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GOP working on solution to ports deal

Voluntary 45-day investigation would address security issue

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Department of Homeland Security
United Arab Emirates
Mergers - Acquisitions - Takeovers

WASHINGTON (CNN) -- Republicans in Congress are crafting a solution under which the controversial deal allowing a state-owned Arab company to run some terminals at six U.S. ports could move forward.

The agreement would first have to pass a 45-day investigation focusing on the national security implications of the deal, several sources linked to the talks said.

Senate Majority Leader Bill Frist of Tennessee is encouraging DP World to ask a government review panel to kick-start the investigations, which is the best way to convince lawmakers the transaction won't jeopardize national security, a Frist aide said.

DP World, a company controlled by the United Arab Emirates, declined to comment Saturday.

P&O, the British company selling its operations at six major U.S. ports to DB World, has operations in 23 U.S. port cities. But it does not a have a monopoly at any of the ports to be sold, according to the company's Web site.

The Department of Homeland Security has released a document stating that DP World, which plans to take over some operations from British-based P&O in a deal worth $6.8 billion, will not "operate or manage any U.S. port."

The deal has been stalled amid bipartisan concerns over security. But if it goes through, DP World will operate 11 of the 43 terminals in the six ports: two of 14 in Baltimore, Maryland; one of five in Philadelphia, Pennsylvania; one of three in Miami, Florida; two of five in New Orleans, Louisiana; four of 12 in Houston, Texas; and one of four in Newark, New Jersey, according to the Department of Homeland Security news release.

P&O also has service operations in 17 other cities, including New York, according to its Web site, which refers to the company as "the largest independent stevedore and terminal operator on the U.S. East and Gulf coasts with operations in most ports from Maine to Texas."

According to a dispatcher at the Dix-Fairway terminal in Corpus Christi, Texas -- one of the cities where P&O operates -- such services include container repair, cargo storage and stevedoring, which is the loading and unloading of cargo.

DP World's plans to buy P&O's operations has caused a bipartisan uproar in the United States, where politicians have opposed the deal because the company is owned by the United Arab Emirates. (Watch how security concerns forced DP World to postpone the takeover -- 2:09)

Allaying security concerns

Under the proposed compromise aimed at simmering congressional concerns, DP World would have to request the special investigation, and it is not clear whether the company would.

GOP sources, however, say that lobbyists are encouraging DP World to embrace the proposal.

The White House has resisted calls to subject the deal to that level of scrutiny, saying the earlier review was thorough and addressed national security questions.

Though the White House says this level of review is unnecessary, it could prove to be a handy exit strategy to end a dramatic face-off with the GOP leadership and ultimately allow the deal to go through.

The deal underwent a 30-day review before it was initially approved, but the 45-day review will focus almost exclusively on national security and it would involve more senior administration officials.

UAE history

Critics say the UAE has had questionable ties to terrorists in the past and that its banking hub in Dubai was used to funnel money linked to the September 11, 2001, terrorist attacks on New York and Washington, D.C.

There is concern among some that allowing the company to operate some terminals in U.S. ports will compromise national security, but the White House and DHS have vehemently defended the transaction.

In its news release, the DHS states that U.S. Customs and Border Protection and the Coast Guard, often with the help of local port authorities, provide security and screen cargo as it arrives in a port.

"DP World will not, nor will any other terminal operator, control, operate or manage any United States port," the news release states. "DP World will only operate and manage specific, individual terminals located within six ports."

On Saturday, New Jersey Gov. Jon Corzine, a Democrat, criticized the deal, detailing the "many reasons why this transaction fails the basic test of common sense with regard to our nation's homeland security."

He said that 11 of the 9/11 hijackers traveled to the United States through Dubai's airport. Two of the suicide attackers were from the UAE.

In addition, Corzine said, "about half of the money used to finance" those attacks was wired to terrorists from Dubai banks. He added that Pakistani nuclear scientist A.Q. Khan has acknowledged working with a Dubai firm "to supply nuclear technology to Iran, Libya and North Korea."

"Dangerous men, tainted blood money and nuclear technology have moved across UAE borders," Corzine said.

He said that to protect the Port of Newark, considered by the FBI "the most vulnerable two miles in America," he directed New Jersey's attorney general and the regional port authority to file lawsuits to stop the deal. (More on lawsuits)

Corzine also said there was a difference between a foreign-owned company like P&O and one owned by a foreign government like DP World.

"Dubai is not Britain," he said, adding that "port security does not begin and end at the pier in Newark." (More on what he said)

President Bush has told reporters that the merger poses no security risk, and he has threatened to veto any legislation that seeks to block the transaction. It would be Bush's first use of the veto power.

The UAE has been a key U.S. ally in the region, a frequent stop for U.S. warships and aircraft and a supply depot for American troops in Iraq, he said. The nation also donated $100 million to Hurricane Katrina victims the week after the storm ravaged the Gulf Coast.

Faced with a firestorm on Capitol Hill, DP World agreed Thursday to delay the management takeover of the operations in the six U.S. ports, scheduled to commence March 2. (Full story)

CNN's Dana Bash, Michael McManus and Elaine Quijano contributed to this report.

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