The controversy over the proposed sale of U.S. port facilities to a government-owned company of the United Arab Emirates was, in large part, political theater. The deal was a gift issue in election season: It allowed members of Congress to demonstrate their commitment to U.S. security and U.S. jobs. Theatrics notwithstanding, the fracas has highlighted the vital role that ports play in commerce and the protectionist impulses that still hamper completely free and fair trade. On Thursday, the Dubai company said it would pull out of the ports’ deal.
Last month’s announcement that D.P. World, a company owned by the UAE government, would buy six U.S. port facilities unleashed a political firestorm in the United States. Critics first charged that foreigners should not control vital U.S. infrastructure. When it was pointed out that D.P. World was buying from a British-owned company, the focus of complaints shifted to D.P. World’s owners, a government that has been accused of turning a blind eye to terrorist activity. Critics argued that the new owners would not be as vigilant as its predecessors, or as a U.S.-owned company would be.
Since any owner, while running the port, would have to not only comply with U.S. laws and regulations but also subject itself to oversight by U.S. authorities, the security argument does not make sense. In fact, the contretemps is best explained as Congress’ attempt to make political hay ahead of midterm elections next fall. For Democrats, the deal was a chance to outflank a president who has relentlessly — and with great success — used the national security club to beat them down since Sept. 11, 2001. For Republicans, the deal was an opportunity to distance themselves from a president whose popularity ratings are plunging.
The Bush administration’s failure to anticipate the fireworks that followed the announcement of the deal suggests that port security has been largely ignored in the post-9/11 world. It is estimated that nearly one-third of the U.S. gross domestic product derives from trade. For a country like Japan, that number is higher. Virtually all U.S. overseas trade — 95 percent — involves the maritime domain. The figure is 99 percent for Japan, where marine transport accounts for 41 percent of domestic cargo. Just as significant, many urban centers (more than half the U.S. population) and crucial infrastructure are close to ports or are accessible by waterways. The same holds true for Japan.
As essential nodes in a nation’s economy, ports make tempting targets for terrorists. Blocking or disabling a port could cripple a country. If one of the world’s mega-ports were hit, the shock waves could ripple throughout the world. The significance — and attractiveness — of these sites will grow as global trade increases. It is estimated that global container traffic — the primary means of shipping maritime commerce — will double over the next two decades.
Despite the growing significance of maritime security, it has not been a priority for the U.S. government — and most others. The U.S. has spent $18 billion to protect its airports since the 9/11 terrorist attacks, but just $630 million to strengthen security at its 361 seaports. Amid the current controversy in America, there have been a slew of proposals to step up security, ranging from banning the sale of any key infrastructure to foreign companies affiliated with governments to checking the background of port employees and installing monitors to check for radioactive substances. All cost money, all are overdue, and all are piecemeal solutions to a huge problem.
U.S. President George W. Bush was committed to the deal. His administration was satisfied with the results of a mandatory review of the sale, although D.P. World had agreed to resubmit its application to allow the process to be vetted with more congressional scrutiny. Mr. Bush says the UAE is a vital ally in the war on terror and that discriminating against it would send the wrong signal.
He is right about that. The nationality of the owners is immaterial, as any operator would have to comply with U.S. regulations. It is the quality of those regulations and the will to enforce them that will determine the security of U.S. ports. Forbidding or limiting foreign ownership panders to protectionism at a time when the world needs more leadership to encourage greater investment flows.
The same governments around the world that seek more opportunities for their capital to facilitate growth and development often block the flow of capital into their domestic markets, usually in the name of protecting “national security,” in one form or another. This is hypocrisy — and it is dangerous. Impeding such flows stymies growth and inhibits prosperity, perpetuating the conditions that breed terrorism. Port security is important, but so is a broad strategy to fight terrorism.
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