UAE firm to transfer port operations to U.S. 'entity'
Sources: House, Senate leaders tell Bush deal appears dead

Thursday, March 9, 2006; Posted: 3:10 p.m. EST (20:10 GMT)

Sen. John Warner, R-Virginia, announces DP World's decision on the Senate floor Thursday.
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WASHINGTON (CNN) -- United Arab Emirates-owned DP World said Thursday it would transfer its operations of American ports to a U.S. "entity" after congressional leaders reportedly told President Bush that the firm's takeover deal was essentially dead on Capitol Hill.

"Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship ... DP World will transfer fully the U.S. operations of P&O Operations North America to a United States entity," Edward H. Bilkey, DP World's chief operating officer, said in a statement.

The announcement did not specify which American company would be involved.

The UAE firm's purchase of P&O, the British company that manages cargo and passenger terminals at ports on the Atlantic and Gulf coasts, has stirred up bipartisan opposition.

Unusually rancorous debate on the issue has split Bush from his GOP allies in Congress at a time when the president's approval ratings have plunged and midterm elections approach. (Read a timeline of the ports deal)

A source involved in talks between the White House, Congress and DP World told CNN the exact meaning of the UAE firm's statement is unclear.

"The next steps are very hard to predict at this point, either in terms of who they'll actually sell to and in terms of what it means for U.S. relations in the region," the source said.

Sen. John Warner, R-Virginia, who had been working to craft a compromise, announced the move by DP World on the Senate floor Thursday.

Earlier Thursday, Senate and House leaders warned Bush that the UAE deal was a lost cause, GOP sources said.

House Speaker Dennis Hastert, R-Illinois, and Senate Majority Leader Bill Frist, R-Tennessee, delivered the news to Bush during a meeting at the White House, the sources said.

The leaders told the president they would pass measures to block the deal by veto-proof majorities, sources told CNN. Bush had threatened to veto any legislation that stopped the deal. Bush has said any effort to stall or kill the deal would strain ties with a vital Arab ally in the war on terrorism.

On Wednesday, the House Appropriations Committee essentially blocked the deal by voting 62-2 to insert an amendment into a $68 billion emergency supplemental funding bill for military actions in Iraq and Afghanistan.

House Republicans are openly defying the president, apparently to prevent Democrats from outflanking them on national security and outsourcing issues as elections approach. (Questions about the deal answered)

The issue marks an unusual rift between Bush and House Republicans, who say they have received overwhelmingly negative comments from constituents. (Your e-mails: Should Bush change his mind?)

The committee's approval was bipartisan, with Reps. Jim Moran, D-Virginia, and Jim Kolbe, R-Arizona, casting the only votes against it.

Rep. Jerry Lewis, R-California, chairman of the House Appropriations Committee, worked with other GOP leaders to amend the spending bill. (Watch top Republicans rock the boat on the ports deal -- 1:36)

Tensions between Bush, whose approval rating is near an all-time low, and Congress have been growing for some time, and the president's vow to veto the legislation angered many of his congressional allies.

"In politics ... sometimes the passions and the emotions can overwhelm any factual discussion," said John King, CNN's chief national correspondent. (King: Passions, emotions cloud ports debate)

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