In reporting on the Bush administration's decision to approve the takeover of the British firm that manages six U.S. ports by a state-controlled Dubai company, articles in USA Today and The Washington Post obscured or misrepresented lawmakers' objections to the deal, failing to make clear that their criticisms center on the fact that the acquiring company is owned by a foreign government with what The New York Times editorial board has referred to as a "mixed" record on fighting terrorism.
In reporting on the Bush administration's decision to approve the takeover by Dubai Ports World (DPW) of a British company -- a deal that will transfer control of six U.S. ports to a state-owned company -- February 24 articles in USA Today and The Washington Post obscured or misrepresented lawmakers' objections to the deal. While both articles noted that DPW is controlled by the government of Dubai, a member state of the United Arab Emirates (UAE), neither made clear in their descriptions of opposition to the transaction by members of Congress that -- as many of these critics noted -- the law requires an additional 45-day review of such deals if the acquiring company is owned by a foreign government and the acquisition "could affect the national security of the U.S."
In The Washington Post article on the lobbying efforts of former Sen. Robert Dole (R-KS) on behalf of DPW, staff writer Jeffrey H. Birnbaum correctly noted in the first paragraph that the company is "Dubai-owned." But he later reported as fact that members of Congress have "threatened to scuttle the transaction" simply because the company is Middle Eastern:
Dubai Ports World beefed up its lobbying efforts, including on Capitol Hill, after lawmakers threatened this week to scuttle the transaction. The lawmakers said they feared that national security might be compromised by letting a Middle Eastern firm manage key U.S. ports.
Birnbaum's reporting echoes the Bush administration's repeated suggestion that the widespread criticism of this deal is discriminatory and based on the company's Arab ownership. In order to make this point, the White House has repeatedly conflated DPW and Peninsular and Oriental Steam Navigation Co. (P & O) -- the British company that currently manages the ports -- omitting the highly relevant fact that, before its acquisition by DPW, P & O was not controlled by the British government or any other foreign government:
- On February 21, Bush told reporters: "I really don't understand why it's OK for a British company to operate our ports, but not a company from the Middle East."
- At a February 22 press briefing, White House press secretary Scott McClellan argued that critics of the transaction were holding "a company from the Middle East to a different standard from a company from Great Britain."
- Following a February 23 cabinet meeting, Bush said: "What I find interesting is that it's OK for a British company to manage some ports, but not OK for a company from a country that is also a valuable ally in the war on terror."
But contrary to the administration's claim -- and Birnbaum's report -- many lawmakers' objections to the transaction have arisen not from the mere fact that DPW is based in the Middle East. Rather, they cite a provision in the National Defense Authorization Act of Fiscal Year 1993, which amended the Exon-Florio provision* to require an additional 45-day investigation if "the acquirer is controlled by or acting on behalf of a foreign government" and the acquisition "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."
Sen. Hillary Rodham Clinton (D-NY) made this argument during a February 23 meeting of the Senate Armed Services Committee, at which she said that her concerns about the deal do not simply stem from DPW's Arab origins. They stem from the administration's apparent decision -- in her view -- to ignore the legal requirements of the Exon-Florio provision:
CLINTON: We've heard from numerous administration spokespeople that those of us who are raising concerns are somehow out of place because, after all, it was a British company that was engaged in these activities selling to the Dubai company.
For many of us, there is a significant difference between a private company and a foreign government entity. Under the Exon-Florio statute, which governs these foreign investments and the process that you undertook, if we are at all impacting national security, the full 45-day investigation of an investment by a foreign government is mandatory if it, quote, "affects national security."
Yet the CFIUS board voted unanimously -- according to our information -- not to conduct an investigation that, by my reading of the statute, is required. Since D.P. World is controlled by a foreign government, under the statute, the transaction requires a 45-day investigation if it affects national security.
In a February 22 USA Today op-ed, Sen. Charles Schumer (D-NY) and Rep. Peter King (R-NY) similarly argued that their criticism of the deal "has nothing to do with the fact that the United Arab Emirates ... is an Arab nation":
The Committee on Foreign Investments in the United States was established to answer these important questions of national security. Yet, in this case, CFIUS only completed a brief 23-day staff review and didn't even begin the 45-day investigation required by law when a foreign government is involved in a deal. More must be done.
Our call for increased scrutiny of this deal has nothing to do with the fact that the United Arab Emirates (UAE) is an Arab nation. Our seaports remain the most vulnerable aspect of our homeland security. Therefore, handing over their operation to a foreign government, especially one with reported terrorist ties, deserves thorough review.
While the USA Today article reported that Senate Democrats on the Armed Service Committee argued that the administration "ignored the law when they dispensed with a 45-day security review of the company," it did not explain the basis for the Democrats' argument -- that DPW is controlled by a foreign government with what critics have referred to as a questionable record on terrorism. Moreover, throughout the report, USA Today referred to DPW as a "United Arab Emirates company" and a "Dubai-based company." It was not until the final sentence of the 26-paragraph story that the article mentioned the company's foreign ownership:
Sen. Hillary Rodham Clinton, D-N.Y., said she and Sen. Robert Menendez, D-N.J., plan to submit a bill to bar all companies controlled by foreign governments from operating U.S. ports.
A February 24 Post editorial, headlined "How to Lose Friends," similarly obscured lawmakers' criticism of the DPW deal, while also parroting the administration's claim that these objections were purely discriminatory. The editorial referred to the company as "based in the United Arab Emirates," but never mentioned it is owned by the government of Dubai, a UAE member state. Further, the editorial highlighted Deputy Defense Secretary Gordon R. England's February 23 statement before the Armed Services Committee that U.S. allies should be treated "without discrimination":
If members of Congress really want to burnish their "tough on terrorism" credentials, they should start by focusing on real presidential lapses, which are sufficient, and forget about the phony ones. As Mr. England said yesterday, the war on terrorism demands that the United States "strengthen the bonds of friendship and security ... especially with our friends and allies in the Arab world." That means allies should be treated "equally and fairly around the world and without discrimination," he said. And he suggested that it is the terrorists who want the United States to "become distrustful, they want us to become paranoid and isolationist."
*CORRECTION: The original version of this item stated incorrectly that "a 1993 amendment known as the Exon-Florio provision ... requires an additional 45-day investigation if 'the acquirer is controlled by or acting on behalf of a foreign government' and the acquisition 'could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S.' " In fact, this requirement was established by the "Byrd amendment" [Section 2170(b)] to the National Defense Authorization Act for Fiscal Year 1993. The amendment modified a 1988 law known as the Exon-Florio provision.