The red-hot political controversy over Dubai Ports World�s acquisition of the British
Peninsular & Oriental Steam Navigation
Co., and assumption of leases to manage terminals in six U.S. cities, has faded from America�s front pages, radio talk shows and cable news pundit panels. But the howling of charges that some of America�s Gulf allies were too cozy with terrorists and the Taliban is still ringing in the ears of many specialists who closely follow developments between the United States and the Arab world.
Among them is Ambassador Chas Freeman. Last week at a panel discussion called �How Can the U.S. Re-Open for Business to the Arab World?� Freeman, the U.S. Ambassador to Saudi Arabia during the 1991 Gulf War, shared his observations from a recent trip to the Middle East region. Freeman, who now heads the Washington-based
Middle East Policy Council, said the firestorm that arose against the UAE-based DPW terminal management deal was the �final straw� for many Arabs in the region who had defended U.S. actions out of a sense of affection for America. He said, �It demonstrated that �Arabophobia,� a fear of Arabs and Islam, was not simply a regional or elite phenomenon, but was deeply rooted throughout our country, and it demonstrated that passionate prejudice would be exploited with shameless demagoguery by our ruling political class.�
Freeman noted that President Bush was on the right side of the port terminal lease issue but was ultimately tagged with blame for the controversy when others were culpable, �[t]he only accusation that has been made against the president is that he failed.. I should say perhaps to use his word -- he "misunderestimated" the ugly ignorance of the public and the shameless irresponsibility of the American political class.� Freeman added, �[t]he public and the irresponsible people of the political class escape all blame, but the president, having failed to correctly analyze their ignorance and shamelessness is blamed.�
There were other testaments to the negative effects the aborted ports deal will have for business between Americans and Arabs. Don De Marino, Chairman of the
National US-Arab Chamber of
Commerce, told the audience, �There is a firm belief among virtually all Arab investors of my acquaintance that a definite political risk is to be assumed for any direct investment in the United States in any sector for any amount and virtually anywhere in this country.� He continued, �It is not a risk guaranteed to occur, like an exchange conversion problem might be in another country -- it is a latent risk, but one that could explode on you suddenly and make the political and cultural context so challenging as to moot the investment.�
Edward Graham, a senior fellow at the Institute for International Economics and author of the forthcoming book,
"U.S. National Security and Foreign Direct
Investment," said he examined the DPW deal in the course of his research, �I detected, well, xenophobia for certain and �Arabiaphobia,� if that's a word, certainly a lot of politics.� Graham said that some of the protests came from politicians engaging in �demagoguery for the purpose of padding one's political r�sum� when one is a possible presidential candidate, that certainly seemed to be a big part of the story.� Graham also commented on his review of the process employed by the
Committee on Foreign Investment in the United
States, or CFIUS, �When you look in detail, as we did, at the measures that the CFIUS took - I mean, this much-maligned CFIUS that supposedly is a pushover - when you look at what they did, well, I think they pretty much did do the right thing. The only thing they didn't do was what I think might have been something that would have been advisable just on political grounds, and that is to go ahead with the extended 90-day review. But in terms of what you might ask on a technical basis for security arrangements, well, it pretty much was all in place.�
Career diplomat James Andrew Lewis, now a senior fellow and director of the Technology and Public Policy program at Washington�s
Center for Strategic and International Studies talked about the failed deal�s costs and causes, �The immediate effect of the Dubai incident, the financial implications are to devalue U.S. assets, including the dollar, without any benefit to security.� Lewis said the resolution was driven by politics but shaped by negative perceptions Americans held towards globalization and the Arab world. Regarding globalization Lewis said, �People are questioning the ability of our current political leadership to manage these complex risks and this complex process of international engagement.� On the question of perceptions he added, �Sometimes you hear about the Arab street, and you can read Zogby polls about how Arab views of the U.S. are declining. Well, this was the American street, and Dubai ran directly into the American street.. ..and the American street, if you will, does not trust the Middle East.�
An optimistic note was sounded by William Reinsch, President of the
National Foreign Trade Council who said, �We can repair our relationship with the UAE by maintaining momentum to conclude that FTA negotiation.� It was ironic that the prospects for success in that free trade agreement, he added, were probably better in the wake of the DPW deal because both sides were afraid to fail, �because if they do, the DP World case is going to be blamed and nobody wants to have that happen.�
The panel on reopening business in the Arab world was the latest in the Middle East Policy Council�s Capitol Hill series of forums. They started in 1993 as critiques of U.S. foreign policy �directed at the Washington lawmakers and opinion leaders who affect U.S. relations with the Middle East and the Arab world.� The events are usually conducted, as the name implies, on Capitol Hill. However, this panel, held April 7, 2006, was hosted at the Center for Strategic and International Studies in Washington because, according to Ambassador Freeman, �members of Congress on whom we normally rely to provide us with a venue were afraid to do so. All of them stated that they wish to be to the right of the President on this issue; in other words, Arab-bashing rather than defending relations with the Arab world. This is a sign of the times.�
[SUSRIS will provide complete reports of the presentations at the �How Can the U.S. Re-Open for Business to the Arab World?� panel over the next several days.]
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