Thread: White House Defends Port Sale to Arab Co.

A little more information, from December 2004.

Dubai Ports International to acquire CSX Corporation's international terminal business
Dubai Ports International ('DPI'), one of the world's leading port operators, announces that it has signed a definitive agreement with CSX Corporation (NYSE: CSX) to acquire the international terminal business conducted by CSX World Terminals ('the Company') and other related interests for a cash consideration of USD1.15 billion, subject to customary adjustments.
United Arab Emirates: Thursday, December 09 - 2004 at 15:42 GMT
related stories

1. DPI signs MOUs with Abu Dhabi and Fujairah
2. Dubai Ports International signs agreement for Vallarpadam port development
3. Dubai Ports International completes acquisition of CSX World Terminals
4. DPI signs 30 year concession with Fujairah Port Authority
5. DPI terminals shortlisted for Aden management contract

The transaction will be financed from a committed facility arranged and underwritten by Deutsche Bank. Completion of the transaction is expected to take place in the first quarter of 2005.

CSX World Terminals is a leading international container terminal developer and operator with operations in Asia, Europe, Australia and Latin America. The Company's container terminal portfolio currently consists of interests in 9 terminals with 24 berths and combined future capacity of 14.6 million teus. All of the terminals are operated by the Company.

Key existing port operations include CT3 and CT8 in Hong Kong, Tianjin and Yantai in China and operations in Australia, Germany, Dominican Republic and Venezuela. In addition, CSX World Terminals has interests in logistics businesses in Hong Kong and China, notably ATL the market leading logistics operator based at Kwai Chung.

As well as an existing portfolio of significant scale and global reach, the Company has a strong pipeline of development projects. In particular, CSX World Terminals has a 25% interest in, and will be the operator of, Pusan Newport, a 9 berth facility with capacity of 5.5 million teus that is currently under development and is expected to commence operations in 2006.

Deutsche Bank acted as financial adviser to Dubai Ports International and Citigroup acted as financial adviser to CSX with respect to the transaction.

Highlights
DPI will acquire CSX World Terminals, a leading global container terminal and logistics operator. The transaction is consistent with DPI's international growth strategy and follows successful acquisitions and management contracts in the Middle East, Europe and India. The transaction brings the following key benefits to Dubai Ports:


• Dubai Ports will be a top 6 global port operator


• Global portfolio of container terminals - to participate in the
current and long-term growth of the global transportation and logistics
industry and provide superior service to customers


• Access to new growth markets - Asia and Latin America offer the highest volume growth rates in the port industry


• Revenue growth potential - opportunity to increase volume and expand level of service

Sultan Ahmed Bin Sulayem, Executive Chairman, Dubai Ports, commented:

'This is a major step in DPI's global expansion strategy. The acquisition will give DPI an important platform in the North Asia region, notably in Hong Kong, China and Korea and further expands our global network in Europe and the Americas. We look forward to working with our new and existing partners, customers and the relevant governments and regulatory bodies to contribute to the fabric of the local social environment. This, in turn, will allow us to better participate in the current and long-term growth of the global transportation industry.

'This is a service led industry, in which the people make the difference. In this acquisition we are delighted to welcome all of CSX World Terminals' employees, who have demonstrated their commitment to the operations and contributed to the success of the Company to date. We look forward to supporting the management and employees of the Company to grow and develop the business going forward.'

Mohammed Sharaf, Managing Director, Dubai Ports International, said:

'The acquisition of CSX World Terminals will be a strong strategic fit for DPI, bridging our terminal network between East and West. DPI has a proven track record of owning ports on a profitable basis around the world - we are a performance driven organisation. At our existing operating locations we have employed innovative technologies and efficiencies to drive growth and we are keen to extend these skills to CSX World Terminals.

'Our people are our most important assets, and we believe having the right people in the right position is essential. Our commitment to invest in the development of our people will continue into the future. With this already established, we will be able to continue to provide our customers with a level of service that is second to none.'

Michael Ward, Chairman, CSX Corporation:

'On behalf of CSX, I am delighted to join the announcement of the agreement to sell CSX World Terminals to Dubai Ports International. We have been highly impressed with the quality of DPI's management and believe it will do an excellent job with this important portfolio of assets and terrific team. We look forward to working with DPI through what we expect will be a brief transition to closing.'

Ward added that the transaction will be 'another important step in our continuing efforts to focus on the North American railroad business. CSX is focused on leadership in the U.S. rail industry through safe, reliable service to customers and consistent, continuous improvement quality in all aspects of our performance.'

CSX acquired Sea-Land Corporation in 1987 and has, for the past several years, sold off parts of those international ocean-shipping assets. This transaction would complete that divestiture.

