Monday, November 30, 2009

Looking Back on the Dubai Ports World Deal

or, Why Sometimes It's OK to Be A Little Paranoid.

Remember this story:

United Arab Emirates Firm May Oversee 6 U.S. Ports
By Ted Bridis
 Associated Press

Sunday, February 12, 2006

A company in the United Arab Emirates is poised to take over significant operations at six American ports as part of a corporate sale, leaving a country with ties to the Sept. 11, 2001, hijackers with influence over a maritime industry considered vulnerable to terrorism.

The Bush administration considers the UAE an important ally in the fight against terrorism since the suicide hijackings and is not objecting to Dubai Ports World's purchase of London-based Peninsular and Oriental Steam Navigation Co.

The $6.8 billion sale could be approved Monday and would affect commercial port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

DP World said it won approval from a secretive U.S. government panel that considers security risks of foreign companies buying or investing in American industry. The U.S. Committee on Foreign Investment (CFIUS) in the United States "thoroughly reviewed the potential transaction and concluded they had no objection," the company said in a statement.

The committee, which could have recommended that President Bush block the purchase, includes representatives from the departments of Treasury, Defense, Justice, Commerce, State and Homeland Security.
And now today the government of Dubai has announced that it will not cover Dubai Ports World's debts.

Graeme Wearden reported for the
"The Dubai government said today that it will not guarantee the debts of the stricken conglomerate Dubai World as the city state's debt crisis continues to haunt the world's financial markets.

After the Abu Dhabi stock market suffered its biggest ever one-day fall today as investors returned after the Eid holiday, Dubai's top finance official appeared on Dubai TV to say that the emirate's government will not guarantee Dubai World's $59bn (£36bn) debts.

The statement suggests that creditors, which include leading banks, could face billions of dollars of losses as the conglomerate's worldwide property, industry and leisure empire unravels.

Abdulrahman al-Saleh, director general of Dubai's department of finance, said: 'Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct,' he said.

'Dubai World was established as an independent company, it is true that the government is the owner, but given that the company has various activities and is exposed to various types of risks, the decision, since its establishment, has been that the company is not guaranteed by the [Dubai] government.'"

Now let's just pause for a moment and imagine.

If that "secretive US panel that considers security risks of foreign companies", the Bush Administration and Dubai World had gotten their way, a non-US owned company, whose own government describes it as being a "company (that) has various activities and is exposed to various types of risks"; and is carrying $56b in debt: would be responsible for "significant operations" at the ports of New York, New Jersey, Philadelphia, Baltimore, New Orleans and Miami.

Of course, anyone who expressed a concerned of the proposed Dubai Ports World deal of 2006 was labeled as protectionist and paranoid.

Makes you wonder how any of us survived the Bush administration at all.

But wait, are any of those same people still working at CFIUS?

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