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Bush: I'm worried by message sent by failed port deal

UAE firm says it will transfer operations to U.S. 'entity'

President Bush speaks Friday to the National Newspaper Association in Washington.



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WASHINGTON (CNN) -- President Bush said Friday he was concerned about the "broader message" that the failed port operation deal with a United Arab Emirates company sends to other Arab allies in the U.S. war on terrorism.

"In order to win the war on terror, we've got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," Bush told a meeting of the National Newspaper Association in Washington.

"The UAE is a committed ally in the war on terror. They are a key partner for our military in a critical region." (Watch Bush vow to strengthen U.S. ties with the UAE -- 1:54)

After weeks of political debate, the UAE-owned DP World said Thursday it would transfer its operations of American ports to a U.S. "entity." (Read DP World's statement -- PDF)

The proposal to have an Arab state-owned company manage operations at six U.S. ports opened a rift between Bush and GOP allies that touched on issues such as national security, the president's plunging approval ratings and upcoming congressional elections. (Questions about the deal answered)

The president said Friday that he would not pull back from relations with the UAE.

"Outside of our own country, Dubai [the emirate where DP World is based] services more of our military ships than any country in the world," Bush said.

"We're sharing intelligence so we can hunt down the terrorists. ... I'm committed to strengthening our relationship with the UAE and explaining why it's important to Congress and the American people."

Bush maintained that the agreement would not have undermined port secuirty.

"My administration will continue to work with the Congress to provide a greater understanding of how these transactions are approved -- in other words the process -- and how we can improve that process in the future," he said.

Arab media reaction

The UAE news media generally portrayed the situation as having come to a smooth resolution.

"Under the guidance of his highness the ruler of Dubai and in the spirit of friendship between the UAE and the USA, Dubai Ports World announces its decision to turn over management of the U.S. ports to any U.S. business or entity," reported Al-Bayan Newspaper, one of many state-run publications.

But the London-based newspaper Al-Quds Al-Arabi decried "American Racism" in a headline on an editorial.

"The excuses that the U.S. Congress used to oppose this deal were not only pathetic but very racist at the same time because if a non-Arab company would have won the bid, we would not have heard all that noise from the U.S. Congress or any other American institution," the editorial said.

Deal dies on Capitol Hill

Republicans in Congress said they had received overwhelmingly negative comments from constituents about the DP World ports deal, while Bush had said any effort to stall or kill it would strain ties with a vital Arab ally. (Your e-mails: What was the controversy about?)

On Wednesday, the House Appropriations Committee voted 62-2 to thwart the deal by inserting an amendment into a $68 billion emergency supplemental funding bill for military actions in Iraq and Afghanistan.

The controversy came to a head Thursday when congressional leaders reportedly told Bush that the ports deal was dead on Capitol Hill. (Read a timeline of the ports deal)

House and Senate leaders told the president they would pass measures to block the deal by veto-proof majorities, sources said. Bush had threatened to veto any legislation that stopped the deal.

Details of transaction not worked out

DP World's announcement did not specify which U.S. "entity" would be involved in its handover of the ports, but a source told CNN that the White House believes the firm's American assets would be sold to a U.S. company.

A source involved in talks between the White House, Congress and DP World said the exact meaning of the UAE firm's statement is unclear, in part because details of the transaction have not been worked out.

"The next steps are very hard to predict at this point, either in terms of who they'll actually sell to and in terms of what it means for U.S. relations in the region," the source said.

Trade talks postponed

As Bush spoke on the scuttled ports deal, Washington announced that free-trade talks between the United States and the UAE were postponed Friday. A spokeswoman for U.S. Trade Representative Rob Portman declined to say whether the deal's failure played a role in the delay.

"The U.S. and UAE are strongly committed to making progress on our [free-trade agreement] negotiations," said spokeswoman Neena Moorjani. "In order to get an agreement that both sides can successfully implement, we need additional time to prepare for the next round of negotiations.

"This is not unusual. Just in the past few months, we've postponed rounds with Ecuador three times, Panama twice and Colombia once."

CNN's Octavia Nasr contributed to this report.

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