Bush okays new Dubai military deal

By JIM RUTENBERG and DAVID E. SANGER
Published: April 28, 2006

WASHINGTON, April 27 — President Bush is expected on Friday to announce his approval of a deal under which a Dubai-owned company would take control of nine plants in the United States that manufacture parts for American military vehicles and aircraft, say two administration officials familiar with the terms of the deal.

The officials, who were granted anonymity so they could speak freely about something the president had not yet announced, said that the final details had not yet been set and that Mr. Bush might put conditions on the transaction to keep military technology in the United States.

But his action is almost certain to attract scrutiny in Congress, because of the political furor that erupted over the administration's approval of a deal earlier this spring that would have given another Dubai-owned company, Dubai Ports World, leases to operate several American port terminals through its acquisition of a British company, the Peninsular and Oriental Steam Navigation Company.

Dubai Ports agreed to drop the port deal after it became clear that Republicans were abandoning Mr. Bush and opposing the takeover.

In this case, the plants in question are owned by Doncasters Group Ltd., a British company that is being purchased for $1.2 billion from the Royal Bank of Scotland Group by Dubai International Capital, which is owned by the United Arab Emirate government.

Because the plants make turbine blades for tanks and aircraft, the deal was reviewed by the Committee on Foreign Investment in the United States, which sent it on to Mr. Bush himself for a decision, a step used only when the potential security risks or political considerations are particularly acute.

Administration officials alerted Congress that the deal would go through the committee's review process in an effort to head off the kind of public debate that surrounded the ports deal.

Opponents of the ports transactions argued that the terrorists involved in the Sept. 11 attacks had filtered money through the United Arab Emirates, where Dubai is the major shipping center. Mr. Bush argued that blocking the deal would have sent the wrong message to a friendly Arab state. His support, however, was not enough to quell the political furor.

One official who was briefed on the Doncasters transaction said there would be provisions in the agreement protecting American military secrets. But it was unclear whether that would satisfy Congressional objections. With nine Doncasters plants in Georgia and Connecticut making parts for American military contractors, the prospect of a takeover by the Dubai company has already caused nervousness among some lawmakers.

Representative John Barrow, Democrat of Georgia, likened the Doncasters deal to "outsourcing" part of the nation's industrial-military complex.

But Representative Peter T. King, Republican of New York, the chairman of the House Committee on Homeland Security and one of the foremost critics of the ports deal, said on Thursday that he would not necessarily have a problem this time around, in large part because the White House had given the deal a thorough review.

"It's a significant improvement over what happened before," Mr. King said. "It's been much more thorough, much more detailed."

A senior Republican Congressional aide who was granted anonymity because he was not authorized to talk about the matter, said he did not believe the president's approval of the deal would cause quite the same stir as the ports deal.

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