Bush's bizarre ports deal.
Bush talks tough about the deal to turn over shipping operations at ports in in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia to United Arab Emirates' Dubai Ports World:
"They ought to listen to what I have to say about this," the president said. "They'll look at the facts and understand the consequences of what they're going to do. But if they pass a law, I'll deal with it with a veto."
Bush, who has never vetoed a bill as president, said on the White House South Lawn: "This is a company that has played by the rules, has been cooperative with the United States, from a country that's an ally on the war on terror, and it would send a terrible signal to friends and allies not to let this transaction go through."
So bizarre. Of course, concerns that domestic opposition to the deal is built on anti-Arab sentiment are certainly valid, particularly when you've got Lindsay Graham saying things like this on Fox:
"Americans right now want free trade, but when it comes to national security issues, we want to maintain the infrastructure ourselves...I don't think now is the time to outsource major port security to a foreign-based company."
But the dispute isn't over a simple matter of subverting "free trade" to security concerns, however obvious that politicians from both parties would try to frame it as such. Beside the fact that the panel that reviews these deals operates in complete secrecy (the Committee on Foreign Investment in the United States reviewed the deal but its report is classified), it's not as if DPW is a private company that happens to locate its headquarters and corporate governance in the UAE. It's a state-owned company poised to buy out the private London-based corporation that currently handles U.S. port operations. We're not talking about turning over port management from one foreign company to another, but turning it over from a private foreign firm to a foreign government wearing its corporate hat.
The blurring of the corporation and the state is already a contentious issue, and for good reason. There are both conservative and liberal cases to be made against state-owned international corporations. Not only they drive industrial concentration in a way regulated private companies cannot (or not without serious lobbying efforts), but state-owned corporations that operate globally necessarily blur the public functions of a government with profit-oriented functions of the company. For instance, The shortcomings of the UAE's banking system and unregulated gold market, through which Al Qaeda and Taliban representatives moved money before 911 and again before the US invasion of Afghanistan, would have no real bearing on a private Dubai-based firm's fitness to run a US port under US law. But they sure as hell matter when that firm is part and parcel of the UAE's (completely undemocratic) government.
At the very least, you don't have to be a nativist bigot to have a problem with the arrangement. Of course, by inviting the inevitable controversy, the Bushies have certainly given nativist bigots a platform from which to rant (and to make incorrect assertions; the actual port employees aren't going to change much because the merger). Chalk another one up to the Bush Admin's excellent judgement.
Update: Doing some further reading, Scott Shields at MyDD quotes Glenn Greenwald pointing out that a Chinese state-owned company already runs several ports in the US and it hasn't been an issue. I didn't know that, and I guess I see the dilemma here, in the sense that the distinction between private and state-run firms isn't always obvious, particularly in quasi-communist states like China.
It still seems to me, though, that the meta-issue with this deal isn't about the tradeoff between security and free trade, but about whether governments should ever turn over their public functions (like the operation of port facilities) to other governments operating through state-run corporations. And, no, I don't think they should. And, even if you think that such a blurring of government and private enterprise on the international stage is OK, the standards to which those governments (not just the firm itself, as the Bushies are stressing) should rise in order to secure a deal ought to be higher than what the UAE has achieved in recent years.
Update 2: This time it's Atrios who already made the exact same point, only shorter.
"They ought to listen to what I have to say about this," the president said. "They'll look at the facts and understand the consequences of what they're going to do. But if they pass a law, I'll deal with it with a veto."
Bush, who has never vetoed a bill as president, said on the White House South Lawn: "This is a company that has played by the rules, has been cooperative with the United States, from a country that's an ally on the war on terror, and it would send a terrible signal to friends and allies not to let this transaction go through."
So bizarre. Of course, concerns that domestic opposition to the deal is built on anti-Arab sentiment are certainly valid, particularly when you've got Lindsay Graham saying things like this on Fox:
"Americans right now want free trade, but when it comes to national security issues, we want to maintain the infrastructure ourselves...I don't think now is the time to outsource major port security to a foreign-based company."
But the dispute isn't over a simple matter of subverting "free trade" to security concerns, however obvious that politicians from both parties would try to frame it as such. Beside the fact that the panel that reviews these deals operates in complete secrecy (the Committee on Foreign Investment in the United States reviewed the deal but its report is classified), it's not as if DPW is a private company that happens to locate its headquarters and corporate governance in the UAE. It's a state-owned company poised to buy out the private London-based corporation that currently handles U.S. port operations. We're not talking about turning over port management from one foreign company to another, but turning it over from a private foreign firm to a foreign government wearing its corporate hat.
The blurring of the corporation and the state is already a contentious issue, and for good reason. There are both conservative and liberal cases to be made against state-owned international corporations. Not only they drive industrial concentration in a way regulated private companies cannot (or not without serious lobbying efforts), but state-owned corporations that operate globally necessarily blur the public functions of a government with profit-oriented functions of the company. For instance, The shortcomings of the UAE's banking system and unregulated gold market, through which Al Qaeda and Taliban representatives moved money before 911 and again before the US invasion of Afghanistan, would have no real bearing on a private Dubai-based firm's fitness to run a US port under US law. But they sure as hell matter when that firm is part and parcel of the UAE's (completely undemocratic) government.
