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White House: Port deal should have gone to Congress earlier

UAE firm hires Dole to lobby amid bipartisan concern about takeover



United Arab Emirates

WASHINGTON (CNN) -- The White House said Wednesday that critics of a deal that would let a United Arab Emirates company manage six U.S. seaports are "misinformed," but conceded it should have consulted Congress earlier.

The administration's blessing of the purchase of Peninsular and Oriental Steam Navigation, which currently runs those ports, by the state-owned Dubai Ports World has sparked a firestorm of opposition on Capitol Hill.

President Bush has defended the deal and threatened to use the first veto of his presidency on any congressional attempt to block it.

A federal committee that oversees international investment approved the deal, and White House spokesman Scott McClellan repeated Bush's reassurances that the security of those ports would remain in the hands of the U.S. government.

"If this transaction were blocked, it would not change security at our ports one iota," McClellan said.

But he conceded, "We feel like Congress probably should have been briefed on this matter sooner, particularly in light of some of the false impressions that have been left in the minds of members of Congress."

P&O, a British-based company, for several years has run commercial operations at the ports in New York and New Jersey; Philadelphia, Pennsylvania; Baltimore, Maryland; Miami, Florida; and New Orleans, Louisiana. (See where the ports are).

But its purchase by an entity owned by the United Arab Emirates has raised security concerns among members of Congress from both parties. (Watch a company official defend the deal -- 7:39)

Critics of the deal note that two of the hijackers involved in the September 11, 2001, attacks came from the UAE, and the hijackers drew funds from bank accounts there. In addition, Dubai was a key transfer point for the illicit nuclear technology sales led by Pakistani scientist A.Q. Khan.

The International Longshoremen's Association, which represents dockworkers at the affected ports, Wednesday joined calls to hold up the deal for further review. The union's president, John Bowers, said the group views the agreement "with great concern."

"We cannot adequately urge the administration to promptly reconsider its position on this inexplicable development and, at the very least, to revisit its consideration with open discussion and debate," Bowers said in a written statement. "The implications are simply too important and far-reaching to leave to the surreptitious disposition of an unaccountable panel."

The Bush administration's Committee on Foreign Investments in the United States, which includes representatives of several Cabinet agencies and the National Security Council, approved the purchase in January.

McClellan said the president only "became aware of it over the last several days." He said every Cabinet member whose agencies participated in the review process then told the president they had no concerns about the deal.

And he said the emirates are "a strong ally and partner in the global war on terrorism ... someone we have worked very carefully with to crack down on terrorist financing. They work very closely with us in sharing important intelligence."

Concern in Congress

But the White House faced an outpouring of bipartisan opposition to the transaction, which is scheduled to close March 2.

Senate Majority Leader Bill Frist and House Speaker Dennis Hastert, both Republicans, urged the administration to place the agreement on hold until Congress could scrutinize it.

Frist said he would support a bill to delay the agreement unless the administration allows further investigation of the arrangement, a statement that helped trigger Bush's veto threat.

Hastert said he is "concerned about the national security implications that this could have for the safety of the American people."

Across the aisle, House Minority Leader Nancy Pelosi, a California Democrat, called for hearings and accused the administration of approving the port agreement "in secret."

Democratic Sens. Bob Menendez of New Jersey, and Hillary Clinton of New York, have introduced a bill that would block the sale of U.S. port operations to other governments.

U.S. Rep. Peter King, a New York Republican and chairman of the House Committee on Homeland Security, and Sen. Charles Schumer, a New York Democrat, already introduced a bill to put the deal on hold. (Watch how both parties are teaming up against Bush -- 1:14)

A delegation from the UAE is in Washington to lobby for the deal, and the company has hired former Senate Majority Leader Bob Dole to assist them. Dole was the Republican presidential candidate in 1996 and his wife, Elizabeth, is a senator from North Carolina.

"We will continue to work with the U.S. government in maintaining the highest standards of security at U.S. ports and will fully cooperate in putting into place whatever is necessary to protect the terminals," Ted Bilkey, chief operating officer of Dubai Ports World, said Tuesday.

Bush accused critics of the deal of applying a double standard to an Arab company when no security concerns were raised about P&O.

Reem Al-Hashimy, the UAE's commercial attache in Washington, told CNN Tuesday that her country is not offended by the controversy and said it respects the democratic process at work in the United States.

But she said the outcry was unexpected, because the UAE's cooperation with U.S. antiterrorist efforts dates to before the al Qaeda attacks on New York and Washington.

Foreign-owned companies operate many ports in the United States. In Los Angeles, California, companies from China, Denmark, Japan, Singapore and Taiwan lease operations.

Administration officials are scheduled to discuss the sale Thursday with the Senate Armed Services Committee, said the committee's chairman, Sen. John Warner, a Virginia Republican. (Watch what role the UAE plays in the war on terror -- 1:57)

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