The agreement to give an additional 45 day review to Dubai Ports World's acquisition of Peninsular and Oriental Steam Navigation Co.'s U.S. terminal operations is a good one. One final look at the deal, with special scrutiny of the national security implications, should be sufficient to either scuttle the deal or quell the fears of all but the most close-minded opponents.

An Arab maritime company at the center of a political imbroglio over port security asked the Bush administration Sunday to conduct a 45-day review of the national security implications of its plans to take control of significant operations at six U.S. ports.

The announcement by Dubai Ports World, brokered by the White House and Senate Majority Leader Bill Frist (R-Tenn.), appears to satisfy the demands of many members of Congress, who had threatened to force a security review if the administration would not conduct one. The administration had approved DP World's $6.85 billion purchase of London-based Peninsular and Oriental Steam Navigation Co., or P&O, earlier this month without conducting a national security review, after a broad, interagency panel that looked at the transaction concluded the takeover of port operations in the United States would not impact the nation's safety.

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"We recognize that there are concerns regarding DP World's acquisition of P&O's U.S. terminal operations. Despite having already obtained approval by the federal government, we continue to take voluntary steps to assure people that the security of the U.S. will not be harmed as a result of this acquisition," said Ted Bilkey, DP World's chief operating officer.

Personally, I am persuaded that the deal is in the best interests of the United States, and that the security concerns voiced by opponents are not grounded in reality. The claimed degradation of national security does not make sense, given that the day-to-day operations will remain in the hands of the same folks who currently work for P&O and the security responsibilities will remain with the US government.

The deal will allow the purchase to proceed, but will keep the US operations independent.

Under the terms of the deal announced by DP World, the company would proceed with its acquisition. That deal is to be completed Thursday.

But DP World said it would "guarantee" the independence of operations at the ports of New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans by establishing North American operations as a "completely separate" business unit. Management of the North American operations would be left in the hands of P&O's chief executive officer in London, who is British. The chief security officer of the North American unit will remain a U.S. citizen, unless the Coast Guard approves a change.

The rest of the current management of P&O in the United States would also remain in place, and DP World pledged not to interfere with operations, policies, procedures or security that were in place when P&O ran the U.S. terminals.

The statement concluded that all these pledges would remain in place until May 1 or the completion of the CFIUS review.

"We are confident the further review by CFIUS will confirm that DP World's acquisition of P&O's U.S. operations does not pose any threat to American's safety and security. We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States," Bilkey said.

Perhaps some similar management structure can remain in place following the review. After all, I suspect there are more negotiations to come.

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Posted by: Greg at 10:25 AM | No Comments | Add Comment
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