Legislators target foreign-owned terminals, as port dispute rages
The departments of Defense and Homeland Security would have the final say on which port terminals and other infrastructure are critical to national security and need to be reserved for American businesses, Rep. Duncan Hunter, R-Calif., said Sunday about his proposal to rollback certain investments in the United States by Dubai Ports World and other foreign companies.
Hunter, the powerful chairman of the House Armed Services Committee, led a hearing last week during which he announced his intent to block the Dubai government’s purchase of port properties in the United States from a British company because the United Arab Emirates has taken a lax approach towards smugglers moving components for nuclear and chemical weapons through the country to rogue regimes such as Iran, Libya and North Korea.
Beyond stopping the Dubai deal, his legislation would force all foreign companies to surrender ownership of critical infrastructure to American firms.
Lawmakers have roundly criticized the Bush administration for failing to conduct a second-stage investigation they say is required by the law governing foreign investment in national security cases, especially when the company doing the acquiring is owned by a country that was used as a conduit by some of the Sept. 11, 2001 attackers for financial and operational support and has been a transfer point for illegal shipments of nuclear components and weapons.
The Defense Department and Department of Homeland Security would create a list of power plants, airports, ports and other infrastructure they consider critical to national security, and foreign companies on the list would have to divest their properties, Hunter said on ABC’s “This Week” program.
About three-quarters of marine terminals in U.S. ports are operated by subsidiaries of foreign companies and the legislation, if enacted, raises the possibility that some of them would be forced to sell their ownership stakes to American interests.
But Sen. Susan Collins, chairman of the Homeland Security and Governmental Affairs Committee, said Hunter’s proposal “goes too far” because it lumps trusted allies such as Canada together with the UAE, which she said has a mixed track record on terrorism “I don’t think we need a blanket prohibition,” Collins said.
Former Sen. John Edwards, who unsuccessfully ran for vice president in 2004 alongside Sen. John Kerry, sided with Hunter in an interview on the NBC talk show “Meet the Press.”
“I think that this is sufficiently important to the safety and security of America that American companies should be doing it. I would start by saying companies that are owned by foreign governments should not be operating or providing security for our ports.
“I’d like to go further than that and say foreign companies shouldn’t be doing this. We ought to be doing it ourselves,” Edwards said, adding that such a solution avoids discriminating against an Arab country.
Most military and security experts continue to maintain that the DP World sale doesn’t pose a threat because security is a function of how the U.S. regulates port facilities, not who owns them. The best way to protect ports is to work with foreign governments and the private sector to implement security measures for the entire global maritime trading system to make sure the cargo and vessels arriving at the port are safe, they say.
“Port security actually starts abroad. You have to start with the ports overseas that are actually loading the containers that are coming to America. It’s too late once they reach our shores,” retired U.S. Army Gen. Wesley Clark said on “This Week.”
“Even if we owned every port in American that wouldn’t be adequate for port security, because the security has to start over there. We have to work with the people in Dubai, in Rotterdam, in Korea, in China because that’s where the threats originate.
“There’s no walling off of America — we’re in a global economy,” the former NATO commander and 2004 Democratic presidential candidate said.
Plus, it would be difficult to define what constitutes a pure American company because a domestic company could have foreign owners or a U.S. multinational could have its headquarters overseas.
Banning foreign companies is not the answer, agreed James Carafano, a senior research fellow at the Heritage Foundation, at Thursday’s House Armed Services Committee hearing.
“While our ports are vulnerable, I think we miss the point if we think we can somehow make our ports safe by turning them into little Fort Knoxes or little Maginot Lines. You make ports safe by keeping terrorists out of the ports. And it’s about making the maritime system safe. And it is the system that is the critical infrastructure, not the port,” he said.
“Terrorist tradecraft does not involve high-profile purchases of companies. Terrorism infiltration, like criminal smuggling, involves penetration by individuals, often at very low levels. That is a challenge for any company” he added.
Hunter poses a major roadblock for DP World’s investment because he tends to express the mood of Republican legislators in the House, who appear ready to break with President Bush on the controversial port sale. Opposition within Bush’s own party to DP World’s takeover of container terminals in six major U.S. ports and other services on the East and Gulf coasts has not abated, as the White House had hoped, since DP World’s offer 10 days ago to delay taking full control of U.S. terminals from Peninsular and Oriental Steam Navigation Co. to give the Bush administration time to conduct a more thorough 45-day investigation.
Hunter was instrumental in getting Congress to ban the sale of a shuttered U.S. Naval base in Long Beach, Calif., in 1998 to China Ocean Shipping Co. (COSCO).
At the time, Hunter said the size of the 144-acre terminal made it much too difficult for the Customs Service and intelligence agencies to monitor all shipments compared with subleasing space at someone else’s terminal.
Hunter charges that COSCO is an arm of the Chinese military, which was implicated in a seizure of 2,000 Chinese-made AK-47 sub-machine guns bound for street gangs in Los Angeles, and transported components and material from China to Pakistan for use in that country’s nuclear weapons and ballistic missile programs. COSCO also shipped heavy artillery and ammunition from North Korea to Syria, as well as weapons and spare parts from North Korea and China to both Iran and Iraq, he said.
COSCO now operates a joint cargo handling venture with Eagle Marine Services at a single terminal in the Port of Long Beach. Eagle Marine is a subsidiary of the NOL Group, which is owned by the government of Singapore.
Meanwhile, Collins said the special panel that provides security clearances for foreign investments in the United States needs to be managed by the Department of Homeland Security instead of the Treasury Department.
The Committee for Foreign Investment in the United States (CFIUS) is “too weighted towards investment concerns when the purpose needs to be national security,” Collins said.
