The Custom-House

Dubai Ports World - two legal questions

Two posts at the new "International Economic Law and Policy Blog" examine legal aspects of the Dubai Ports World controversy.

Does trade promote growth, yes but not always

Kash Mansori surveys recent papers on: Trade and growth.  His take:

"So you're the little lady who started this big war."

Neil King and Greg Hitt are suggesting that Eller & Co., a regional Florida port terminal operator, triggered the Doha Ports World controversy on behalf of one of its subsidiaries, which was embroiled in a legal controversy with P&O. ("Small Florida Firm Sowed Seed of Port Dispute," Wall Street Journal, Feb 28, page A3)

What does "P&O Ports North America" do in the U.S.?

Over the weekend I asked "What is Dubai Ports World buying?"  The answer was the management of container terminals (some but not all terminals) in six U.S. ports.

This morning I received a comment on that post from James Hamilton (Econbrowser), pointing to a UPI story from last Friday indicating that P&O was active in a larger number of ports - perhaps 21.  The UPI story is here: UAE terminal takeover extends to 21 ports .

Here is a key paragraph:

What do you do, when the bomber gets through?

The terrorist bomber won't always get through, but the odds are good that, despite our best efforts, he'll (or she'll) get through once and a while.  The damage will be reduced if  we've thought ahead.  This goes for port security.

How did the CFIUS review process work?

We have to find ways to function comfortably in the world, and at reasonable cost, despite the revolution in terror tactics pioneered by al Q'aeda (Kash is right).

Getting the security review of foreign investments right is an important part of this.  The review process has to provide a politically viable vetting of potential security issues, and an opportunity to address potential problems without necessarily stopping a deal.  The review has to be conducted in a timely manner.

So a review of the review process is important.  The Dubai Ports World controversy provides a good opportunity.

What is Dubai Ports World buying?

What is it, actually, that Dubai Ports World gets when it buys P&O?

Kash is right

We're at war with al Q'aeda, but not with terror (Confusing a Metaphor with the Real Thing, Kash Mansori, Feb 20, Angry Bear).

Terror is a tactic - you can't be at war with it.  al Q'aeda has "pushed the envelope" with terror and shown what an effective, low cost, tactic it can be.  Everyone was watching, and no one missed the significance of what they did.  al Q'aeda may go away, but terror won't.

They don't like bilateral agreements

Here's the web site of: bilaterals.org, "everything that's not happening at the WTO."

bilaterals.org is a collective effort to share information and stimulate cooperation against bilateral trade and investment agreements that are opening countries to the deepest forms of penetration by transnational corporations.

I don't think I'll agree with them much, but it looks like it might be a useful site for news and information.

In favor of the port deal

Dan Drezner makes the case: What's the big deal about the port deal?.

• Security remains in the hands of U.S. police, U.S. Customs, and USCG.
• This was vetted by the Committee on Foreign Investments in the United States (CFIUS).
• The United Arab Emirates is a long-time U.S. ally.  ("Dubai, in fact, was one of the first Middle Eastern countries to join the U.S. Container Security Initiative, which places U.S. customs agents in overseas ports to begin the screening process from a U.S.-bound cargo's point of departure." quoting Tony Karom in Time)
• Dubai Port World is a reputable company: "It operates port facilities from Australia through China, Korea and Malaysia to India, Germany and Venezuela. (The acquisition of P&O would give them control over container shipping ports in Vancouver, Buenos Aires and a number of locations in Britain, France and a number of Asian countries.)" (quoting Tony Karon in Time)

More:  (from Jim VandeHei and Jonathan Weisman in today's Washington Post - Bush Threatens Veto Against Bid To Stop Port Deal):

• Appropriate internal review: "Senate Armed Services Committee Chairman John W. Warner (R-Va.) said last night that he will convene his panel today for a public briefing to be led by Deputy Treasury Secretary Robert M. Kimmitt and five other administration officials involved in the security review of the deal. Warner was briefed yesterday by Defense Secretary Donald H. Rumsfeld and Marine Corps Gen. Peter Pace, chairman of the Joint Chiefs of Staff. The senator said he was satisfied that proper procedures were followed on the deal."
• A long time ally: "The United Arab Emirates provides docking rights for more U.S. Navy ships than any other nation in the region, Warner noted. He added: "If they say they have not been treated fairly in this, we run the risk of them pulling back some of that support at a critical time of the war."

Maybe there is an argument for revamping the operations of CIFUS to provide better communication with Congress (from the Post story):

• "The deal has already passed muster with the Committee on Foreign Investment in the United States, a secretive 12-member board that includes Cabinet members and White House officials. The panel operates behind closed doors, with little or no consultation with Congress."
• "GOP leaders are also fuming that they had not been consulted on an issue with such obvious political implications. "It's strange that the administration didn't consult Congress," a Republican leadership aide said. "They might not have had to, but it was going to be a big deal on Capitol Hill. To not know that is mystifying."

More:  Here is the useful Council of Foreign Relations background site on the issue: UAE Port Purchase Raises Outcry .