At the very least, you don't have to be a nativist bigot to have a problem with the arrangement. Of course, by inviting the inevitable controversy, the Bushies have certainly given nativist bigots a platform from which to rant (and to make incorrect assertions; the actual port employees aren't going to change much because the merger). Chalk another one up to the Bush Admin's excellent judgement.
Update: Doing some further reading, Scott Shields at MyDD quotes Glenn Greenwald pointing out that a Chinese state-owned company already runs several ports in the US and it hasn't been an issue. I didn't know that, and I guess I see the dilemma here, in the sense that the distinction between private and state-run firms isn't always obvious, particularly in quasi-communist states like China.
It still seems to me, though, that the meta-issue with this deal isn't about the tradeoff between security and free trade, but about whether governments should ever turn over their public functions (like the operation of port facilities) to other governments operating through state-run corporations. And, no, I don't think they should. And, even if you think that such a blurring of government and private enterprise on the international stage is OK, the standards to which those governments (not just the firm itself, as the Bushies are stressing) should rise in order to secure a deal ought to be higher than what the UAE has achieved in recent years.
Update 2: This time it's Atrios who already made the exact same point, only shorter.
5 Comments:
The thing is though, it's not port operations and port security that are being outsourced. It is specific port facilities. In New York it is a cruise ship terminal which P&O now owns and a container terminal in New Jersey. The actual port is a US function and all operations lodged within it are required to meet US labour, operations and security standards.
Vancouver harbour is filled with ship service and port facilities which are privately owned. However, the Port Manager and Harbour Master are employed by the Port Corporation which is Canadian and sovereign.
I agree that state ownership is a bit of an optics problem. I dislike China's state-owned oil company casting about to buy a major Canadian oil producer so they can get into the tar sands project too.
What I see as the real interest here though is the reaction of Bush. Methinks Dubya protests too much and I start to suspect there is some connection we're not seeing. Carlyle group keeps ringing in my head.
Oops; you're right Dave. I meant to put "shipping operations" not "security" in the first paragraph. Just a sloppy typing mistake.
To follow up, I do understand that the companies would be subject to US law regarding inspections etc., and (as I wrote in my post) that the employees running the port aren't going to change. I'm just surprised that politicians and pundits on both sides of the issue are casting this as a question of setting aside "free trade" principles in the interest of a specific security concern and whether that's ok -- with Bush championing the meritocracy of the market and pols like Graham saying security trumps fealty to the market.
The thing is, other than on ideological grounds, i.e. whether port facilities should be privatized in the first place and whether outsourcing is ever ok, the real concern isn't over where DPW locates its corporate headquarters. If it was a private Middle Eastern firm, for instance, I doubt we'd be facing this uproar. It's the fact that an acutal foreign government, and one with a pretty sketchy security-ally history, is going to be running a US facility. It's not as simple as I made it out to be in the original post, and the more I think about it the more I realize this happens all the time, with oil for instance. But theoretically, under the global trade regime, governments regulate corporations. So what happens when the government is the corporation? Then shouldn't the government's institutional history (like the fact that citizens don't vote and that the Taliban used the Dubai currency markets to move their financial capital out of Afghanistan before the US invasion) matter just like the firm's actual narrow corporate history? I think that's what's causing the lion's share of the consternation here. As it should.
Also, go read David Sirota's take on the whole thing at Huffpo. I don't often agree with Sirota, but his argument that this is about the UAE trade deal seems plenty plausible.
I consider myself fairly well informed, and I had no idea until the Dubai deal that our ports were 'outsourced' to any other countries. I'm no bigot, but the notion that our port operations and/or security are being handled by any non-US entities or persons disgusts me. The fact that Red China or the UAE, through which funds have certainly flown to AQ and others, have any presence at all in our ports astounds me, and I thought I was beyond shock at anything the US government might do.
One last aside, I'm a former sailor. I assure you, no matter how this gets spun, it is impossible to separate port operations from port security. There will be overlap in the two functions.
I am a currently serving Master Mariner and now command merchant ships. Port security is the responsibility of the company only insofar as it must comply with the ISPS code internationally and any national requirements which may be added. It is my experience that US ports have a security focus which is directed primarily at people and not the avenues through which contraband or weapons may flow. Even the port surveillance of people leaves the masters of ships shaking their heads since it is invariably aimed at the wrong people.
I agree that the foreign-state ownership of facilities is odious but it is a fact of life in most industries. Notwithstanding, there are certin countries whose past perfomance as nations supporting terrorist should preclude their involvement in certain industries on the sovereign territory of one which has suffered at the hands of terrorists.
This thing is being reported all over the map and few have actually focussed on the reason it bothers them. I like Laura's link to David Sirota which is one of the few I've read that provides a decent analysis. But even that falls short in my view. I believe it runs deeper and there is always a way to find out what it is in the Bush administration. Follow the money.
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