She and ranking Democrat Joseph Lieberman, Conn., plan to introduce legislation this week to reform CFIUS before it starts its review of state-owned Dubai Ports World’s takeover of Peninsular and Oriental Steamship Navigation Co.’s U.S. marine terminals and stevedoring services.
“I think we need to scrap the committee, start over again, constitute it within the Department of Homeland Security, have the DHS secretary chair it, and have a member of the intelligence community on it,” Collins said. The administration should conduct a broader review and consult Congress, she added. CFIUS is a panel comprising representatives from 12 Cabinet-level agencies, led by the Treasury Department, that looks at the national security threats posed by the sale of U.S. companies to foreign investors. The vast majority of foreign acquisitions are routinely reviewed and approved by mid-level policy aides at each department and its component agencies. On rare occasions when an agency has voiced dissent, the case is referred to a more intensive, 45-day investigation, followed by a recommendation to the president by the Cabinet secretaries themselves. Only 25 out of some 1,500 cases during the past 18 years have become full investigations.
The current set up is “deeply flawed,” Collins said.
Congress is pressuring the administration to make sure the outcome of the new investigation isn’t preordained. Many lawmakers were upset last week when President Bush indicated that he hadn’t changed his mind in favor of the sale. Administration officials have testified that they welcome the extra 45-day period as an opportunity to educate Congress and the public about the merits of the sale, leaving the impression with many members that CFIUS did not intend to open up new lines of inquiry into DP World and the UAE’s possible links to terrorism.
A group of senators on Friday wrote Majority Leader Bill Frist and Minority Leader Harry Reid asking them to make sure that Congress is kept informed about the investigation, is provided 30 days to review the final report and has the opportunity to disapprove the deal if security concerns are not addressed. Sen. Charles Schumer, D-N.Y., put on hold legislation with those goals when the Bush administration promised to conduct a 45-day review.
Hunter reiterated Sunday that the UAE cannot be trusted to operate in U.S. ports because of its track record facilitating nuclear weapons proliferation, including a case in 2003 when the country allowed 66 American-made nuclear triggers to be sent to Pakistan over U.S. protests.
President Bush didn’t get intelligence briefings about the UAE’s role as a transshipment hub for nuclear components because CFIUS conducted a “superficial” review the first time, Hunter said, adding he thinks the president will change his mind about the sale once he learns about UAE’s role in weapons proliferation.
The UAE “has a reputation as being a place where you can ship something with anonymity” because the shipper and buyer are allowed to mask their identities by using front companies, he said.
“Only if the national security concerns are satisfied should the deal go forward,” Collins said.
DP World Chief Executive Officer Ted Bilkey, interviewed on CNN, defended the company’s record on security.
“When you look at any port operation, you have to distinguish between products coming in and being re-exported and from products sitting in transshipment mode. Transshipment means that you don’t inspect the box,” he said.
Clark and Edwards said the debate about port ownership ought to be used to jump-start initiatives to improve port security, which they said have not gotten enough attention after 9/11. Legislators who have made similar calls to action frequently suggest the country needs to physically inspect all ocean containers, an idea that importers and carriers have resisted in favor of targeted searches because of the potential impact on the flow of commerce.
The government is not inspecting containers, doesn’t have the right radiation detection monitors and doesn’t have a handle on who has legitimate access to the ports, Clark said.
“Number one, we ought to be moving toward the goal of screening all containers. We also ought to make sure that we have a tracking system so that we know what’s happened to them in transit,” Edwards said.
“And then last, we need to figure out a way — and there are seals available that will do this — to make sure that these containers have not been tampered with. So they’re very specific practical things that have not been done by George Bush and this administration that very much need to be done,” he said.
U.S. Customs and Border Protection officials have said they hope to certify a tamper-evident container security device this year.
The port deal has proven to be a political bonanza for Democrats who have used the controversy to burnish their homeland security credentials at the expense of the president, whose strength largely derived from his image as tough on terrorists.
Democrats used their weekly radio address Saturday to call for an immediate vote on the port deal, a “dramatic increase” in screening of arriving cargo and more resources for the Coast Guard.
“I was outraged to learn that the president wanted to outsource operations at some American ports to the United Arab Emirates,” said Francine Busby, the party’s candidate for the vacant seat of California Rep. Randy “Duke” Cunningham, who was sentenced to eight years in prison for accepting bribes from defense contractors.
Rep. Harold Ford, who is campaigning for senator in Tennessee, is prepared to run this week the first political advertisement exploiting the port sale. In a clip from the ad shown on news programs, Ford speaks out against “outsourcing” national security to foreign countries at the Port of Baltimore, one of the ports at which DP World would acquire terminals.
Hunter said the Democrats won’t be able to use the port sale against Republicans because former President Clinton has provided advice to the government of Dubai on how to get the deal approved even though is wife, Sen. Hillary Clinton of New York, is fighting the sale and introduced a bill prohibiting foreign governments from owning U.S. port facilities.
President Clinton’s office has since released a statement saying he supports legislation against foreign government ownership of port property.
Rep. John Murtha, D-Penn., a decorated war veteran who challenged President Bush to withdraw troops from Iraq, said on CBS’s “Face the Nation” that he would probably vote against the DP World transaction right now, but indicated he was willing to keep an open mind because he doesn’t know enough about the subject to make an informed decision.
Hunter predicted the DP World sale will be blocked, but Collins said it was too soon to tell.
A British court has tentatively sanctioned the final contract between P&O and DP World, but has withheld final approval while it considers an objection today from one of P&O’s U.S. partners. Under the revised terms of the deal, DP World would acquire the entire company but hold the North American portion at arms length from management while proceedings in the United States continue.