Bush Threatens to Veto Any Bill to Stop Port Takeover

By DAVID E. SANGER
and ERIC LIPTON
Published: February 21, 2006

WASHINGTON, Feb. 21 — President Bush said this afternoon that he would veto any legislation seeking to block the administration's decision to allow a state-owned company from Dubai to assume control of port terminals in New York and other cities.

Mr. Bush's rare veto threat came as Republican leaders and many of their Democratic counterparts called up today for the port takeover to be put on hold. They demanded that the Bush administration conduct a further investigation of the Dubai company's acquisition of the British operator of the six American ports.

"After careful review by our government, I believe the transaction ought to go forward," Mr. Bush told reporters who were traveling with him on Air Force One to Washington, according to news agencies. "I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a Great British company. I am trying to conduct foreign policy now by saying to the people of the world, 'We'll treat you fairly." '
The confrontation between Mr. Bush and his own supporters escalated rapidly after the Senate Republican leader, Bill Frist, and the House speaker, J. Dennis Hastert, joined Mayor Michael R. Bloomberg, Gov. George E. Pataki and a host of other Republicans in insisting that the transaction must be extensively reviewed, if not killed. That put them on essentially the same side of the issue as a chorus of Democrats, who have seized on the issue to argue that Mr. Bush was ignoring a potential security threat.

The White House appeared stunned by the uprising, over a transaction that they considered routine — especially since China's biggest state-owned shipper runs major ports in the United States, as do a host of other foreign companies. Mr. Bush's aides defended their decision, saying the company, Dubai Ports World, which is owned by the United Arab Emirates, would have no control over security issues.

Some administration officials, refusing to be quoted by name, suggested that there was a whiff of racism in the objections to an Arab owner taking over the terminals. The current operator of the six American terminals, P&O Port, is owned by the British company that Dubai Ports World is acquiring. The ports include those in New Jersey, Baltimore, New Orleans, Miami and Philadelphia, as well as New York.

Mr. Frist, in a rare break from the Bush administration, declared that "the decision to finalize this deal should be put on hold until the administration conducts a more extensive review of this matter."

He added, "If the administration cannot delay this process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review."

Representative Edward Markey, Democrat of Massachusetts and a persistent critic of the administration's actions on port security, said in an interview that "this is now a bipartisan posse chasing the president."

But firestorm of opposition to the deal drew a similarly intense expression of befuddlement by shipping industry and port experts.

The shipping business, they said, went global more than a decade ago and across the United States, foreign-based companies already control more than 30 percent of the port terminals.

That inventory includes APL Limited, which is controlled by the government of Singapore, and which operates terminals in Los Angeles, Oakland, Seattle, and Dutch Harbor, Alaska. Globally, 24 of the top 25 ship terminal operators are foreign-based, meaning most of the containers sent to the United States leave terminals around the world that are operated by foreign government or foreign-based companies.

"This kind of reaction is totally illogical," said Philip Damas, research director at Drewry Shipping Consultants of London. "The location of the headquarters of a company in the age of globalism is irrelevant."

But the reasoning did not resonate in Washington, where members of Congress from every end of the political spectrum piled on to condemn the deal and to propose emergency legislation to block it if necessary.

"This sale will create an unacceptable risk to the security of our ports," Senator Hilary Rodham Clinton, joined by Senators Frank Lautenberg, Robert Menendez and Barbara Boxer said in a letter Tuesday. On Monday, the Republican governors of New York and Maryland raised the threat of legal action to void contracts at ports in New York City and Baltimore.

At the Pentagon today, Defense Secretary Donald H. Rumsfeld praised the Arab country as an important strategic military partner.

"Nothing changes with respect to security under the contract," Mr. Rumsfeld said. "The Coast Guard is in charge of security, not the corporation."

"We all deal with the U.A.E. on a regular basis," he added. "It's a country that's been involved in the global war on terror."

The acquisition of the British port operator is scheduled to close on March 2. Governors George E. Pataki of New York and Robert L. Ehrlich Jr. of Maryland both said they would do what they could to stop the deal from going through.

Maria Newman contributed reporting from New York for this article.