Politics As Usual

We’ll get by this one eventually, but for the past week or so the media and politicians have been concerned with nothing but the “Arab takeover of U.S. ports”. It’s good in a way, because they’re bound to learn a thing or two before they’re through. And there’s a lot of room for learning. Checking out the difference between a port and a terminal would be a great place to start, and reading a few maritime journals wouldn’t hurt either.

CBS News political analyst reported that neither the Congressional leaders or the White House knew that the port deal with a United Arab Emirates company was even in the works, and that Congressional leaders are loudly complaining now about the failure of the administration to brief them on the DP World purchase of the P&O assets. In spite of the fact that ongoing coverage in maritime periodicals was being given to the bidding process over the last three months, both sides claim to be in the dark about the matter. The whining is a clear indication that they were caught napping. One cannot help but wonder, however, what the real reason for this uproar might be. Too often in the past, the media and politicians have diverted the attention of U.S. citizens by making mountains out of molehills, thereby covering up events that would not normally pass muster. Smokescreens have always been the most effective cover in battle and in prattle. Let’s see how this one plays out. The consequences may not be beneficial to the average US citizen.

**** Posted on February 22, 2006, in the FINANCIAL TIMES (By Robert Wright) ****

“Backlash to Dubai deal sends danger signal to US ports sector”

“Wright reminds us this is not the first time such a controversy has arisen, citing the Chinese company, Costco’s, effort in 1998 to take control of the Port of Long Beach. Costco simply switched to nearby Los Angeles and used the facilities there.

“First, the ‘legislation proposed by US senators now could affect a number of companies that already operate container terminals in the US, possibly forcing them to sell.

“Secondly: ‘The dispute could also put at risk the US’s reputation in the maritime industry as a safe, predictable place to do business, observers believe.

“Finally: ‘The ultimate effect may be to divorce practice in the US’s relatively protected, inefficient container ports sector further from that elsewhere in the industrialized world, where large international companies have generally developed more efficient businesses.’

“Neil Davidson, a container ports analyst at London-based Drewry Shipping consultants, indicates, ‘the US container port industry would be unworkable without companies controlled by foreign governments. Proposed emergency legislation by senators Hilary Clinton and Robert Menendez would prevent foreign governments from controlling US container port assets.

“Among key companies that could be barred from operating US container terminals are China Shipping, the state-owned Chinese line, which has a terminal at the Port of Los Angeles, and APL, a line based in Oakland, California, and owned by Singapore’s state-owned NOL,’ and ‘There are a number of major state-owned shipping lines that have terminals in the US,’ Davidson notes.

“Further, ‘The law would prevent DP World, which is owned by the emirate of Dubai, from making any future investments but also lock out permanently Singapore’s PSA, the world number three container port operator by capacity, owned by the Singaporean government. DP World will become the number four through the P&O takeover but will only be just behind PSA and Denmark’s APM Terminals.’

“Finally: ‘Without DP World and PSA, the US would be further cut off from the influence of the world’s largest, most efficient container port operators. Hong Kong’s Hutchison Ports, the world’s number one, already refuses to invest in the US because its executives are skeptical of how the container ports industry is organized.’

“Still, ‘that may suit the mainly small family-owned companies that lease container terminals at many US ports from the publicly owned port authorities controlling nearly all of them. Such small companies dominate the sector in the US, along with shipping lines, which lease dedicated terminals for their ships at many ports, especially on the west coast.’

“Thus, ‘Although the restrictive practices at union-dominated US ports mean profits are not as high as in other parts of the world, business for such family-controlled companies has been generally good, according to Mr. Davidson. Few have chosen to sell out in the same way as the owners of ITO, the small terminal operator that sold P&O is north American assets in June 1999.’

“Finally, ‘US politicians well beyond Washington might also benefit if the deal were to fall apart. Many local port authorities are run by political appointees, who might benefit from attacking Arab interests if P&O North America’s terminal leases were surrendered and could be relet.’

“Concludes Mr. Davidson, ‘The US ports business is a pretty political animal.’”

**** Posted on February 22, 2006 at LewRockwell.com (By William Marina) ****

“American ports use to be controlled by a corruption-prone alliance of politicians and unions. One can recall with nostalgia a half-century ago, as Oscar week approaches, Marlon Brando, Karl Malden, Lee J. Cobb, Rod Steiger and Eva Marie Saint in ‘On the Waterfront,’ offering us a glimpse of this relationship. And as we see the posturing of Chuck and Hillary, we are reminded that all of our actors are not in Hollywood.”

As Jay Hancock stated in the Baltimore Sun this morning, “The politicians really do fear a vicious attack. But not from a bomb sneaked into a container by secret-agent stevedores controlled by Arab masters. They’re too smart for that.

“They’re worried about November elections.”