UAE firm to transfer port operations to U.S. 'entity'

WASHINGTON (CNN) -- A United Arab Emirates-owned company has agreed to turn over all of its operations at U.S. ports to an American "entity," Sen. John Warner said Thursday.

Reading a statement from DP World on the Senate floor, Warner, a Virginia Republican, said the reason is "to preserve" the strong relationship between the UAE and United States.

The announcement comes after congressional leaders reportedly told President Bush that the deal for DP World to assume some operations at six U.S. ports appeared dead on Capitol Hill.

House Speaker Dennis Hastert, R-Illinois, and Senate Majority Leader Bill Frist, R-Tennessee, delivered the news to Bush during a meeting Thursday at the White House, two Republican sources said.

The leaders told the president they would pass measures to block the deal by veto-proof majorities, sources told CNN. Bush had threatened to veto any legislation that stopped the deal.

The UAE firm DP World's purchase of P&O, the British company that manages cargo and passenger terminals at ports on the Atlantic and Gulf coasts, has stirred up intense opposition in Washington. (Read a timeline of the ports deal)

House Republicans are openly defying the president, apparently to prevent Democrats from outflanking them on national security and outsourcing issues as elections approach.(Questions about the deal answered)

The issue marks an unusual rift between Bush and House Republicans, who say they have received overwhelmingly negative comments from constituents. (Your e-mails: Should Bush change his mind?)

On Wednesday, the House Appropriations Committee essentially blocked the deal by voting 62-2 to insert an amendment into a $68 billion emergency supplemental funding bill for military actions in Iraq and Afghanistan.

The bill also includes about $19 billion in disaster assistance for the Gulf Coast for Hurricanes Katrina and Rita.

The measure could come before the full House next week when it is expected to pass by a similar large margin. The committee's approval was bipartisan, with Reps. Jim Moran, D-Virginia, and Jim Kolbe, R-Arizona, casting the only votes against it.

Rep. Jerry Lewis, R-California, chairman of the House Appropriations Committee, worked with other GOP leaders to amend the spending bill. (Watch top Republicans rock the boat on the ports deal -- 1:36)

Tensions between Bush, whose approval rating is near an all-time low, and Congress have been growing for some time, and the president's vow to veto the legislation angered many of his congressional allies.

"In politics ... sometimes the passions and the emotions can overwhelm any factual discussion," said John King, CNN's chief national correspondent. (King: Passions, emotions cloud ports debate)