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.
We have to face the fact that people who don't like us, and these need not just be people in al Q'aeda, have found a way to leverage weak assets to hit us hard. This change is permanent.
How we are going to organize ourselves for the long haul to prevent terrorist acts, and mitigate the impact of those that (will) get through, without hobbling our liberty and privacy, and while avoiding other exorbitant costs (The war on terror ).
In the Dubai Ports World controversy this issue is raised in the form of the specific question: how do we produce an acceptable level of security in our ports, and for the people who live near them, without failing to achieve our other objectives?
We have a lot of tools to enhance security. In addition to supervision of port management - the issue in the present instance - we have foreign intelligence work, diplomatic and security cooperation with foreign countries exporting to the US, electronic and human monitoring in the ports, investment in USCG or US Customs human infrastructure, and so on.
To some extent these tools are substitutes for each other. Each of these tools has its own costs, and the use of each changes the level of risk we face by different amounts. Each undoubtedly produces decreasing reductions in risk as more of it is used. What is the right balance between further reductions in risk and the increasing costs of preventing it, and the right balance between the tools used to bring risk to any given level? (this Washington Post story suggests that the supervision tool might have modest benefits compared to other actions we could take: Port Problems Said To Dwarf New Fears ).
The lowest level of the port management supervision tool is a total lack of regulation. From there, increasing the intensity of the use of this tool moves through something like the current CFIUS review process, through an enhanced CFIUS process (possibly with stricter levels of approval criteria), through banning of foreign port management firms, through state control of port management. As we use this instrument more intensively, we get a smaller and smaller "bang for the buck."
Port security is not my field, but I suspect the CFIUS or enhanced CFIUS process gives us a lot of what we're ever going to get, at a modest cost. In this instance an inter-agency committee, chaired by Treasury, and with representatives from Defense, State, Homeland Security and the National Security Council, reviewed the proposed purchase, and approved it - unanimously - with conditions (see selections below from Washington Post stories). Management of the review was in the hands of Homeland Security. (It is disturbing that CFIUS apparently ignored a requirement for an additional 45 days of review in the case of state owned companies).
Banning of foreign firms will be costly in terms of higher in lost efficiency and economic growth and competitiveness, comprehensive banning of foreign firms will come at a high cost.
Without international competition for the right to manage ports, domestic or state management might stagnate, and our transportation infrastructure could become less efficient and progressive. To the extent that we wall ourselves off from competition by the most efficient port management companies, using the best techniques, management, and technology, transportation costs will be higher.
Would this step even enhance the use of other security tools? If port management were taken over by an agency within Homeland Security, interagency cooperation with other Homeland Security agencies would be facilitated, but if port administration were relatively stagnant, the effectiveness of other tools might be reduced.
That, years after 9-11, port security risks in the US remain high (Port Security Is Still a House of Cards) has very little to do with foreign ownership of ports, and a lot to do with our unwillingness to incur the social costs of increasing security levels. Infrastructure and manpower costs alone would be high. But it would also mean long delays in deliveries through the ports, higher costs for imports, delays in imports, increased need for domestic inventories, and slower growth. Preventing foreign countries, including those of allies in the Arab world, from investing in port security, is not going to change that.
Selections from Washington Post:
What are the security issues? Jim VandeHei and Jonathan Weisman (Washington Post, Feb 23, Republicans Split With Bush on Ports):
Joseph King, who headed the customs agency's anti-terrorism efforts under the Treasury Department and the new Department of Homeland Security, said national security fears are well grounded.
He said a company the size of Dubai Ports World would be able to get hundreds of visas to relocate managers and other employees to the United States. Using appeals to Muslim solidarity or threats of violence, al-Qaeda operatives could force low-level managers to provide some of those visas to al-Qaeda sympathizers, said King, who for years tracked similar efforts by organized crime to infiltrate ports in New York and New Jersey. Those sympathizers could obtain legitimate driver's licenses, work permits and mortgages that could then be used by terrorist operatives.
Dubai Ports World could also offer a simple conduit for wire transfers to terrorist operatives in the Middle East. Large wire transfers from individuals would quickly attract federal scrutiny, but such transfers, buried in the dozens of wire transfers a day from Dubai Ports World's operations in the United States to the Middle East would go undetected, King said.
It's not clear to me that these issues are unique to the business of port management, or to Dubai Ports World.
How did the review process work: Jim VandeHei and Jonathan Weisman (Washington Post, Feb 23, Republicans Split With Bush on Ports):
At the Treasury Department, the Committee on Foreign Investments in the United States (CFIUS), which includes Cabinet officials and White House aides, examines sales with potential national security risks and usually attracts little attention.
Administration officials did not consider the sale of port terminal management to a Middle Eastern company dangerous or potentially controversial, White House aides said. Foreign-owned companies including a Chinese operation have controlled terminals at various U.S. ports for years -- and lawmakers have rarely complained. The White House said intelligence officials reviewed the sale and raised no concerns.
