VARIOUS: House of Representatives votes to snub Arabic company and defy President Bush over US ports deal.

Record ID: 492350

  • Title: VARIOUS: House of Representatives votes to snub Arabic company and defy President Bush over US ports deal.
  • Date: 9th March 2006
  • Summary: (MUTE) INVESTORS MONITORING STOCKS ON DEALING FLOOR
  • Embargoed: 24th March 2006 12:00
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  • Topics: International Relations,Industry
  • Reuters ID: LVABBSW92LDHY5V09D4ORCKRHZ32
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  • Story Text: A U.S. House of Representatives committee on Wednesday (March 8) voted overwhelmingly to block an Arab-owned company from managing American ports, defying President George W. Bush who has vigorously supported the deal.
    By a vote of 62-2, the House Appropriations Committee approved a measure to stop the state-owned United Arab Emirates company Dubai Ports World from managing six U.S. ports.
    A vote by the full House could come next week on the legislation, which was attached to a must-do bill providing more emergency funds for the war in Iraq and for rebuilding Southern states hit by hurricanes last year.
    Speaker of the House Dennis Hastert said: "We're talking about the safety of our children here and we have some concerns about the safety of this country and the port deal."
    Since word of the deal broke last month, lawmakers have complained about security risks if ports management was turned over to firms from countries that in the past were sympathetic to terrorist activities.
    Over the past year or so, Democrats have accused Bush and the Republican-controlled Congress of seriously underfunding U.S. port security efforts, including checking ship containers for possible weapons of mass destruction.
    The Bush administration says concerns about the deal are unwarranted and the United Arab Emirates has been a valuable ally in fighting terrorism after the September 11 2001 attacks.
    Management of the U.S. ports was included in a 6.85 billion U.S. dollar (USD) deal in which Dubai Ports World would take over the global assets of Britain-based port operating company P&O.
    In Dubai, opposition to the deal could lead to wealthy Gulf Arabs thinking twice before investing in the United States.
    Investors may instead consider injecting their funds into other countries such as China, Asia and the European Union, the United Arab Emirates Minister of Economy Sheikha Lubna al Qasimi said.
    "What is happening now is that this is a straightforward commercial business deal that has been interfered with by politics. This means that there has been a slow down or some kind of delay to finalise this business deal. This of course could not just have an impact on Arab and Gulf investors, it will have an impact on any country that would like to invest in America, or has any thought of investing in the US.
    "The United States is looked at as a country with a strong economy and has a lot of opportunities for investors. There could be (now) hesitation to invest in the United States."
    Arab investors are likely to factor more political risk into any future high-profile U.S. investments. High oil prices have left energy-rich Gulf Arab states flush with funds and led to an economic boom in the region and analysts say Gulf Arab cash flows are becoming increasingly important to the global economy.
    Ever since the Sept. 11, 2001 al Qaeda attacks on the United States, investors in the world's biggest oil exporting region have feared their assets in the West would be targeted for security reasons.
    The suicide hijackers were all Arabs and most of them were Saudis. U.S. Congressmen have used this fact to lobby against the Dubai Ports World take-over but Gulf officials have dismissed their concerns, citing their strong ties with the Bush administration, long-standing military cooperation with Washington and their efforts to close loopholes used by al Qaeda militants pre-Sept. 11.
    "Today in the United Arab Emirates, U.S. navy ships visit on an annual basis, about 600 visits a year, to Jebel Ali port and this is part of the family of Dubai Ports World. So there is a huge trust for the American government for their U.S. naval ships for them to be here. Also, their aircraft carriers have been coming since the Kuwait war. They were in the United Arab Emirates, so this reflects the trust between the United States government and the United Arab Emirates," Shiekha Lubna Al Qasami told Reuters.
    Several Gulf Arab investors say they would prefer to put their money into local stock markets, which have hit record highs in recent months, than be subjected to U.S. scrutiny.
    "Whoever goes there (United States) faces a lot of complications either security-wise or investment-wise or anything you want to do has to be investigated by the United States government. This is not like it was before, before it was a lot easier for Arabs. Now they have put laws that we find impossible to overcome," one investor said.
    Emirates Securities is one of the UAE's largest brokerages and its managing director, Mohammed Ali Yasin, said that if the Dubai Ports World deal falls through, Arab investors may turn away for from investing in the United States.
    "I believe that if this deal fails we might see investors' money recirculating in the markets and that Arab investors might stop transferring their money to the global markets and the money might be directed to their local markets. These could benefit from added liquidity due to the statements that we have heard recently," Yasin said.
    The backlash against the deal is seen by some in the region as blatant discrimination and proof of a U.S. phobia of anything Arab.
    Analysts estimate Gulf funds available for investment in foreign assets would increase by about 130 billion USD a year until 2007 -- about 16 percent of the external funding needed to cover the U.S. current account deficit. Analysts say Washington can not afford to lose these funds.
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