GULF MEDIA ASKS IF "ISRAELI ELEMENT" KILLED UAE PORTS DEAL

by Meena Janardhan

(IPS) DUBAI -- Although the Dubai-based DP World has withdrawn its bid to manage key ports in the United States, questions linger as to what prompted Congress resistance to the deal-- genuine security concerns, protectionism, Islamophobia or domestic politics.

Some in the United Arab Emirate (UAE) think it was a mix of all of these and more.

Abdulkhaleq Abdulla, professor of political science at the UAE University, told IPS he saw a "combination of 9/11 paranoia, deep anti-Arab sentiments, a weak president and a hysterical Congress finally aborting a sound business transaction that would have been a key element in building stronger Gulf-U.S. friendship."

Under the original $6.8 billion purchase plan, DP World was to take over the British Peninuslar and Oriental Steam Navigation's container terminal operations in the ports of New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

While the Bush administration approved the deal, DP World announced, on Mar. 9, that it would give up its bid after an outcry over security in the Republican-dominated Congress. It is still unclear whether a transfer of assets agreed to by DP World would mean divesting ownership or just management responsibilities.

Critics of the deal emphasized that two of the 9/11 hijackers were from the UAE, and pointed to the country's recognition of the Taliban government in Afghanistan as reasons for the distrust.

Lawmakers, both Republicans and Democrats, pointed to the UAE's role as an operational and financial base for terrorists and said they were concerned that key U.S. ports would become vulnerable to terrorist attacks.

Such was the level of mistrust that when CNN online survey asked readers whether they trusted an Arab company or the U.S. mafia more, when it came to running U.S. ports, about 63 percent of more than 30,000 voters responded in favour of the underworld gangs.

The irony is that the UAE is a key regional ally in Washington's 'war on terror' and Dubai presently services more U.S. warships than any other country in the world.

Dubai was the first country in the Middle East to sign the U.S. Container Security Initiative to screen all U.S.-bound containers for security hazards. Further, in May 2005, Dubai signed an agreement with the U.S. department of energy to help prevent nuclear materials from passing through its ports.

"This anti-Dubai venom is about race, religion and prejudice, not ports, security and politics. Blocking the DP World deal will strip bare our illusion that an Arab, a Muslim, can ever be a friend of America again," Matein Khalid wrote in the English daily Khaleej Times on Mar.11.

"Security, especially of ports, is certainly a concern for the U.S. but accusing Arabs of being incompetent and linking them to terror is not the right approach at a time when the controversy dealing with Prophet Mohammed's caricatures in European newspapers is yet to die down," said Mustafa Al-Naseer, a university student.

"Dubai is the most pro-Western place in the region. The controversy may have been conditioned by petty politics ahead of U.S. mid-term elections, but they will have to pay a hefty price for this," Al-Naseer added.

The first fallout has been the postponement of the already-troubled UAE-U.S. free trade talks which were to resume on Mar. 13. Though Washington said both sides need more time to prepare, the strain was evident.

"It is not right to mix political issues with commercial issues," UAE Central Bank governor Sultan bin Nasser Al-Suwaidi said. "What the U.S. is doing goes against the tenets of international trade, which they created in the first place. Investors are going to look at future investments in the U. S. from a new perspective," he added.

K. S. Sreekumar, business journalist at the 'Gulf Today' newspaper said: "History does not have on record any country having developed successfully through adherence to 'free market' principles, certainly not the U.S. Protectionism has been the hallmark of U.S. policies and this controversy amply illustrates it."

The next casualty could be investments. Though the region is awash in cash in the wake of high oil prices, Gulf Arabs could become wary of investments in the U.S. in the immediate future despite it being a tempting market. Bush himself said he was worried over the message the aborted deal would send to the Arab world.

"This (controversy) could discourage (Arab) investment in the U.S.," said UAE minister for economy Sheikh Lubna Al-Qassimi, adding that funds could now be diverted to Asia and Europe.

Gulf investors ploughed more than $30 billion into foreign takeovers in 2005, more than in the previous five years put together.

Meanwhile, conspiracy theories abound. An editorial in the English daily Gulf News on Mar. 12 asked: "Was it the ÔIsraeli element' as some have suggested? Maybe. Otherwise, why would some Congress members bombard the DP World executive, during last week's hearing, with questions about the Arab boycott of Israel? Did they want to force the UAE to end the pan-Arab boycott of Israel in order approve the deal?"

Media reaction, elsewhere in the region, has been scathing too. In its editorial on Mar. 10, the Saudi Arabia-based Arab News asked: "If the U.S. does not trust an Arab company to run something like a port, should we trust American companies to do similar things here? Can we? If the Americans mistrust us as they do, in whose interests will their companies be operating?"

In fence-mending exercises, a group of U.S. businesspeople in the UAE said they planned to organize talk shows aimed at changing public opinion in the U.S.

But then the U.S. has also launched an investigation into Dubai International Capital's plans to take over plants in Georgia and Connecticut, that make components for military aircraft.

Prof. Abdulla said the aborted port deal was bound to "leave a scar on bilateral ties for some time to come."