Reidblog [The Reid Report blog]

Think at your own risk.
Thursday, March 02, 2006
Ports everlasting
Wolf Blitzer broke the story earlier this morning that a major Israeli shipping firm has endorsed the Dubai Ports World deal, saying it has had a long and excellent business relationship with the firm, including docking Israeli ships at Dubai ports. Interesting scoop, but not sure how happy DPW will be to have their friends in the Arab world hear that news...

The firm, Zim Integrated Shipping, recently sent a letter to Sen. Hillary Clinton praising DPW executives and the company as excellent operators, and good business partners. The head of the firm said he also plans to send a similar letter to Chuck Schumer. This is interesting in light of the recent disclosure that the UAE observes the pan-Arab economic boycott of Israel. From CNN today:
WASHINGTON (CNN) -- Despite the United Arab Emirates' boycott of Israel, the Dubai-based shipping company that is slated to take control of several U.S. port terminals is a strong business partner of Israel's largest shipping firm, Zim Integrated Shipping Services, according to Zim's chairman.

CNN has obtained a copy of a letter written by Zim's CEO, Idon Ofer, to Sen. Hillary Clinton, D-N.Y., a leading opponent of the proposed deal, voicing his support of the merger that would but Dubai Ports World in charge of some terminal operations at six U.S. ports.

"During our long association with DP World, we have not experienced a single security issue in these ports or in any of the terminals operated by DP World," Ofer said in the letter, written Feb. 22. (Posted 11:30 a.m.)
Meanwhile, CNN is reporting that when CFIUS looked into the DPW deal one thing they didn't bother to look into was whether the company had any ties to terror groups like al-Qaida:

Rep. Peter King of New York, chairman of the House Homeland Security Committee, said officials from the Homeland Security and Treasury departments told him weeks ago that their 30-day review of the deal did not look into the question of links between DP World and al Qaeda.

King said the officials told him after he asked about investigation into possible terrorist ties: "Congressman, you don't understand, we don't conduct a thorough investigation. We just ask the intel director if there is anything on file, and he said no."

"There was no real investigation conducted during the 30-day period," King, who has been a vocal critic of the deal, told CNN. "I can't emphasize this enough,"

King's comments appear to contradict testimony by administration officials before Congress this week that a through review of any terrorism ties had occurred during the initial review of the deal. (Watch dispute over port deal investigation -- 2:10)
Contradictions? No, get out! King, normally a strong Bush apologist ... I mean supporter ... seems to hit the mark with this comment:

"When I hear the administration saying they want to educate the Congress and the American public, they should be educating themselves," King said. "They should do the investigation they should have done after the 30 days."
Perhaps if the review had included asking questions about ties to terrorist groups, it would have uncovered this (courtesy of ThinkProgress):


New evidence has emerged that key agencies of the United Arab Emirates may have been infiltrated by al-Qaeda. In May or June of 2002, al Qaeda officials wrote a letter to the UAE government claiming the emirates were “well aware” of the infiltration.

The letter, translated by the United States Government, is publicly available on the website of the West Point Combating Terrorism Center. The intro:

...The existence of the al-Qaeda letter – known officially as AFGP-2002-603856 – was first reported in a little noticed column by Scripps Howard.

The letter also contains the following "key phrase," says TP:


"You are well aware that we have infiltrated your security, censorship and monetary agencies along with other agencies that should not be mentioned."
Now, that could just be al-Qaida talking smack, but shouldn't the U.S. have looked into these possibilities (the letter is dated in 2002...) before approving the DPW deal? After all, DPW is not a private company -- it's owned by the same UAE government al-Qaida is apparently convinced that it has infiltrated...

Meanwhile,the U.S. is doing a special review of a second and third foreign ownership deals. Says WaPo this morning:


The Bush administration, stung by the public outcry over the Dubai port deal, has launched a national security investigation of another Dubai-owned company set to take over plants in Georgia and Connecticut that make precision components used in engines for military aircraft and tanks.

