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Bush concerned about ports message to arabs

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Bush concerned about ports message
Mar 10, 3:05 PM (ET)

By Steve Holland

WASHINGTON (Reuters) - The collapse of efforts by a Gulf Arab company to manage U.S. ports may send a worrying message to Middle East allies, U.S. President George W. Bush said on Friday, a day after his stinging defeat on the deal.

"In order to win the war on terror, we have got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," Bush told newspaper editors.

In a possible repercussion, the United Arab Emirates broke off talks on a free trade agreement with the United States the day after the ports deal fell apart.

Bush suffered an embarrassing defeat at the hands of his own Republican allies in the U.S. Congress when state-owned Dubai Ports World surrendered to unrelenting criticism and gave up trying to manage some terminals at six major U.S. ports.

The UAE company said it would transfer the ports to a U.S. entity at the behest of Dubai's ruler, to allay U.S. concerns that the deal posed a threat to American national security. Details of the transfer were not outlined.

A leading critic of the ports deal, New York Democratic Sen. Charles Schumer, said questions remained about the company's transfer of port operations to a still-unidentified U.S. entity and promised to keep pressing the issue.

"If things are as they appear, this is a great victory for national security. But make no mistake, we are going to scrutinize this deal with a fine-tooth comb to make sure the separation between American port operators and Dubai Ports World is complete and security is tight as a drum," Schumer said.

Dubai Ports Chairman Sultan Ahmed Bin Sulayem, asked whether the company would sell the management rights of the U.S. ports, told Reuters: "All this is being worked out by our parties in the States." He could not say immediately how separate the U.S. entity would be from Dubai Ports.

Gulf Arabs reacted bitterly to the company's decision, saying the political storm that forced the emirate's hand could provoke a backlash among regional investors.

"Do you think we are happy this morning? The mood is black, very, very black," said a senior official in the region involved in the Dubai Ports deal.

Bush, who had vowed to veto congressional efforts to block the deal, praised the UAE as a committed ally in the war on terrorism.

"I'm concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East," Bush said.

The U.S. Trade Representative's office said the United States and UAE had postponed free trade talks that had been set for next week.

Officials attempted to play down the move. "This is not unusual," said USTR spokeswoman Needa Moorjani. "Just in the past few months, we've postponed rounds with Ecuador three times, Panama twice and Colombia once."

House of Representatives Speaker Dennis Hastert, an Illinois Republican, said it was probably best for "both countries to kind of step back and evaluate a little bit. We'll move on from there."

Treasury Secretary John Snow said the political furor over the company's withdrawn bid was an isolated case, as he tried to limit the damage to the U.S. free-trade image.

He insisted the United States was still "open for business."

"I don't view this as anything but an isolated incident," Snow said in an interview with CNBC television. "We don't want to be isolationist. We don't want to turn our backs on the rest of the world."

Bush and Snow conceded that the approval process of the ports deal that led to bitter congressional opposition needed to be improved.

The Committee on Foreign Investment in the United States, headed by Snow, had approved the deal in a routine, quiet manner, and both Bush nor Snow had learned about it only after it was approved.

Democrats first complained, then Republicans leaped on it as well, not wanting to be seen as soft on national security during a congressional election year.

Larry Sabato, a political science professor at the University of Virginia, said congressional Republicans are running away from Bush this election year, and the port deal is the latest and most vivid example.

"In a way, the port deal was a godsend to them," Sabato said. "It allowed them to put a lot of daylight between themselves and a very unpopular president."

New York City Mayor Michael Bloomberg said the port debate has ignored the failure of the United States to adequately fund the U.S. Coast Guard.

"We complain about our ports being open to everybody -- but the Coast Guard is our first line of defense," Bloomberg told WABC Radio in New York.

A congressional Republican leadership aide said that among congressional Republicans "there was a certain level of outrage about how the whole matter was handled by the administration."

(Additional reporting by Thomas Ferraro, Susan Cornwell, Richard Cowan, Tim Ahmann, and Mark Egan in New York)

Bush allows arab country to operate six US ports { February 13 2006 }
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