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March 9, 2006

Dubai Ports World - A Change In Plans

Topics: Homeland Security Issues

Apparently the port security controversy over the purchase of P&O and the contracts it held for operations in six major American ports has just ended by their agreement to sell the American business to a "U.S. entity."

(...) DP World has bowed to overwhelming pressure from Congress and agreed to offload its United States ports to an American company.

(...) The surprise climbdown by DP World comes after weeks of insisting that it was going to hold on to all five ports that it acquired as part of its £3.4bn acquisition of British ports operator P&O.

(...) Only yesterday, the chief executive of DP World, Mohammed Sharaf, said that an asset sale was not on the agenda: "We have not even thought of that yet. We have a business to run - the US is part of it."

(...) However, Edward Bilkey, chief operating officer of DP World, said in a statement last night: "DP World will transfer fully the US operations of P&O Ports North America to a United States entity. This decision is based on an understanding that DP World will have time to effect the transfer in an orderly fashion and that DP World will not suffer an economic loss."

(...) It is not clear how the company would transfer the assets and not suffer an economic loss. It could sell the assets or create a corporate structure where the US business has no management ties to its parent in the United Arab Emirates.

(...) It was not immediately clear if last night's announcement from DP World would be enough to cool widespread sentiment in Congress to pass legislation to block the deal.

(...) In the statement, DP World said it was selling the ports because "of the strong relationship between the UAE and the US and to preserve this relationship."

While others are already offering opinions on this, I'm going to hold off commenting for a few days and work toward seeing a few more facts come to light. Something tells me that we not only haven't learned all there is to know about the potential security implications of the original plan, but just might know even less about the consequences of the changes in the original plan. As for the political implications, it's going to hard to sort through who ends up with the most egg on their face, and in the end, who if anyone had it right all along. Surely the pundits are going to "pundicize" and the talking heads are going to be in over-drive, however the real political and security issues on both the national and international levels are not going to be accurately determined in the near term.

Posted by Richard at March 9, 2006 9:00 PM

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