By Roxanne Tiron, The Hill
This ports deal has gone down in flames, and gone down badly. Congress rushed to legislation to block the deal, outright rejecting the 45 day investigation. DP World, seeing they were never to be given a chance, released the US assets, turning them over to a yet unnamed American company.
The controversy has ended. And now... the consequences begin.
As the House Appropriations Committee yesterday marked up legislation to kill Dubai Ports World’s acquisition of Britain’s Peninsular and Oriental Steam Navigation (P&O), the emirate let it be known that it is preparing to hit back hard if necessary.
A source close to the deal said members of Dubai’s royal family are furious at the hostility both Republicans and Democrats on Capitol Hill have shown toward the deal.
“They’re saying, ‘All we’ve done for you guys, all our purchases, we’ll stop it, we’ll just yank it,’” the source said.
Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the United Arab Emirates (UAE), the source added.
It is not clear how much of Dubai’s behind-the-scenes anger would be followed up by action, but Boeing has been made aware of the threat and is already reportedly lobbying to save the ports deal.
But when it comes to the emirates’ cooperation in the war on terrorism and in intelligence gathering, there is concern that some help may be pulled.
“If we reject the company in terms of doing the [ports] work, they are going to lose a lot of face. In the Arab culture, losing face is a big deal,” a former government official said. “We risk losing that help. It is not an empty threat.”
Dubai is a critical logistics hub for the U.S. Navy and a popular relaxation destination for troops fighting in the Middle East. On many occasions since the ports story erupted, the Pentagon has stressed the importance of the U.S-UAE relationship.
Last year, the U.S. Navy docked 590 supply vessels in Dubai, plus 56 warships, Gordon England, deputy secretary of defense, said in a Senate hearing last month. About 77,000 military personnel went on leave in the UAE last year, he added.
During the hearing, he warned about the implications of a negative decision on the ports deal: “So obviously it would have some effect on us, and I’d not care to quantify that, because I don’t have the facts to quantify it. It would certainly have an effect on us.”
Senate leaders have indicated that they would wait to take action until the new 45-day Committee on Foreign Investment in the United States (CFIUS) review is completed.
From an article in the Khaleej Times...
Analysts said the political furor was bound to provoke businesses in the world's biggest oil exporting region, which is an increasingly important source of financing for the huge US current account deficit.
'It's American double standards. Do you think that businesses and governments here won't react and even retaliate?' said Wadah Al Taha of the National Bank of Abu Dhabi.
He said the issue was likely to feature prominently in trade talks later this month between the United States and the UAE, a federation of seven emirates that includes Dubai.
The Dubai Ports row has reinforced fears in the Middle East that investments in the United States have become politically risky for Arabs and Muslims. Some Arabs say the US opposition to the deal smacks of racism.
The UAE is a close ally of Washington and a frequent port of call for American warships. Concerns are growing that the fallout from the ports row will affect US economic ties with the Gulf.
UAE Economy Minister Sheikha Lubna Al Qassimi said last week the furor could prompt other countries to divert funds away from the United States.
American businesses in the UAE warned on Wednesday that trade worth more than $8 billion between the United States and the United Arab Emirates could be in jeopardy.