The administration notified congressional committees this week that its secretive Committee on Foreign Investment in the United States (CFIUS) is investigating the security implications of Dubai International Capital's $1.2 billion acquisition of London-based Doncasters Group Ltd., which has subsidiaries in the United States. It is also investigating an Israeli company's plans to buy the Maryland software security firm Sourcefire, which does business with Defense Department agencies.

Administration officials are privately briefing leaders of half a dozen House and Senate committees this week about the two planned transactions, concerned that both deals could stir controversy in a political climate that remains supercharged over the Dubai port deal. ...

... In the past, the foreign investment committee rarely told Congress of such inquiries. Wary of another misstep, administration officials decided to inform lawmakers of the two other pending transactions with national security implications for the United States.

There have been suggestions in the trade press that the publicly traded Israeli firm, Check Point Software Technologies, has been subjected to more scrutiny than Dubai Ports World, the state-owned Arab company that was initially cleared to take over operations at the six major U.S. ports with no security investigation. That inquiry was initiated only after an outcry about turning over port security to a country that has been cited for ties to terrorism. Sources familiar with the Israeli investigation said cybersecurity officials at the departments of Defense, Justice and Homeland Security all raised serious concerns about the purchase before the port controversy erupted.

Dubai International Capital's acquisition of Doncasters could present some of the same political problems created by Dubai Ports World's purchase of London-based Peninsular and Oriental Steam Navigation Co. Once again, a state-controlled Dubai company with deep pockets is purchasing a British firm with U.S. holdings. Doncasters has operations in nine U.S. locations and manufactures precision parts for defense contractors such as Boeing, Honeywell, Pratt & Whitney and General Electric.

A spokesman for Doncasters' corporate office in Connecticut said the company had no comment on the security investigation.

Although many foreign companies manufacture parts used in U.S. military equipment, in this instance CFIUS members decided to look more carefully at the Doncasters transaction. The CFIUS met last week and tentatively decided to subject that proposal to a 45-day investigation, and it finalized that decision in a conference call late Monday. The decision came on the final day of the regular 30-day review period. Aides on the Senate banking committee said the panel was notified late Monday that the CFIUS had initiated both national security inquiries.

"The CFIUS process is charged with determining if there are national security concerns in any transaction, and it takes that role very seriously," said Tony Fratto, spokesman for the Treasury Department, which leads the interagency committee. "It looks at each transaction on a case-by-case basis, and if security concerns are raised by any member of the committee at the end of an initial 30-day review, the case goes into investigation."

The 45-day investigation of the Israeli deal began in early February, several weeks before the controversy erupted over the Dubai port deal, administration officials said. The investigation of the Dubai-Doncasters deal began this week, at the height of the political turmoil over the port issue.

Yet Fratto said that neither of the new investigations were started "because of public reaction to some other transaction."

Of the 1,500 acquisitions that have been referred to the CFIUS, one has been rejected. But deals with security implications tend to fall through before the 45-day investigation. In 1989, 204 deals involving the purchase of a company with significant U.S. operations triggered a security investigation. Last year, only 65 went that far. [Emphasis added]

In the case of Check Point, the security questions were apparently raised early on, according to people familiar with the review. Check Point's proposed $225 million purchase of Laurel-based Sourcefire raised red flags with government cybersecurity officials.

Check Point was built by Gil Shwed, whom Forbes magazine has described as an Israeli billionaire who served in the electronic intelligence arm of the Israeli Defense Forces.

Sourcefire makes network defense and intrusion detection software for an array of customers, including the Defense Department. The company has deep roots in the National Security Agency. Its founder and chief technology officer, Martin Roesch, has served as an NSA contractor. Its vice president of engineering, Tom Ashoff, developed software for the secretive spy agency.

Last August, the Israeli government signed an agreement with the Pentagon to alert the United States before selling other countries technology related to national security. The United States asked for the agreement after learning that Israel had sold unmanned aerial vehicles to China in late 2004.

The CFIUS investigation is to be completed in mid-March.
All of this seems to beg the question: is there any operational aspect of American national security or military readiness that is not for sale?

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Tags: , , , , Dubai, Ports, Terrorism, Politics, UAE, News, Republicans
posted by JReid @ 11:36 AM  
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