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Bush faces pressure to block port deal

Lawmakers voice concerns about takeover by Dubai-based firm

Port Newark
The Port of Newark, New Jersey, shown here, is one of the facilities affected by the deal.


United Arab Emirates
Michael Chertoff

WASHINGTON (CNN) -- President Bush on Monday faced political pressure to block a deal that would give a United Arab Emirates-based company management of six major U.S. seaports.

The Republican chairman of the House Homeland Security panel said the deal should not go through without a complete investigation.

"I would urge the president to freeze the contract, hold this contract, until a full and thorough and complete investigation can be conducted," said New York Rep. Peter King, who has been briefed on the transaction.

He said Americans can't have faith in the company involved because "there was never a thorough investigation done of Dubai Ports."

The deal -- which will affect the ports of New York and New Jersey; Philadelphia, Pennsylvania; Baltimore, Maryland; Miami, Florida; and New Orleans, Louisiana -- has triggered security concerns among some members of Congress and the public.

The Bush administration has said the UAE is a key ally in the war on terror.

Others, however, point out that two of the September 11, 2001, hijackers were from the UAE. In addition, most of the hijackers received money channeled through various sources based in the UAE, according to the Justice Department and the 9/11 commission. (Watch UAE's role in war on terror -- 1:57)

Earlier this month, shareholders of the U.K.-based Peninsular and Oriental Steam Navigation Company (P&O) approved the company's acquisition by Thunder FZE, a subsidiary of Dubai-based Dubai Ports World.

P&O directs commercial operations at the six U.S. ports. The takeover by DPW means that the Dubai company will be in charge of those operations.

On Sunday, Sen. Charles Schumer, a New York Democrat, held a news conference with relatives of some of those killed in the terrorist attacks, and denounced the takeover.

"Outsourcing the operation of our largest ports to a country with long involvement in terrorism is a homeland security accident waiting to happen," he said.

Deal 'by the book'

Administration officials Monday sought to downplay the deal, saying it was done properly and that they would not jeopardize the security of American ports.

Bush was unaware of the deal until he heard reports of the congressional uproar, presidential adviser Dan Bartlett told CNN.

"The process was done by the book," Bartlett said. "If you start deciding these issues in a guilt-by-association method, you will have a situation which has deep and harmful ramifications to the economic interests of this country."

A Dubai Ports World spokesman told CNN that the firm has received all the necessary regulatory approvals, and that the security systems in place at the ports would only get better under the new management.

"All DP World ports are [International Security Port System] certified, as are any P&O ports in the U.S.," the spokesman said. "We intend to maintain or enhance current security arrangements, and this is business as usual for the P&O terminals."

Michael Seymour, the president of P&O's North American operations, said the company "has long worked with U.S. government officials in charge of security at the ports to meet all U.S. government standards."

"We are confident that the DP World purchase will ensure that our operations will continue to meet all relevant standards," he said.

Industry official alleges 'racism'

A port security expert, meanwhile, told CNN that fears that the agreement will reduce U.S. security are based on "bigotry" and that "shameless" politicians are creating an issue they think will resonate with the public.

Kim Petersen, head of SeaSecure, a U.S.-based maritime security company, and executive director of the Maritime Security Council -- which represents 70 percent of the world's ocean shipping -- told CNN, "This whole notion that Dubai is going to control or set standards for U.S. ports is a canard ... is factually false."

Dubai Ports World, like all port owners, must abide by the Maritime Transportation Security Act passed by Congress in 2002 and International Ship and Port Facility Security codes enacted in 2004, he said. Both sets of security measures are enforced in the United States by the U.S. Coast Guard.

Petersen said DPW will be under "identical" security obligations, and said opposition to the purchase "comes down to bigotry [against] Arabs."

Petersen said the company has an "exemplary" record of security compliance certification.

Ridge: 'Legitimate' concerns

Homeland Security secretary Michael Chertoff defended the deal in appearances on talk shows Sunday. He said federal law required a review of the sale by a committee that includes officials from the Homeland Security, Treasury and Commerce departments, along with the FBI and the Pentagon.

"We look at what the issue of the threat is. If necessary, we build in conditions or requirements that, for extra security, would have to be met in order to make sure that there isn't a compromise to national security," Chertoff said on CNN.

Sen. Robert Menendez, a New Jersey Democrat, pounced on Chertoff, who is already under fire for his agency's response to Hurricane Katrina.

"You can't just simply tell us, 'Trust us,' " Menendez told reporters. "We trusted the government response to Hurricane Katrina -- and the people of the Gulf were largely left on their own."

Menendez has proposed a new law prohibiting the sale of operations at U.S. ports to companies owned by international governments, noting 95 percent of cargo reaching U.S. ports is not inspected.

Chertoff's predecessor, Tom Ridge, said that during his tenure as secretary from October 2001 to February 2005, he sat in on deals with similar national security concerns, and that he believes U.S. officials would not jeopardize national security.

But he also told CNN, "I think the anxiety and the concern [over the deal] that has been expressed by congressmen and senators and elsewhere is legitimate."

But Ridge said, "The bottom line is, I think we need a little bit more transparency here. There are some legitimate concerns about who would be in charge of hiring and firing, security measures, added technology in these ports that we'll need to upgrade our security.

"So I think it's very appropriate for the administration to go to the Hill and explain why they think they have not compromised security and, in fact, as they've announced, they will enhance and improve security," he said. "It's tough to see that right now on the surface."

CNN's Mike Ahlers, Dana Bash, Caroline Faraj, Terry Frieden, Maria Gavrilovic, Ed Henry, Phil Hirschkorn, Suzanne Malveaux contributed to this report.

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