Wednesday, February 22, 2006

Trust, But Verify

The list continues to grow of U.S. lawmakers who want to block a deal that would give a United Arab Emirates-based company management of six major U.S. seaports. The $6.8 billion friendly takeover by Dubai Ports World of the British-based Peninsular and Oriental Steam Navigation Co. (P&O), which currently directs commercial operations at the six U.S. ports, is to be completed in a few weeks. The deal -- which would affect the ports of New York and New Jersey; Philadelphia, Pennsylvania; Baltimore, Maryland; Miami, Florida; and New Orleans, Louisiana -- has triggered security concerns among American lawmakers and the public. But there is less concern in 18 other countries where P&O has about 100 operations. The UK government says merely it is one company taking over another and observers detect political point scoring and racism as much as genuine security concerns.
While sorry to see a venerable British company bought by an overseas competitor, the attitude is: that's business. That lack of concern comes as no surprise to some security experts who say the Dubai port has one of the best safety records. "This is an efficient port ... well run. Security has been 100 percent," says Middle East expert Robert Springborg. "They have had no incidents there. They trade with everyone. They've traded with the Islamic republic in Iran since 1979 when it was created. They trade with the Saudis of course. So they trade with everybody and do it extremely efficiently," Springborg added. The U.S. ports in question are and will continue to be owned by state or local authorities and others rent space from them.
It is a different situation in the UK where ports were privatized years ago. P&O owns none of them but is a joint operator of Southampton port. Still, only 4 percent of its business is in Britain and just 6 percent in the U.S. Most of its business is now in fast-growing Asia, which is the main reason P&O was a takeover target for Dubai Ports World. The security criticism is a red herring anyway, according to analysts, who say that for the most part P&O only handles the logistics in ports. "When you listen to the way some of the lawmakers have talked about it, they've been talking about it as if this company is going to control the whole port of New York and New Jersey," says Robert Wright of the Financial Times. "That's very far from the case." Each country has its own port security systems in place but most of the containers that go in and out are unchecked. Security has more to do with theft. Analysts are puzzled by the outcry in the U.S. because port security there is run by federal agencies along with the states and this will continue to be the case.