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February 28, 2006 [LINK]

The Dubai Ports World uproar

The latest uproar facing the Bush administration is another example of policy that is eminently reasonable in terms of substance, but which has been marred by a faulty decision-making process and lack of attention in the White House to public perception. The result has been another feeding frenzy by the mainstream media, as the trauma of relatives of 9/11 victims is being exploited by isolationists. If reason does not prevail in this case, U.S. security and economic interests may be severely damaged.

First, the substance: Last October the Dubai Ports World company, based in the United Arab Emirates, began steps to purchase a London-based port management company, and the deal was essentially finalized earlier this month for $6.85 billion. The United Arab Emirates is humble federation of principalities in the Persian Gulf, an island of Western business ethics in a turbulent sea of religious fanaticism. Think of it as a beachhead of freedom, albeit incipient freedom. These things take time. Many critics call attention to the fact that some of the 9/11 hijackers were from the UAE, but that doesn't necessarily mean very much. Indeed, port management has almost nothing to do with port security. That is the domain of the Coast Guard and the U.S. Customs Service. In today's Washington Post, C. Peter Bergsten, who has impeccable credentials as an advocate of free trade and globalization as the head of the Institute for International Economics, warns about the adverse consequences if Congress meddles in this case, and suggests some procedural improvements to prevent such a thing from getting out of hand again.

On the other hand, there is a very good reason to question this deal as promoting economic liberalism abroad: The company is owned by the UAE government! None other than Sen. Hillary Clinton pointed this out in a committee hearing last week. Indeed, we should be very leery of putting the government in charge of critical economic sectors in which efficiency is crucial -- such as, for example, health care! It doesn't mean we should never make deals with foreign state-owned firms, it's just a factor to take into account.

The grand strategy of the United States is to expand the domain of and economic freedom, setting the stage -- it is hoped -- for expansion in the domain of political freedom. It is, to be sure, somewhat risky, because some regimes such as the one in Beijing are trying to have one kind of freedom without the other, but the virtue in this strategy is that it leverages American self-confidence. Our nation's prosperity is rooted to a very large extent in our eagerness to accept business risk. Whenever we have embraced openness to the world in our history, we have reaped big economic dividends. But the big picture in this particular circumstance is centered around security, national and international. For the United States of America to turn its back on a significant ally in the very part of the world in which our foreign policy is currently focused would be blindingly stupid.

As for decision-making process, a "background article" in Sunday's Washington Post provided a brief timeline since Chuck Schumer broke the "scandal" two weeks ago. It concluded that Bush's frequent resort to citing national security as a rationale for his administration's policies have created a double-edged sword that has nicked him badly in this case. Perhaps. What is indisputable is that the Democrats have seized the opportunity to regain credibility on the security issue. Given this country's lack of attention to complex international security and economic issues, a populist wedge issue such as this one might resonate among voters who are disenchanted with Bush and the Republican leadership, possibly tipping the balance in the 2006 congressional elections. Unless Congress acts by Thursday, the sale will go through. In hopes of averting rejection, Dubai Ports World has asked for a 45-day period in which U.S. agencies will take a more thorough security review.

Finally, public perception. Most people would acknowledge, at least privately, that the real problem in this case is the way Bush handled this before and after it became a media feeding frenzy. The fact that he was blind-sided by the port deal debacle reflects very poorly on the White House staff, though he bears some responsibility for his initial stubborn refusal to compromise or consult with Congress on the matter. You know something is wrong when respectable Republican moderates like Sen. Susan Collins (Maine) in effect pander to the xenophobes among us. (You can almost hear them sneering, "We don't want no stinkin' Ay-rabs runnin' our ports!") Sen. Collins' attitude in this case is very disappointing. In the Chicago Sun Times, Robert Novak discusses the political angle, and how some Republicans such as Reps. Vito Fossela and Peter King (both of New York) caved in to the outcry. On a brighter note, Sen. John McCain spoke out forcefully against critics of the deal on ABC's "This Week" on Sunday: "The near-hysteria about this is not warranted, particularly in light of the other major crises that we're facing throughout the world." See Nevertheless, part of the problem is President Bush's loss of credibility ever since Hurricane Katrina, a lapse in managerial oversight for which he is paying very dearly.

Posted (or last updated or commented upon): 28 Feb 2006, 4: 36 PM

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