by the Bush administration's over-heated rhetoric about the global war against Islamic militants. Scare tactics by Vice-President Dick Cheney, by Defence Secretary Donald Rumsfeld and by Bush himself have led to a national obsession with the danger of mass casualty terrorism, such as occurred on September 11, 2001.
Nuclear nightmares
Americans have nightmares about the possibility that a nuclear device, shipped from overseas to an American container terminal, might then be exploded in a large American city.
Such fears apart, there are other strands to the dispute over control of US ports. One is old-fashioned American protectionism, as was evident last year when the Chinese state-owned oil company, CNOOC, was thwarted in its $18 billion bid for the American oil company Unocal.
But protectionism can have a local flavour. If DP World were forced to surrender its leases on North American terminals as the opposition in Congress seems to want these could then be relet to local port authorities, to the benefit of local businessmen and local political bosses. There are considerable financial interests involved.
Another strand in the DP World dispute is straightforward Arab-bashing, always politically profitable in the US. A typical example was provided last week by Republican Senator Lindsey Graham, who attacked the government for "turning port security over to a company based in the UAE, which vows to destroy Israel". Arabs may well despair at such ignorant prejudice, tinged with racism.
Underlying the controversy is another major question: Who has ultimate control over foreign investment in the US? Is it the White House or Congress? Bush wants to assert his authority in this domain, but the Congress, sensing his weakness, is seeking to exploit the situation to its own advantage.
In a sense, DP World's problems are a reflection of the UAE's extraordinary success. Americans read, with fascination and some alarm, that the world's largest aluminium plant is to be built near Abu Dhabi; that the new Dubai Aerospace Enterprise plans to spend $15 billion developing aerospace manufacturing and aviation services; that Ras Al Khaimah is to build a spaceport from which intrepid tourists can explore suborbital travel by 2008.
Just as Mittal Steel's bid for Arcelor has disturbed protectionists in Europe, so DP World's control of American ports has reminded the Western world that money, power and enterprise are moving East. Like the rise of China and India, the UAE is beginning to signal that the West's pre-eminence in each and every field may not last for ever.
Patrick Seale is a commentator and author of several books on Middle East affairs.
