In a March 10 editorial on the reported demise of the deal that would have let Dubai Ports World (DPW) -- a company owned by the government of Dubai, a member state of the United Arab Emirates (UAE) -- assume control of terminal operations at six major U.S. ports, The Washington Post adopted the Bush administration's false suggestion that there is no difference between DPW and Peninsular and Oriental Steam Navigation Co. (P&O), the British company that controlled the ports, which DPW purchased. The Post, like the Bush administration, suggested that criticism of the deal was based on DPW's Arab ownership and was therefore discriminatory. In fact, there is a key difference as a matter of law between DPW and P&O: DPW is a state-owned company, whereas P&O was not, prior to its acquisition by DPW.

On March 9, DPW announced it would divest its leases to terminals at six U.S. ports after the House Appropriations Committee voted overwhelmingly to block the deal. As The New York Times reported on March 10: “The action averted a showdown with Congress that Mr. Bush was all but certain to lose, as signaled on Wednesday by a 62-to-2 vote of the House Appropriations Committee to reject the transfer, because it allowed the sale of some terminal operations to an Arab state company.”

According to the March 10 Washington Post editorial:

No one should underestimate the potential damage. Any government in a Muslim-majority country will have to ask itself: Why take the risk of friendship? If governments find no good answer to that question, the fight against radical Islamic terrorism will suffer. Meanwhile, Arab investors may think twice before putting their money in a country where their companies risk expropriation. With the price of oil so high, Arabs are rapidly becoming a major supplier of foreign capital. This isn't a good moment for Americans to discourage foreign investment, given the nation's dependence on foreign capital (see: Congress, drunken spending by). Nor will the message -- that foreign ownership was unobjectionable when it was British but intolerable when it was Arab -- do much to advance U.S. efforts to promote equitable investment rules for its own companies abroad.

This language strongly echoes comments President Bush made at a February 28 press briefing: "[W]hat kind of signal does it send throughout the world if it's okay for a British company to manage the ports, but not a company ... from the Arab world."

As Media Matters for America noted, critics of the deal have argued that the administration ignored a federal law governing the transfer of American assets to foreign, government-owned companies. Enacted in 1988, the Exon-Florio provision established the Committee on Foreign Investments in the United States (CFIUS), the interagency panel that oversees all foreign acquisitions of American assets. As amended by Congress as part of the National Defense Authorization Act for Fiscal Year 1993, the law requires an additional 45-day review 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 its initial 30-day review of the deal, CFIUS determined that it did not raise national security concerns. But critics of the deal have noted that the UAE does not recognize Israel as a sovereign state and was one of only three countries to recognize the Taliban-led government in Afghanistan prior to the September 11, 2001, terrorist attacks. Also, they have cited a discovery by U.S. investigators that more than $120,000 was funneled through UAE bank accounts to the 9-11 hijackers, and the 9-11 Commission's finding that the UAE “ignored American pressure to clamp down on terror financing until after the attacks.” These critics contend that because DPW is controlled by a member state of a country with what is arguably a “mixed” record on terrorism, CFIUS' review of the transfer was not in accordance with the law.