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The little agency that created a great big stink

By
February 24, 2006

By JAMES ROSEN
McClatchy Newspapers

Five years ago — or even five days ago — it was just another obscure federal agency, one of thousands with alphabet-soup acronyms and quiet missions performed beyond the glare of public scrutiny.

Today, though, the Committee on Foreign Investments in the United States is at the center of a raucous political fight over port security — and, more broadly, at the heart of an ongoing national debate over Americans’ attitudes toward Arab nations since the Sept. 11, 2001 terrorist attacks.

President Bush’s aides acknowledged Wednesday that he hadn’t been informed of a decision by the committee — CFIUS, for acronym lovers — to approve the pending purchase by a United Arab Emirates-owned company of a British firm that helps run six major American ports.

Bush didn’t know about the deal because CFIUS, which has approved some 1,500 commercial transactions since it was created three decades ago, hadn’t told him. And the committee hadn’t told him because it decided that the deal didn’t threaten U.S. national security.

Many private port security experts agreed with that assessment. Globalization came to American seaports a decade or more ago, they said, so that as many as a third are now run by foreign companies.

"This is not unlike what is happening at many U.S. ports," Kim Petersen, president of Fort Lauderdale, Fla.-based SeaSecure, the country’s largest maritime-security company, said in an interview from Jordan. "It astonishes me that none of the politicians who are so fearful of foreign operations in U.S. ports raised any objections when China, for example, assumed control of their port operation in Los Angeles."

The U.S. Coast Guard and the Homeland Security Department, along with local authorities, maintain security at American ports, Petersen said, including inspections of the 5 million cargo containers that enter the country by ship each year.

But the decision to open six American ports to Arab operators cost CFIUS its anonymity. For Bush, the political price is proving even higher as he bears a torrent of bipartisan ire over the deal.

Rep. Sue Myrick, a North Carolina Republican, sent the president a very short but hardly sweet missive Wednesday.

"Dear Mr. President," Myrick wrote. "In regards to selling American ports to the United Arab Emirates, not just NO _ but HELL NO!"

Senate Majority Leader Bill Frist of Tennessee and House Speaker Dennis Hastert of Illinois, both normally among the Bush administration’s stoutest defenders, vowed to take a closer look at the sale of the British company Peninsular and Oriental Steamship Navigation Co. to Dubai Ports World.

Sen. John Warner, R-Va., announced that the Senate Armed Services Committee would hold a hearing Thursday on the pending sale.

Along with firms from China, Singapore, Denmark and other countries, the British company already operates terminals at various American ports.

Bush, who has vowed to veto any legislation blocking the deal, sent his senior aides scurrying across Capitol Hill and into TV broadcast studios to try to stem the controversy over the state-owned Arab company helping to operate ports in New York, Newark, N.J., Philadelphia, Miami, Baltimore and New Orleans.

"There was a very thorough review by a variety of different agencies across our government _ 14, to be specific _ including actually getting assessments from the intelligence community," Clay Lowery, assistant treasury secretary for international affairs, told reporters. "The review said there was no derogatory information against this company, and that this company did not raise . . . undue concerns about national security in the country."

CFIUS, which made that call, sounds like a sleepy congressional committee, but it is actually a high-powered, secretive inter-agency group made up of a dozen senior representatives from across the government’s military and intelligence spectrum.

The Treasury is the lead agency in CFIUS. Others with seats on the committee include the National Security Council, the State Department, the Homeland Security Department and several White House economic offices.

Ironically, an earlier spasm of public outcry over Arab economic power gave birth to CFIUS. President Gerald Ford created it via executive order in 1975 after the OPEC oil boycott sent gasoline prices soaring in the United States.

Congress codified and toughened the agency in 1988 amid yet more public angst over Japan, then seen as a rising economic superpower. A congressional amendment five years later required CFIUS to conduct a 45-day investigation of any sale in which the purchasing company is owned or controlled by a foreign government, with the probe’s findings forwarded to the president for a final decision.

Bush administration officials said repeatedly Wednesday that the takeover of the British shipping firm by Dubai Ports World had been thoroughly investigated, but they didn’t explain why the 45-day formal probe was skipped or why Bush wasn’t compelled to sign off on the deal.

Such a step has rarely been taken. Among more than 1,500 transactions received by CFIUS, only 25 prompted an investigation. Twelve were sent to the president, and only one — by the first President Bush in 1990 — was prohibited, according to the Washington Post.

Concerns over CFIUS were highlighted in September in a report by the Government Accountability Office, the investigative arm of Congress. It found disagreement among the different agencies with seats on CFIUS over the criteria for determining national security threats.

The GAO recommended that Congress act to require greater disclosure of actions taken by CFIUS and their rationales, and it said there should be more robust investigations to determine whether investments or sales involving foreign firms threaten U.S. security.

"Economic interests are important, but they shouldn’t take a backseat to national security," Ann Calvaresi-Barr, the report’s author and GAO director of acquisition management, said in an interview Wednesday. "The process has weaknesses and vulnerabilities that need to be addressed."

Petersen, though, said the review system "worked quite well" in the case of the Dubai-based shipping firm’s pending purchase of the British company. Dubai was the first port to install radiation-detection equipment, he said, and the United Arab Emirates government has worked closely with Washington on a number of counter-terrorism measures since the Sept. 11 attacks.

"The (U.S.) intelligence agencies and defense agencies are very familiar with the United Arab Emirates, they are very familiar with Dubai Ports, and they weighed in without exception in favor of this decision," Petersen said.

 

Barbara Barrett of the McClatchy Washington Bureau contributed to this report.