In a private briefing for House aides late yesterday, administration officials from the departments of State, Defense, Treasury and Homeland Security said the CFIUS met only once during a 23-day review of the sale and that the few objections raised were quickly addressed.
A Homeland Security official, for instance, argued successfully that the UAE company should be required to open its books without the threat of subpoena, participants said. Dubai Ports World agreed. Administration officials said they were trying to get a copy of that agreement to provide to lawmakers. The Associated Press reported last night that the administration, before approving the ports deal, secretly required the firm to cooperate with future U.S. investigations.
Under a 1993 amendment to the law that helped create the review panel, a more rigorous 45-day investigation is automatically required if "the acquirer is controlled by or acting on behalf of a foreign government" and the acquisition "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."
Patrick Mulloy, a member of the government-appointed U.S.-China trade commission and a critic of the approval process, said that Treasury officials throughout the Clinton and Bush administrations have routinely ignored the 1993 language.
"The culture of the department is to oppose [the longer review] as an impediment to foreign investment," he said.
More on the review process: Paul Blustein, Washington Post, February 23 (Ports Debate Reawakens Foreign-Investment Jitters):
The dispute has focused fresh attention on a secretive interagency panel, the Committee on Foreign Investment in the United States, which scrutinizes foreign purchases of U.S. companies for potential national-security problems. The committee includes representatives from 12 agencies, including the departments of Defense, Treasury, State, and Homeland Security, as well as White House offices such as the National Security Council. Having vetted the Dubai Ports World takeover of the British terminal operator, Peninsular and Oriental Steam Navigation Co., the panel's members unanimously agreed that the deal could go ahead. Had any of them dissented, an additional 45-day investigation would have been required.
The failure to insist on the extra investigation has drawn some of the harshest criticism. CFIUS has a bias in favor of approving deals, stemming from the fact that the Treasury chairs the panel, said Patrick A. Mulloy, an attorney who as a Senate aide helped draft the legislation governing foreign investment more than 15 years ago.
"Treasury has a view that we have to keep our market open to foreign investment, to help finance the trade deficit," Mulloy said. "They say that the Defense Department and others are in the meetings -- well, sure, but when you chair the meetings, and have the staff that implements the statute, you have tremendous influence."
Officials involved in the review countered that the Homeland Security Department took the lead on the review of the ports takeover because of its expertise and jurisdiction. The officials said in a briefing that the department's security experts had a positive view of Dubai Ports World because the company participates in a U.S. program to screen containers before they are put on U.S.-bound ships. Moreover, they knew that at terminals managed by the firm, vital security functions would continue to be performed by Customs and Border Protection employees and the Coast Guard and that longshoremen's unions would continue to supply other security personnel.
But asked whether the panel could have handled the issue better, Stewart A. Baker, the assistant secretary for policy at the Homeland Security Department, said: "Obviously, given all the firestorm on this one, I would think that we probably could have."
More on the the relative value of increased port supervision: Paul Blustein and Walter Pincus, Washington Post, February 24 (Port Problems Said To Dwarf New Fears ):
Shifting ownership from Britain's P&O to Dubai Ports World would not affect those arrangements at the terminals in question, company officials said. Consider, for example, the situation at the Philadelphia port, where Dubai Ports World would obtain 50 percent control over a local outfit that runs one terminal out of eight leased from the Philadelphia Regional Port Authority.
Robert Palaima, who runs the local company, said yesterday that he hires guards from a union that provides security officers and police guards under a security plan approved by the Coast Guard, which carried out a full-day inspection this week.
Cargo loading and unloading is done by work crews supplied by the International Longshoremen's Association, which Palaima described as "the most patriotic of unions." And there would be no changes in the workforce even if the Dubai Ports World takeover goes through, he said, adding: "I am sick and tired of all this uproar. We're patriots and nothing will change."
Much more serious, in the view of Petersen and other experts, are gaps in security that have nothing to do with the Dubai takeover.
"We've spent barely $700 million in federal grants to U.S. ports for security, compared with almost $20 billion for aviation security," Petersen said. "And most important, we are doing an abysmal job in assisting ports in the developing world in improving security to even minimal acceptable standards."
Since 2001, Washington has arranged for customs officials to work in 42 foreign ports with rights to inspect containers before they head for U.S. shores; Dubai was the first in its region. But that covers only 80 percent of the containers entering the United States.
"If you're an al-Qaeda operative, you're going to send a bomb from a developing country where you know those safeguards don't exist," Petersen said. "That's the key flaw. We should be investing now in the countries that pose a real threat to our national security, with more security grants. But many of these ports don't even have adequate fencing or lighting."
Revised on February 24: minor editorial changes, new reference in text to Blustein and Pincus story of 2-24, new selection from Blustein and Pincus story.
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