Enlarge imageBy Susan Cornwell and Tabassum Zakaria
WASHINGTON (Reuters) - President George W. Bush rejected congressional pressure to step in and suspend an Arab company’s takeover of operations at major U.S. seaports on Tuesday and vowed to veto any legislation to block the deal.
"After careful review by our government, I believe the transaction ought to go forward," Bush told reporters aboard Air Force One. If Congress passed a law to stop the deal, "I’ll deal with it with a veto."
The port operations erupted as a major political headache for Bush, whose fellow Republicans on Capitol Hill joined Democrats in questioning the deal.
Senate Republican leader Bill Frist added his voice to Capitol Hill outcry against the decision allowing state-controlled Dubai Ports World of the United Arab Emirates to manage ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
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"If the administration cannot delay the process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review," Frist, a Tennessean and potential 2008 presidential contender, said in a statement.
Frist’s decision to join the fray was significant because as majority leader he sets the Senate’s agenda. Other lawmakers from both parties said they already had legislation ready to go to block the decision by a Treasury-led interagency panel known as the Committee on Foreign Investment in the United States.
Along with state and local officials from the affected areas, the lawmakers were indignant about the deal’s impact on the ports, considered vulnerable since the September 11 attacks. Dubai Ports World is on the verge of taking over Britain’s P&O, which now manages the ports.
"It’s hard to believe that this Administration would be so out of touch with the American people’s national security concerns, that it would use its first ever veto to save this troubling Dubai ports deal," said New York Democratic Sen. Charles Schumer
Bush said he was trying to conduct a fair foreign policy.
"I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a great British company," Bush said.
"I’m trying to conduct foreign policy now by saying to the people of the world ’we’ll treat you fairly.’"
"And after careful scrutiny, we believe this deal is a legitimate deal that will not jeopardize the security of the country and at the same time sends that signal that we are willing to treat people fairly."
Schumer and Republican Rep. Peter King of New York vowed to try and block the deal legislatively as soon as Congress is back in town on Monday. King is chairman of the House of Representatives Homeland Security Committee.
A similar hail of criticism from American lawmakers last year drove off a bid by China’s state-controlled CNOOC Ltd. for American oil company Unocal.
Officials from several Bush administration departments defended the Dubai Ports World decision.
Treasury spokesman Tony Fratto said all the administration members of the committee on foreign investment, including the Department of Homeland Security, agreed the transaction could proceed.
State Department spokesman Adam Ereli said a risk assessment by the U.S. intelligence community and decided there was no objection on national security grounds.
At the Justice Department, Attorney General Alberto Gonzales stressed the deal had only to do with the management of port operations -- not security.
At the Pentagon, Defence Secretary Donald Rumsfeld and Marine Corps Gen. Peter Pace defended the United Arab Emirates as a close ally of the United States.
P&O shareholders last week approved Dubai Ports World’s $6.8 billion takeover, which would create the world’s third-largest ports group. A British court is expected to give its final approval at a hearing scheduled for February 27.
A UAE government official said the security concerns were unfounded given his country’s close ties with Washington and Dubai Ports’ record as global operator. U.S. warships often call at the UAE’s Jebel Ali port, run by Dubai Ports.
U.S. seaports handle 2 billion ton(ne)s of freight a year. Only about 5 percent of containers are examined on arrival.
(Additional reporting by Dayan Candappa in Dubai, Daniel Trotta and Claudia Parsons in New York and Jim Loney in Miami)
