Don’t Sell American Ports to the United Arab Emirates
Peter Morici


President Bush is confronting a tough decision. Republicans are revolting against his approval of the sale of operations for six large U.S. ports to Dubai Ports World, which is owned by the United Arab Emirates.

Denying this purchase flies in the face of the free trade and open investment policies championed by every president since Roosevelt. However, national security considerations and the shifting balance of economic power in the global economy require a radical rethinking of how broadly these policies are applied and when exceptions are wiser than compliance.

Clearly, in the 9-11 environment, ports pose a critical juncture of vulnerability which requires the highest standards of vigilance against terrorist intents. The President has obtained assurances from Dubai Ports of high levels of compliance and cooperation with U.S. authorities, but that simply is not enough. It only takes a few well placed terrorist moles to facilitate another tragedy on a grand scale.

As anyone who observes speeding on our highways or the accounting shenanigans of some American companies realizes true compliance with the intent of our laws requires a cultural commitment and earnest desire for their benefits.

We can’t get away from the fact that terrorists are educated, financed and find safe passage to the United States and Europe through Middle Eastern states like the U.A.E. By their action and inaction these countries have contributed much to the threat to western nations posed by radical Islam. The contempt for western values prevalent in Middle Eastern states requires vigilance. We simply can’t permit companies owned by their governments to run our ports, airlines, telecommunications systems and the like. They might not like that, but they have their own actions to blame.

This is a tough stand for President Bush to take on two counts. First, the United States is critically dependent on Middle Eastern oil to power the U.S. economy. His insistence that higher oil prices, as opposed to higher mileage standards for cars, precipitate adjustments in American energy consumption requires that our vulnerability to whims of Persian Gulf exporters will grow in the decades ahead. An exhaustive study issued by the Rocky Mountain Institutes illustrates that we have technologies now, which were not available back in the 1970s, to provide Americans with good sized, practical and powerful cars and trucks, while using a lot less imported oil. We don’t need to kowtow to less than friendly powers to ensure our economic survival.

Second, we have pursued our free trade and open investment policy by using our market as a carrot and presenting the success of our economy as an example. From China to North Africa that is not working. China severely limits U.S. equity holdings in critical industries like steel and automobiles, and most oil exporters don’t let U.S. companies own vital petroleum assets.

I don’t think we need to worry much about denying the U.A.E. ownership of our ports. Middle East oil exporters will permit foreign oil companies to participate in their petroleum industries to the extent they need exploration and development know how—no more and no less.

Even presidents make mistakes. That is why we have congressional oversight and advice. President Bush should listen to his Republican friends and reverse course before his mistake in judgment results in another national tragedy.


Peter Morici is a Professor of Business at the University of Maryland and former Chief Economist at the U.S. International Trade Commission.

Peter Morici
Professor
Robert H. Smith School of Business
University of Maryland

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