Monday, April 27, 2015

Three words: Dubai Ports World

Back in early 2006, a controversy broke out that eventually "united" both Democrats and Republicans. That controversy was the impending sale of the Peninsular and Oriental Steam Navigation Company (P&O for short) to UAE-based Dubai Ports World (DP World or just DPW).

P&O had, for many decades, operated six seaports in the United States, specifically the Port of New York and New Jersey, the Port of Philadelphia, the Port of Baltimore,  the Port of New Orleans, and the Port of Miami. What this means is that P&O was responsible for port logistics, for handling port traffic, cargo, storage, and the like. And as such it was also required to adhere to U.S. Customs protocols. So, when DPW moved to acquire P&O, one of the many hurdles it needed to overcome was the approval of the U.S. government.

This approval ran through (and would still run through) the Committee on Foreign Investment in the United States (CFIUS), a Ford-era creation strengthened by Reagan's executive order in 1988 (permanently delegating the ability to review impending deals to the Committee). The Committee gave DPW the go ahead to proceed with the deal, so it did. And when the impending deal became public knowledge, well that's when all hell broke loose.

Essentially, the deal was questioned initially by Democratic lawmakers (like Chuck Schumer) because it appeared--to the poorly informed--that U.S.control of ports was being sold off to an Arab country, not a good thing in the post-9/11 world and more grist for the "Bush family is in the pockets of the Saudis" mill. But make no mistake, Republican lawmakers were quick to follow suit. And eventually, the House Appropriations Committee moved to block the deal in a bipartisan vote, while Schumer used his position in the Senate to achieve a similar result.

President Obama--then Senator Obama--weighed in on the issue:
Over four years after the worst terrorist attack in our history, not only are we failing to inspect 95% of the cargo that arrives at U.S. ports, but now we’re allowing our port security to be outsourced to foreign governments. Clearly, more time should have been spent investigating this deal and consulting with homeland security experts and local officials. I support my colleagues on both sides of the aisle who are seeking a full review of this deal.
So did then-Senator Hillary Clinton:
In the post-9/11 world, we cannot afford to surrender our port operations to foreign governments. Port security is national security and national security is port security. Our legislation will stop foreign governments from managing, controlling, or owning U.S. port operations.
Now, one can say they have a fair point to some degree, if not for the fact that--again--port operations had been outsourced to foreign concerns, already. And for the fact that operational control of a port does not mean control over security and customs. The U.S. government still retains authority in this regard and can mandate all sorts of things, from access to specific security protocols. Still, there's something to be said for a country based on free market capitalism--like the United States--doing business with a company controlled by an autocratic regime, i.e DPW being a state-owned (the UEA being the state) company.

Of course, DPW is far from alone in this regard. The United States allows all sorts of state-owned and state-controlled companies to do business with and in the United Sates, proper. And really, companies like P&O achieved their wealth and power because their governments treated them differently (better) than other companies, something that remains true of many large U.S.-based companies, as well.

But I digress.

The point is, there was major pushback against the DPW deal coming from people like Obama and Hillary Clinton. And that pushback was supposedly rooted in issues of national security. I say "supposedly" because really their concerns were all fabricated/imaginary in my opinion. And while they were bilking the issue for all it was worth, other political heavyweights like Bob Dole, Jimmy Carter, Bush senior, and Bill Clinton were supporting the DPW bid!

Fast forward to the here and now.

Much is being made of the linkages running from the Russian nuclear industry to the Clinton Foundation to Hillary and Bill Clinton, themselves:
As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chairman used his family foundation to make four donations totaling $2.35 million. Those contributions were not publicly disclosed by the Clintons, despite an agreement Mrs. Clinton had struck with the Obama White House to publicly identify all donors. Other people with ties to the company made donations as well.  
And shortly after the Russians announced their intention to acquire a majority stake in Uranium One, Mr. Clinton received $500,000 for a Moscow speech from a Russian investment bank with links to the Kremlin that was promoting Uranium One stock.
And that's all good and well. It's completely fair to worry about possible quid pro quos in all of this, because frankly it just seems so obvious, especially given the fact that the Clinton Foundation failed to make public--something it had promised to do--any donations that overlapped with State Department business while Hillary Clinton was Secretary of State.

But I think that the potential for graft here is overshadowing something else: the obvious lack of consistency on the part of Hillary Clinton and President Obama, when it comes to foreign-owned businesses and national security. Look at this WaPo piece, which is at pains to demonstrate that this scandal is really nothing of the sort. It buries the lead and misses the real issue (like almost everyone else, to be fair):
This story is about the sale of a controlling stake in a Canadian company called Uranium One to Rosatom, the Russian atomic energy agency. Because Uranium One controlled uranium mines in the United States, the sale had to be approved by the Committee on Foreign Investment In the United States (CFIUS), part of the executive branch.
The above little tidbit contains all the clues for the real takeaway from all of this. As was the case for the DPW deal, CFIUS approval was required.  And as was the case for the DPW deal, we are not talking about selling U.S. interests to a private concern, but rather to a state-owned agency: Rosatom is controlled by the Russian government. And--again, as was the case for the DPW deal--what is involved here directly concerns national security: uranium production and sales.

So what's different here? Why was the DPW deal something that had to be nipped in the bud, while Rosatom's purchase of Uranium One was just fine and dandy. Obama's and Clinton's concerns over the former should be mirrored in the latter. But they weren't. CFIUS approved the deal and nary a word was said beyond that, not by Obama, not by Clinton, not by Schumer, not by anyone.


Simple, they don't really care. The DPW deal was just a convenient tool with which to batter the Bush Administration. If it had been the Gore Administration, DPW would be running ports all across the country to this day. And while I don't think we should forbid companies from certain regions from doing business with or in the United States, I have to agree with Hillary Clinton's position, as staked out in 2006: we shouldn't be in bed with companies controlled by foreign governments, period. Of course, as we now know, that wasn't really her position...

Cheers, all.