Bush cut secret sweetheart deal with Arabs on port takeover


Under a secretive agreement with the Bush administration, a company in the United Arab Emirates promised to cooperate with U.S. investigations as a condition of its takeover of operations at six major American ports, according to documents obtained by The Associated Press.

The U.S. government chose not to impose other, routine restrictions.

In approving the $6.8 billion purchase, the administration chose not to require state-owned Dubai Ports World to keep copies of its business records on U.S. soil, where they would be subject to orders by American courts. It also did not require the company to designate an American citizen to accommodate requests by the government.

Outside legal experts said such obligations are routinely attached to U.S. approvals of foreign sales in other industries.

Dubai Ports agreed to give up records on demand about “foreign operational direction” of its business at the U.S. ports, according to the documents. Those records broadly include details about the design, maintenance or operation of ports and equipment. It also pledged to continue participating in programs to stop smuggling and detect illegal shipments of nuclear materials.

“They’re not lax but they’re not draconian,” said James Lewis, a former U.S. official who worked on such agreements. If White House officials negotiating the deal had predicted the firestorm of criticism over it, “they might have made them sound harder.”

The conditions over the sale of London-based Peninsular and Oriental Steam Navigation Co. were detailed in U.S. documents marked “confidential.” Such records are regularly guarded as trade secrets, and it is highly unusual for them to be made public.

The Republican head of the Senate Armed Services Committee, John Warner of Virginia, planned an oversight hearing Thursday. Warner has expressed support for the agreement, describing the UAE as an important ally against terrorism.

Rep. Peter King of New York, the Republican chairman of the House Homeland Security Committee, said the conditions are evidence the Bush administration was concerned about security. “There is a very serious question as to why the records are not going to be maintained on American soil subject to American jurisdiction,” King said.

Another critic, Sen. Charles Schumer, D-N.Y., added: “These new revelations ask more questions than they answer.”

The disclosure of the negotiated conditions came as the White House acknowledged President Bush was unaware of the pending sale until the deal had been already approved by his administration.

Bush has pledged to veto any bill Congress might approve to block the agreement, but some lawmakers said they still were determined to capsize it.

Dubai Port’s top American executive, chief operating officer Edward H. Bilkey, said he will work in Washington to persuade skeptical lawmakers they should endorse the deal; several Senate oversight hearings already are scheduled.

“We’re disappointed,” Bilkey told the AP in an interview. “We’re going to do our best to persuade them that they jumped the gun. The UAE is a very solid friend, as President Bush has said.”

Under the deal, the government asked Dubai Ports to operate American seaports with existing U.S. managers “to the extent possible.” The company promised to take “all reasonable steps” to assist the Homeland Security Department.

The administration required Dubai Ports to designate an executive to handle requests from the U.S. government, but it did not specify this person’s citizenship.

It said Dubai Ports must retain paperwork “in the normal course of business” but did not specify a time period or require corporate records to be housed in the United States. Outside experts said stricter provisions are routine in other industries.

Foreign communications companies with American customers are commonly required to store business records in the United States. A senior U.S. official said the Bush administration considers shipping manifests less sensitive. The official spoke on condition of anonymity because of the confidential nature of the agreement.

Bush faces a potential rebellion over the sale from leaders of his own party, as well as a fight from Democrats. It puts Dubai Ports in charge of major terminal operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

In Lebanon, Secretary of State Condoleezza Rice said Thursday that the agreement was thoroughly vetted in a review process that took approximately three months. “This is supposed to be a process that raises security concerns, if they are there, but does not presume that a country in the Middle East should not be capable of doing a deal like this.” She described the United Arab Emirates as “a very good ally” and said “if more details need to be made available then I’m sure they will be.”

The White House said President Bush did not know about the agreement until recently. The AP first reported U.S. approval of the sale to Dubai Ports on Feb. 11, and many members of Congress have said they learned about it from the AP.

“I think somebody dropped the ball,” said Rep. Vito Fossella, R-N.Y. “Information should have flowed more freely and more quickly up into the White House. I think it has been mishandled in terms of coming forward with adequate information.”

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Associated Press Writer Anne Gearan in Riyadh, Saudi Arabia, contributed to this report.

© 2006 The Associated Press

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