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UAE Port Purchase Raises Outcry

Prepared by: cfr.org editorial staff
Updated: February 22, 2006

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Every year, some nine million cargo containers enter the United States through its ports. Soon after the September 11, 2001, attacks, calls arose to increase the scrutiny of this rapid flow of goods. These calls, says CFR fellow Stephen Flynn, have gone largely unanswered, leaving U.S. port security akin to "a house of cards."

This precarious situation has been highlighted again by the acquisition by Dubai Ports World—a major United Arab Emirates-based shipping and cargo concern—of the British firm that has been running portions of six major U.S. ports (BaltSun). The acquisition, described by cfr.org's Eben Kaplan in this Background Q&A, means significant portions of the ports of New York, Miami, Newark-Port Elizabeth, Philadelphia, New Orleans, and Baltimore would be run by Dubai Ports World. President Bush, who has defended the deal (VOA), is under pressure to reverse himself (CNN). State and local governments, Republican and Democrat, are up in arms. The Republican governors of New York and Maryland threaten legal action to block the deal (AP). Democratic senators from New Jersey and New York are drafting legislation prohibiting the sale (WNYC) of port operations to foreign governments. Senator Charles Schumer (D-NY) is making similar demands (Newsday).

The United Arab Emirates is considered a U.S. ally. However, as this CFR Task Force report made clear in 2004, the UAE was used as a financial and operational base by some of the 9/11 hijackers. That fact has many asking questions. The New York Times says the move takes the Bush administration's "laxness to a new level," while Newsday applauds legislators' efforts to review the ports deal.

But there are those—like Senator John McCain (R-AZ)—who urge caution before rushing to block the Dubai Ports World acquisition. According to the Wall Street Journal, the idea that Washington is outsourcing port security to hostile Arab governments "is alarmist nonsense." The Washington Post adds that none of the current furor reflects the extensive review process the ports sale underwent and criticizes Congress for spreading "prejudice and misinformation."

The uproar over the Dubai Ports World purchase is only the latest to focus on foreign ownership of vital infrastructure. The U.S. Congress last year overwhelmingly recommended against the Bush administration granting permission for a Chinese company, CNOOC, to purchase Unocal (Washington Quarterly), a U.S. oil services company. In 1999, just before Hutchison Whampoa, a Chinese company, took control of the shipping yards that line Panama Canal, retired U.S. admiral and former Chairman of the Joint Chiefs of Staff Thomas H. Moorer warned of a "nuclear Pearl Harbor" (NewsMax.com).

In fact, the vast majority of U.S. ports are owned by foreign companies. But ownership ranks toward the bottom of the vulnerabilities, says Flynn, who hopes the attention garnered by the recent purchase will emphasize the need to work with foreign entities in addressing larger security concerns. Regardless of who owns the ports, the volume of goods flowing through them is so massive that providing security oversight for incoming containers is a daunting task. After 9/11, the Department of Homeland Security created the "Container Security Initiative," but an April 2005 Government Accountability Office report (PDF) questions the program's ability to improve cargo security.

Incoming containers are not the only security concern in U.S. ports. Shipments of liquefied natural gas (LNG)—which is increasingly important to meet U.S. energy needs—also pose a risk, and many new terminals are on the drawing board, as cfr.org's Eben Kaplan explains in this CFR Background Q&A. The Journal of Homeland Security and Emergency Management as well as the Congressional Research Service (PDF) both offer solid overviews of the issue.

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