Now Dubai Eyes a Key Defense Contractor

BY ELI LAKE - Staff Reporter of the Sun
April 12, 2006
URL: http://www.nysun.com/article/30831

CAIRO, Egypt - A confidential Treasury Department review of a United Arab Emirates firm's pending purchase of the British-based contractor that makes components for a tank used by the U.S. Army is expected to go to the White House as soon as this week, according to administration officials.

The proposed $1.2 billion deal is almost identical to Dubai Ports World's takeover of the British firm that operated American ports from Miami to New York. But in this case, the proposed buyer, Dubai International Capital, would gain control of a British company, Doncasters Group Limited, that builds the specialized turbine fan blades for the M-1 Abrams Tank, and is also a key contractor in the development of the new stealth joint strike fighter airplane.

The ruler of Dubai, Sheik Mohammed Bin Rashid Al Makhtoum, owns the majority stake in Dubai International Capital.

A British business publication, Business Online, reported last week that the Committee on Foreign Investment in the United States will conclude in its review that the deal poses no threat to national security, a move that would normally clear the way for its approval.

President Bush has 15 days after that date to object to the proposed deal. A Treasury Department spokesman yesterday said he could not comment on the confidential review.

The Dubai International Capital proposal has all the makings of an even more intense political fight than the scuttled ports deal, which ended only when Dubai Ports World agreed to sell the American ports facilities to American "entities."

Already, the Doncasters deal has attracted scrutiny from the ranking Democrat on the House Armed Services Committee, Rep. Ike Skelton of Missouri and his colleague on that panel, Rep. John Barrow, a Democrat of Georgia.

In an interview yesterday, Mr. Barrow said,"I am not against foreigners investing in this country as long as we don't sell them something we are not supposed to sell them. But I am concerned about selling off our national security infrastructure. We are selling off the military industrial complex bit by bit."

Mr. Barrow said he was particularly angry at the White House and Treasury Department for failing to give him straight answers about the deal, considering one of Doncasters's plants is in his district in Rincon, Ga. He and Mr. Skelton will be touring that plant today and will hold a press conference on the deal.

"We have been pestering them about this, trying to get some person to understand this for more than a month. Today I had my first conversation. I asked to speak to the treasury secretary. I ended up talking to an assistant secretary at Treasury who does not know when the investigation will finish or whether a recommendation has been made," he said.

Mr. Barrow added, "I don't think it's politicizing the process to know what the hell is going on.It would not be caught up in the politics of the moment if we had a meaningful process over the years."

Mr. Barrow introduced legislation in March that would require the Committee on Foreign Investments in the United States to notify relevant members of Congress of their decisions to approve or reject foreign investments that may impact national security. The legislation would also move the committee to the Department of Homeland Security.

Mr. Barrow said yesterday that he is far less concerned about allies like Britain investing in America's defense industry than countries like the United Arab Emirates.

"The UAE just doesn't have Great Britain's track record as an ally in the war on terror," he said."[Dubai] had some of their nationals they could not account for take part in 9/11. Some of their financial institutions were complicit in the 9/11 plans.Their ports have been conduits for alarming shipments to Iran, and they were one of three governments to recognize the Taliban."

Nonetheless, the Bush administration and former intelligence officers have given the Emirates high marks for their work in the global war on terror.

They have cited the UAE's intelligence service's cooperation with the CIA in providing bank records and financial intelligence on possible terrorist front companies and business closely linked with Iran.

The UAE also allows the U.S. Navy to dock most of its ships patrolling the Persian Gulf.