No Dubai Ports Rematch Over Doncasters

The United States and Dubai Want to Avoid at All Costs a New Confrontation Over the Purchase of British Arms Merchant Doncasters

By Marc Roche Le Monde
Wednesday 05 April 2006

"Washington and Dubai have come to an understanding to avoid a repetition of the ports affair, a disastrous episode for the United States' image with Arab investors": this banker, a fine connoisseur of the Middle East, is persuaded that the American executive and legislature will give the green light between now and the end of April for Dubai International Capital's offer to buy the British company Doncasters.

This contractor, which manufactures precision military hardware, works for American companies that supply the Pentagon. Up to now, this transaction has not aroused any hostility on the other side of the Atlantic.

That reaction is completely different from the concerted shield-wielding - in the name of protection against terrorism - by Congressmen of all varieties at the announcement of Dubai DP World Group's acquisition of the British port operator P&O and its attempted takeover of six American ports' concessions, which DP World finally had to give up (Le Monde of March 17).

The White House, which never wavered in its support for DP World, is aware of the potentially catastrophic fallout from any new confrontation with the United Arab Emirates (UAE) with regard to their attempted takeover of Doncasters Group.

Reprisals, Then ... Easing of Tensions

This ports affair, with its lingering stench of Anti-Arab racism, had confirmed the worst fears of Middle Eastern funds managers. "The United States gives the impression it doesn't want our money. The controversy over the ports has accelerated the tendency observed since September 2001 toward investing elsewhere, in emerging economies, particularly India and China, or in local or Mahgrebi privatizations," insists a Lebanese trader at the Dubai Financial Centre, a revolving door for the recycling of Arab petrodollars.

Simultaneous with the American Congress's campaign against DP World, the Emirate's central bank liquidated 10% of its colossal reserves in dollars to buy Euros. On top of that, Emirates Airlines's threat to go back on the contract to buy 9.7 billion dollars worth of Boeing airplanes announced in November 2005 sowed panic in American aerospace milieus.

Another retaliatory measure feared by Wall Street is a boycott of New York investment banks by this metropolis born in the middle of the desert that is taking in double mouthfuls to become the Persian Gulf's business center. Finally, the UAE could consider reducing its tight military cooperation with the United States, which uses the two Dubai ports as rear bases for its maritime operations in Iraq.

Dubai's new Emir, Sheikh Mohamed, up until now a firm supporter of Washington, wants to avoid throwing oil on the fire. His decision to retrocede management of the American ports to local interests is part of a strategy to ease tensions. The recent handover to Exxon Mobil of 28% of a huge oilfield by the Abu-Dhabian oil company, ADNOC, also attests to the Emirates' goodwill.

"The United States retains a strategic position in the world economy, while Europe and Japan shrink back. The absence of an alternative to the dollar as a reserve currency, high interest rates, and good prospects for economic growth have won out over possible reprisals," deems one economist from an Islamic risk-capital firm. In short, by penalizing the United States, the United Arab Emirates also ran the risk of shooting themselves in the foot....

Translation: t r u t h o u t French language correspondent Leslie Thatcher.

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