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Roy Munson
02-28-2006, 10:31 AM
Shipping industry is baffled by port uproar in America


2006/2/24
By Evelyn Iritani, Nicolette Gaouette and Ronald D. White Los Angeles Times



An Arab company's bid to take over management of cargo terminals at a half-dozen U.S. ports has become a rallying point for critics seeking tougher port security and greater scrutiny of foreign investment in the U.S.
But trade and security experts said concerns about the Dubai purchase of Britain's Peninsula & Oriental Steam Navigation Co. were ill-founded because port security is handled by U.S. government agencies and foreign companies already control a large share of the U.S. cargo-handling business.

The focus of Congressional critics, who have vowed to block the takeover, is a US$6.8 billion deal by government-owned Dubai Ports World to purchase a British company that runs some cargo operations in New York; Newark, N.J.; Philadelphia; Baltimore; Miami; and New Orleans. They said the Bush administration failed to do a thorough investigation of the deal and should have reported its findings to Congress before giving it a green light.

Critics say the government of Dubai deserves greater scrutiny because of its connections to the Sept. 11 terrorist attacks.

Shipping specialists and business leaders said the transaction wouldn't alter the state of U.S. port security. They contend that efforts to sink the deal were already fanning anti-American sentiment in the Middle East and undermining relations with Dubai, a key Middle East ally and primary staging base for the U.S. Navy in the Persian Gulf.

They stressed that the globalized nature of the shipping industry means that it is dominated by foreign companies that will play an essential role in helping the U.S. secure shipping containers and ports, particularly overseas where the U.S. has minimal oversight.

Foreigners are already major operators in U.S. ports. Seven of the 13 terminal operators at the Los Angeles/Long Beach port complex are foreign-owned, including companies from China, Japan, Taiwan, Singapore and Denmark. Dubai Ports World's deal to buy London-based Peninsular & Oriental Steam Navigation Co., scheduled to be completed March 2, would create the third largest port operator in the world.

"There's a sense that there is a double standard here," said David Hamod, president of the U.S. Arab Chamber of Commerce in Washington.

Torpedoing the Dubai deal, less than a year after Congressional criticism sidelined a bid by a Chinese company to purchase oil producer Unocal Corp., would also send a signal to foreigners that they are not welcome in the U.S. and could trigger retaliation against U.S. companies that have large export markets in the Middle East.

"How are we going to change the hearts and minds of the Middle East if we are not going to let them join in the global markets and assume the responsibilities that go along with that and benefit from that?" asked P.J. Crowley, a homeland security expert at the Center for American Progress in Washington.

Ports pose a security concern because only a small portion of the more than 14 million containers that arrive in the U.S. every year are inspected. Many fear that the containers could easily be used to smuggle destructive weapons, such as so-called "dirty bombs," into the country. Efforts to install U.S. inspectors in foreign ports are only just beginning and funding for port security, which has increased 700 percent since the Sept. 11 attacks, nonetheless lags behind aviation security funding by a wide margin.

But Crowley and other security and port experts agreed Wednesday that blocking the sale of P&O to Dubai Ports World would do nothing to change U.S. port security.

While many criticized the administration's record on port security, they emphasized that the way U.S. ports operate means that the Dubai Ports World purchase would not alter security procedures or the make-up of the unionized workforce on the ground.

Dubai Ports Worlds has a reputation as an efficient port operator with a good security record, including early participation in the U.S. Container Security Initiative, which places U.S. customs agents overseas to screen and secure cargo, according to port experts.

DP World's chief operating officer, Edward H. Bilkey, is an American, and the Bush administration recently nominated a former DP World executive, David Sanborn, to be the U.S. Maritime Administrator.

"There are significant areas of concern in the area of port security, but this one company is not a significant security threat," said Joseph J. Bouchard, executive director of homeland security and defense at Zel Technologies in Virginia.

Representatives at the company's headquarters in Dubai could not be reached Wednesday for comment.

Dubai Ports World would not actually own the ports in question, but would operate terminals there, taking on responsibility for moving goods and ships in and out of those areas.

Changes in port management would not impact security measures, explained Leah Yoon, a spokeswoman for U.S. Customs and Border Protection. U.S. Customs and Border Protection would still bear responsibility for checking cargo throughout the port, while the Coast Guard would still be responsible for general port security. Terminal operators have no control or say over that, she said.

Ground-level workers -- the longshoremen who haul cargo on and off the containers -- would not change either.

"The fear-mongering is that a bunch of Middle Easterners are going to come over and work on the docks, and nothing is farther than the truth," said Robert Bonner, a former commissioner of U.S. Customs and Border Protection.