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Politics, not policy, killed deal on U.S. ports
San Francisco Chronicle


March 11, 2006

WASHINGTON - The collapse of the Dubai port deal was a victory for the politics of fear.

Democrats saw an opportunity to exploit the terrorism anxieties that have been used against them for the past two elections. Republicans faced the prospect that following their president could cost them the November midterm elections.

The result was an extraordinary bipartisan consensus to stand up to President Bush and shut Arabs out of U.S. ports, killing a deal that security experts generally agreed presented no threat.

Fear of foreign investment has been a factor in American politics at other times over the past century: the United States confiscated German assets prior to World War I, and Congress expressed alarm over Japanese investments in the 1980s and Chinese investments in the past few years.




But fear of terrorists in general, and Arab Muslims in particular, has been the driving force of American politics since Sept. 11, 2001.

Bush's unrelenting - exaggerated, according to his critics - campaign against terrorism underpinned the environment that doomed the port deal. Elevated terror warnings from the Department of Homeland Security, the war in Iraq and regular admonitions in presidential speeches of the looming danger have conditioned many Americans to anticipate the worst.

A Washington Post/ABC News poll published Thursday found that 1 in 3 Americans believe "mainstream Islam encourages violence against non-Muslims," and nearly half of Americans surveyed have an unfavorable opinion of the religion. The anti-Muslim views are stronger than those expressed even during the anxious months immediately following the 2001 terrorist attacks.

Against such a backdrop, the port deal stood little chance.

Until the past month, the security issue has been used most effectively by Republicans. Bush's top political aide, Karl Rove, signaled that it would be a big issue once again for Republicans in the 2006 congressional elections, telling party activists earlier this year that Democrats "have a pre-9/11 view of the world."

This time, the White House left itself vulnerable by failing to consult with Congress and lay the political groundwork for what it regarded as an inconsequential business transaction - and Democrats pounced.

Dubai Ports World announced in November a $6.8 billion bid to buy a British firm that among its activities managed terminals at six major U.S. ports, including New York. The bid was reviewed by a 12-agency federal panel and approved Feb. 10.

About a week later, Democratic Sens. Chuck Schumer of New York and Frank Lautenberg of New Jersey began warning that the nation's security would be jeopardized, and the issue quickly exploded into the No. 1 topic on talk radio and cable TV.

"There is a cycle of backlash against foreign ... investors at times of insecurity in the U.S.," said David Marchick, a Washington attorney and co-author of the soon-to-be-released book "U.S. National Security and Foreign Direct Investment."

"This episode will hurt U.S. interests because we're alienating one of the few Arab countries that has actually cooperated with the U.S. in the war on terror," said Marchick, a former Clinton administration official.

Dismissing such guidance, members of both parties called for the deal to be investigated further, and this week a House committee voted 62-2 to block it.

One House Democrat, Rep. Harold Ford of Tennessee, produced a television commercial for his coming Senate run in which he is shown walking through the Port of Baltimore as pictures of a member of the Taliban, wearing a black turban, and two Sept. 11 terrorists are shown. "I'm running for the Senate because we shouldn't outsource our national security to anyone," Ford says in the ad.

Republicans, facing a disgruntled electorate and a president whose approval ratings are below 40 percent, did almost nothing to stand in the Democrats' way. The deal collapsed after Republican leaders told Bush at the White House Thursday that it was going to be killed in Congress despite his threat of a veto.

Privately, many Democrats conceded the xenophobic and anti-Arab strains to their rhetoric made them uncomfortable. But opinion polls that showed the issue hurting Bush's popularity and GOP chances in November prompted them to step up their attacks.

"The Democrats just out-Roved Rove," said James Zogby, president of the Arab American Institute, describing congressional pressure to scuttle the deal as "shameless, absolutely disgraceful behavior."

Democrats insisted their cause was not anti-Arab but applied to any foreign operations at U.S. ports, and they pushed measures to require that U.S. companies be the only ones allowed to manage terminals. The legislation would fundamentally alter most of the nation's largest ports, including the Port of Oakland, where terminals are managed by companies headquartered in Japan, Singapore, Denmark and Korea.

"This is not aimed at any company, it's not aimed at any country, it is aimed at trying to send a big wake-up call to our own government that we've not done what we need to do on security in our ports and so much else that has basically been neglected since 9/11," said Sen. Hillary Clinton, D-N.Y.


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