The WSJ: A Post-Mortem on Dubai Ports World
The fallout from this debacle has a real potential to substantially harm America, because it reveals a protectionist, chauvinistic Congress that is not welcoming to foreign investment. As the Wall Street Journal puts it today:
Dubai Ports World finally threw in the kaffiyah on its American operations yesterday, agreeing to sell them “to a U.S. entity.” We hope that entity turns out to be Halliburton, if only for the torment that would cause certain eminences on Capitol Hill.
Dubai Ports was susceptible to this political stampede because it was an Arab-owned company buying port operations, which Democrats have played up as uniquely vulnerable. But this is also the second such mugging of a foreign investor in recent months, following last year’s demagoguery against a Chinese company’s bid to buy Unocal, a middling American oil company. If Members of Congress want a real security crisis–a financial security crisis–they’ll keep this up.
What’s especially dangerous here is that we’re seeing the re-emergence of the “national security” protectionists. They were last seen in the late 1980s, when Japan in particular was the target of a political foreign-investment panic. The Japanese were buying Pebble Beach and Rockefeller Center, and so America was soon going to be a colony of Tokyo. A Japanese bid for Fairchild Semiconductor of Silicon Valley was seen as a threat to American defense. Those fears seem laughable now. But here we go again, with new targets of anxiety.
Going well beyond Dubai, House Armed Services Chairman Duncan Hunter (R., Calif.) says he wants Congressional oversight of all foreign purchases of “critical infrastructure.” Mull over that one for a minute. If you think corruption on Capitol Hill is bad now, wait until foreigners need approval from Congress for every multi-billion-dollar investment. The current investment review process was designed by the Reagan Administration to be discreet, and to keep Congress out, precisely to avoid such politicization.
In recent weeks Members of Congress have suggested that the foreign-ownership ban should apply to: roads, telecommunications, airlines, broadcasting, shipping, technology firms, water facilities, buildings, real estate, and even U.S. Treasury securities. If this keeps up, we’ll soon arrive at France, where even food and music are “protected” from foreign influences as a matter of national survival.
Indeed, one expects this type of nonsense from the European Union – but not, for cryin’ out loud, from the good ol’ U.S.A….
Nowhere in that article, or in your intro or outtro, does it make reference to the fact that it’s because this is a state-owned company. I guess it’s more convenient for you to make your point if you leave that part out.
Yes, the company is controlled by our ally, the United Arab Emirates…and that changes my point how? Foreign investment is foreign investment – and the point has been made at length, exhaustively, elsewhere that the security functions of the port were not what was at issue here…
And a question arises, Fargus – how is my point the convenient one? The deal was opposed by almost everyone – and almost everyone, in this case, was wrong…
Thanks for the update, Mark – the point seems more reasonable now, in fuller context.
I think it is reasonable to determine what kinds of facilities should be closed to foreign ownership because of security concerns. I think most people would not be comfortable having nuclear power plants or major defense electronics companies under foreign control. Whether ports facilities fall in this category is not something I’m qualified to judge – but I don’t think that everything in America is for sale, and the first step should be deciding what should or should not be open to foreign ownership.
A reasonable point. I think most would agree we shouldn’t, for instance, privatize or outsource the management of our military. Thus, making a list of those functions, loosely described as “critical infrastructure”, that should not be sold, managed, or outsourced to non-US entities is a good thing to do.
But this Dubai Ports thing was never about reasonableness and security; it was about political expediency, political opportunism, and base xenophobia. Btw, what guarantee, security or otherwise, is gained by requiring “critical infrastructure” to be owned and/or operated by US-owned companies? Private business is beholden first and foremost to its shareholders, not US Security interests. It may be possible to align those interests but it certainly isn’t guaranteed by US ownership.
If you want security guarantees then these infrastructure operations – whatever they are – need to be owned and operated by the US Government (you and me) just as the Military is today.
I don’t claim any expertise on the subject, but it seems that there are reasonable objections which can be made to the ports deal. Those who manage ports know about ship movements and have information about cargo, and presumably could be instrumental in allowing (or failing to prevent) a terrorist attack. While the UAE may be more pro-Western than other Arab government (as noted elsewhere, similar to being the third tallest person in Japan), it nonetheless has had involvement in the past with terrorist organizations. Most people would feel comfortable with having England oversee the ports, but not North Korea – the UAE is somewhere in between. I don’t think that opposition to the ports deal is necessarily partisan or xenophobic: in judgment calls like these, it is better to err on the side of caution.
A better principle, peter, would be this: don’t discriminate against our allies…
Do you agree that the best long-term way to ‘win’ the War on Terror is to win the hearts and minds of the Arab world? If so, this seems an odd way to advance that cause…
Whoops – sorry, my comment was referring to the earlier post regarding Dole’s lobbying for UAE.
That’s all right – I caught your drift…
I absolutely agree that the way to defeat terrorism is to develop allies in the Arab world – however it’s an open question as to whether the UAE is a true ally, or is a strong enough ally to manage the ports – that is why I’m agnostic on the ports deal –
Well, that rather begs the question, doesn’t it? If the UAE is not our ally, then we have no allies in the Arab world (and maybe we don’t, but then, if that’s the case, please quit justifying Jimmy Carter’s Palestinian apologism to me – for that means Israel is our only ally in the region, so why should I care if their treatment of the Palestinians is hurting our image in the Arab world?).
In other words, they say they are our ally, and we say they are our ally – are we to develop a ‘Most Favored Ally’ program like we have in trade?…
If we want to show the Arab world that we are open to more ties, politically, and commercially, we have just taken one GIANT step backwards…