The Committee on Foreign Investment is part of the Treasury Dept's Office of International Affairs---- CFIUS

According to Frank Gaffney's article below, it may have something to do with the fact that David Sandborne, who until recently was Dubai Ports World's director of operations for Europe and America has recently been appointed to be DOT's head of Maritime Administration. So -- one of the people who was presumably in line to make the decision has been employed by the company that got the contract. The lobbying back and forth between foreign businesses and government continues apace -- back and forth they go.


http://www.military.com/opinion/0,15202,87787,00.html

Port of Entry

Frank Gaffney | February 13, 2006

How would you feel if, in the aftermath of 9/11, the U.S. government had decided to contract out airport security to the United Arab Emirates (UAE), the country where most of the operational planning and financing of the attacks occurred? My guess is you, like most Americans, would think it a lunatic idea, one that could clear the way for still more terror in this country. You probably would want to know who on earth approved such a plan -- and be determined to prevent it from happening.

Of course, no such thing occurred after September 11, 2001 . In fact, the job of keeping our planes and the flying public secure was deemed to be so important that the government itself took it over from private contractors seen as insufficiently rigorous in executing that responsibility.

Now, however, four-and-a-half years later, a secretive government committee has decided to turn over the management of six of the Nation's most important ports -- in New York, New Jersey, Philadelphia, Miami, Baltimore and New Orleans -- to Dubai Ports World following the UAE company's purchase of London-based Peninsular and Oriental Steam Navigation Co., which previously had the contract.

This is not the first time this interagency panel -- called the Committee on Foreign Investment in the United States (CFIUS) -- has made an astounding call about the transfer of control of strategically sensitive U.S. assets to questionable purchasers. In fact, as of last summer, CFIUS had, since its creation in 1988, formally rejected only one of 1,530 transactions submitted for its review.

Such a record is hardly surprising given that the committee is chaired by the Treasury Department, whose institutional responsibilities include promoting foreign investment in the United States. Treasury has rarely seen a foreign purchase of American assets that it did not like. And this bias on the part of the chairman of CFIUS has consistently skewed the results of the panel's deliberations in favor of approving deals, even those opposed by other, more national security-minded departments.

Thanks to the secrecy with which CFIUS operates, it is not clear at this writing whether any such objection was heard with respect to the idea of contracting out management of six of our country's most important ports to a UAE company. There would certainly appear to be a number of grounds for rejecting this initiative, however:

1) America 's seaports have long been recognized by homeland security experts as among our most vulnerable targets. Huge quantities of cargo move through them every day, much of it of uncertain character and provenance, nearly all of it inadequately monitored. Matters can only be made worse by port managers who might conspire to bring in dangerous containers, or simply look the other way when they arrive.

2) Entrusting information about key U.S. ports -- including, presumably, government-approved plans for securing them, to say nothing of the responsibility for controlling physical access to these facilities, to a country known to have been penetrated by terrorists is not just irresponsible. It is recklessly so.

3) At the risk of being politically incorrect, the proposed new management will also complicate the job of assuring that the personnel working in these ports pose no threat to their operations -- or to the rest of us. To the extent that we must remain particularly vigilant about young male Arab nationals as potential terrorists, it makes no sense to provide legitimate grounds for such individuals to be in and around some of this country's most important strategic assets.

4) Of particular concern must be the implications for energy security as a very large proportion of the Nation's oil imports come through the Atlantic and Gulf State ports that the UAE company hopes to take over. For example, Philadelphia alone handles some 85% of the oil coming into the East Coast; New Orleans is responsible for one-seventh of all of our imported energy.

Given such considerations, the question occurs: How could even a stacked deck like the Committee on Foreign Investment in the United States find it possible to approve the Dubai Ports World's transaction?

Could it have been influenced by the fact that a former senior official of the UAE company, David Sanborn, was recently named the new administrator of the Transportation Department's Maritime Administration? Until recently, Sanborn was DP World's director of operations for Europe and Latin America.

Or is it because the U.S. government views -- and is determined to portray -- the United Arab Emirates as a vital ally in this war for the Free World? A similar determination has long caused Washington to treat Saudi Arabia as a valued friend, even as the Saudis continue playing a double game whereby they work simultaneously to repress terrorism at home and abet it abroad.

Whatever the explanation, the Nation can simply no longer afford to have the disposition of strategic assets -- including those that have a military or homeland security dimension -- determined by a Treasury-dominated panel whose deliberations and decisions are made in secret without congressional oversight.

Congress should see to it that the United Arab Emirates is not entrusted with the operation of any American ports, and that the Treasury Department is stripped of the lead role in evaluating such dubious foreign investments in the United States.

If UAE is our "vital" ally in ANY war, things are way worse off than we think.

Being allied with a nation should not mean we have to expose our weaknesses to them.






We should put HAMAS in charge of our airline security, as a gesture of good faith, with our vital ally in the peace process.





-pa