President worries about ramifications of failed ports deal

House pushes for review of acquisition of U.S. firms

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/03/11/MNGFDHMKFP1.DTL

Washington -- House Republican leaders will unveil legislation as early as next week demanding a congressional role in reviewing the acquisition of U.S. businesses by foreign buyers, suggesting the controversy over a now-abandoned Dubai ports deal will continue to roil congressional relations with the Bush administration.

House Majority Whip Roy Blunt, R-Mo., is drafting a bill to require congressional oversight as the administration reviews foreign business acquisitions, a role Congress has not played since the Committee for Foreign Investment in the United States was created three decades ago.

A day after United Arab Emirates-based Dubai Ports World abandoned its bid to control terminal operations at six major U.S. seaports, lawmakers and President Bush made clear the issue is not going away.

In remarks to newspaper editors, Bush said he was "concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East."

"In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," Bush said. "UAE is a committed ally in the war on terror. They are a key partner for our military in a critical region."

Flush from what they see as a victory, members of Congress appear determined to insert themselves into matters of national security that they had previously left exclusively to the president. But their aggressive response has left administration officials -- and even some colleagues -- concerned that the longer the controversy drags out, the more likely it could alienate foreign allies, dampen investment in the United States and even slow the economy.

Critics of the congressional attack on the ports deal also said DP World's withdrawal will not make the six U.S. ports any safer from terrorist attacks. But lawmakers say the controversy will spark action on measures to tighten security that have languished in Congress for months. Both the Senate and House homeland security committees said they will draft legislation in a matter of weeks.

House leaders also have decided to push ahead next week with a full House vote on legislation to kill the ports deal. The House Appropriations Committee approved the measure 62-2 on Wednesday, but rank-and-file members outside the committee have asked to go on record with their opposition.

Despite the assurances of congressional Republicans and the president, some Democrats also questioned whether DP World really committed to shedding its U.S. port assets Thursday when it pledged to "transfer" them to a U.S. entity. Bush himself said the Dubai-owned firm had "made the difficult decision to hand over port operations that they had purchased from another company."

But company spokesman Mark Dennis again refused to elaborate Friday on the company's official statement, leaving unclear whether a transfer of assets means a loss of ownership or just management responsibilities, and Democrats remain skeptical. Even one knowledgeable House Republican aide suggested the language could mean the company could maintain ownership if a buyer could not be found at the right price.

"The port deal's not dead," said Rep. Dennis Kucinich, D-Ohio.

Officials from both parties warned that if the statement proves to be less than full divestiture, Congress will move swiftly to kill it. "If nothing else, the company will ignite a thermonuclear explosion for itself and the emirate if it falls short of a sale," warned one Republican Senate aide.

Even if DP World sells its assets at the ports of Baltimore, New York, Newark, Philadelphia, Miami and New Orleans immediately, the underlying issues raised by the controversy will remain at the front of Congress' political agenda.

Administration officials struck a conciliatory tone on such legislation.

"This process for review I think can be done better, and we're going to be working with Congress, with people like Chairman (Sen. Richard C.) Shelby, R-Ala., of the Banking Committee to make sure that we improve the process," Treasury Secretary John Snow said on MSNBC.

But administration officials and some congressional allies said Congress cannot be allowed to go too far. The Committee for Foreign Investment review process was set up to be confidential and beyond Congress' reach specifically to insulate sensitive business investments from political forces, they said.

Even Sen. Charles Schumer, D-N.Y., one of the fiercest critics of the port deal, said language must be found to ensure that Congress could scuttle a deal only in "egregious situations."

"We have to figure out a way where it's not routine," he said.

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