Weighing the Dubai Ports Deal

By Daniel Griswold

Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute in Washington.

March 22, 2006

"President Bush, trying to put down a rapidly escalating rebellion among leaders of his own party, said Tuesday that he would veto any legislation blocking a deal for a state-owned company in Dubai to take over the management of port terminals in New York, Miami, Baltimore and other major American cities," The New York Times reports."

"Mr. Bush issued the threat after the Senate majority leader, Bill Frist, and the House speaker, J. Dennis Hastert, publicly criticized the deal and said a thorough review was necessary to ensure that terrorists could not exploit the arrangement to slip weapons into American ports. Mr. Bush suggested that the objections to the deal might be based on bias against a company from the Middle East, one he said was an ally in fighting terrorism."

Daniel Griswold, Cato's director of the Center for Trade Policy studies, comments on the Dubai port deal: "To guard our security, foreign investment in U.S. ports should be reviewed on a case-by-case basis. Just as it would be wrong to automatically approve any and every foreign investor in our port infrastructure without question, it would be equally wrong to unthinkingly reject foreign investment just because of where the investor is based. Contrary to what Sen. Graham and other critics have claimed, Dubai Ports World would not be in charge of security at the U.S. port facilities it would be managing. That responsibility remains firmly in the hands of the U.S. Coast Guard and the Customs and Border Protection Agency.

"The demagoguery surrounding this issue has the potential to do serious damage to our efforts to build alliances with moderate regimes in the Middle East. The United Arab Emirates has cooperated with the United States in our war on terrorism. Its capital of Dubai has become an important hub for commerce and free enterprise in the region. We are currently negotiating a free trade agreement with the UAE. What sort of signal does it send to moderates in the Middle East who are seeking to engage in the global economy if we reject their investment in the United States simply because they are Arabs?"