Ports, Politics, Profit, and Prejudice

I thought the ports issue would pretty much blow over. It’s blown up instead and it has Republicans jumping ship from supporting the Administration. Another sign that the wheels are coming off over at the White House. What’s funny is that the Administration is probably right on this one — it’s just doing a really shitty job of explaining itself.

The basics: A British company, Peninsular and Oriental Steam Navigation Co., successfully bid for the contract to manage the ports of New York/New Jersey, Philadelphia, Baltimore, Miami, and New Orleans (aka South Louisiana). P&O was recently bought out by Dubai Ports World, a commercial arm of the government of the United Arab Emirates, for $6.8 billion (that’s with a “B”). DPW already owns a part of the port operations of CSX, the United States’ third largest railroad. Interestingly, no one within the administration thought to inform the President about his administration’s having approved the deal, until after the fact. Whether or not that is evidence of incompetence within the administration is a decision I leave to you. But since then, in the face of mounting criticism of the decision, the President has defended the decision to approve the deal, in part because there were apparently unusual conditions that were attached to it that didn’t come to light until just today in spite of a week of national controversy.

The national security concern is whether, with ownership of port management contracts, the UAE government might figure out a way to smuggle in nuclear bombs or anthrax or some other bad thing into the U.S. But the sale of the port management contracts is not related to the ability of the bad guys to do that. That’s a matter for having the appropriate security precautions in place. Those security precautions are taken by the government, which scans and inspects each one of the more than 40,000,000 cargo containers entering the U.S. every year. A daunting task, to be sure, but security is directly handled by the government already. The management of a port has more to do with staffing it with longshoremen, acquiring and maintaining the facilities, getting concessionaires to service the ships, and other nuts-and-bolts kinds of operations like that.

Eight years ago, where was the media coverage, where was the political outrage, where was Senator Shumer, when the Chinese military, through its commercial front company COSCO, took over management the ports of Los Angeles and Long Beach? And are we going to do about the fact that the Chinese still own and control most of the West Coast port management contracts? Of course not. For the same reason that we are ought to wind up allowing Dubai Port World to buy the port management contracts for the East Coast ports. For the same reason that we didn’t care that it was a British company that ran them before they were bought out. The reason is this: profit. COSCO cares about making money. DPW cares about making money. Both these companies have managed, through other resources, to make a lot of U.S. dollars. Rather than suffer the expense of converting those dollars into a foreign currency, and not being particularly interested in buying and importing U.S. goods to bring back to their own countries, they have chosen to reinvest those dollars in the U.S. It makes sense that they would want to invest in matters of commercial interest to them, where they have some expertise and knowledge and contacts with the Americans that they are working with. They could invest in any number of business activities here in the U.S., but these are both shipping companies. So they invested in an industry related to shipping cargo.

So, the Chinese now control the Los Angeles/Long Beach port. That port handles more than a third of all traffic for the United States – more than twice the traffic seen in the five or six ports affected by this proposed deal. Between all of these ports, we’re talking about more than half of the cargo capacity of the United States in the hands of two companies, both of which are more or less directly controlled by governments of which we have good reason to be suspicious. But their commercial operations are not the same thing as their governmental masters. Commercial operations are driven by profit.

I’ll concede that the government of the United Arab Emirates has had some pretty fishy dealings with our enemies. But it’s also the case that we have never before allowed national security concerns of this nature to get in the way of a good transaction. Nor should we. The security issue is a phantom; security is handled now by our friends at the Department of Homeland Security and would continue to be handled by them even if Osama bin Laden himself held the port management contracts.

Now, the money does ultimately find its way back to its masters in either China (thereby underwriting the Chinese military) or the UAE (thereby underwriting… the lavish lifestyle of the Emiris). Indirectly, this is a benefit to non-Americans, both of whom have some questionable motives. But directly, there is no particular threat. Whether it was wise of us to allow these commercial opportunities to companies with such ownership interests is an entirely different question than whether changing the management of the port makes it more likely that the port will be used to bring weapons of terror into the U.S. The bad guys’ odds of pulling off a stunt like that will simply not be affected by the identity of the manager.

We sold our port management rights to the British. Who have been bought out by the Emiris. Either we have to take management of the ports back into the government’s hands or we have to deal with the consequences of privatizing them, which is what has been going on.

Here’s the dichotomy: either the Emiris want to make money by providing us with this service, or they want to kill us. They’ve parted with $6.8 billion to buy a service contract here in the U.S. If they kill us, they can’t make that money back. If they try to make their money back, they’ve demonstrated to themselves that they’re better off with us alive and putting money in their pockets than dead and without active ports to generate revenue. So I think I know which way they’re leaning on that question. So why all the fuss? Is it racism? Probably not. But “discrimination” may be more accurate; we don’t particularly like the Emiris because they have some friends who are our enemies. But if we stopped doing business with everyone who has had fishy dealings with our enemies, we would have no trading partners at all.

What’s really going on here is a simple political attack on the Adminstration. Schumer started it and now he’s got lots of Republicans on board along with his fellow Democrats (who were in power when we sold the West Coast ports to China and no one in either party said a word about it). Like I said at the start of this piece, it’s simply a sign that George Bush and Dick “Deadeye” Cheney are losing control of the government, which would appear to be a good thing except for the fact that no one is taking over.

Burt Likko

Pseudonymous Portlander. Homebrewer. Atheist. Recovering litigator. Recovering Republican. Recovering Catholic. Recovering divorcé. Recovering Former Editor-in-Chief of Ordinary Times. House Likko's Words: Scite Verum. Colite Iusticia. Vivere Con Gaudium.

One Comment

  1. There is no American company to run these ports. They apparently all sold out in the 1970s. Dubai is an ally, we should not discriminate against them.

Comments are closed.