Dubai Firm Offers To Delay Ports Deal

A United Arab Emirates company has volunteered to postpone its takeover of significant operations at six major U.S. seaports, giving the White House more time to convince skeptical lawmakers the deal poses no increased risks from terrorism.

The surprise concession late Thursday cools the standoff building between the Congress and President Bush over his administration's previous approval of the deal. In early reaction, lawmakers praised the temporary hold. But some critics pressed anew for an intensive examination of the deal's risks.

As part of its new offer, coordinated with the White House, Dubai Ports World said it would agree not to exercise control or influence management over U.S. ports pending further discussions with the administration and Congress. It did not say how long it would wait for these discussions to be finished.

"A delay makes sense to give the Congress and the American public a chance to gather information on the implications of the sale and to sort out the issues," says former staff member of the House International Relations Committee and CBS News foreign affairs analyst Pamela Falk.

The announcement effectively leaves existing American and British executives in charge of the company's seaport operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

Rep. Peter King of New York, chairman of the House Homeland Security Committee, described the offer as "definitely a positive step." A leading Republican critic of the deal, King said the president still must disclose new details about the administration's review and approval of the agreement last month.

A senior Dubai Ports executive, Edward H. Bilkey, said the company will otherwise move forward with its $6.8 billion purchase of London-based Peninsular & Oriental Steam Navigation Co., which operates in 18 countries. Although Dubai Ports agreed to temporarily segregate the company's U.S. operations, Bilkey expressed bewilderment over the security concerns expressed in Congress.

"The reaction in the United States has occurred in no other country in the world," Bilkey said. "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties."

The company, timing its announcement before financial markets opened in London, assured British shareholders they will be paid as previously planned.

"It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed," Dubai Ports said in a statement.

Early reaction on Capitol Hill was mixed.

"A simple cooling-off period will not allay our concerns," said Sen. Charles Schumer, D-N.Y.

Sen. Hillary Rodham Clinton, D-N.Y., urged Mr. Bush to conduct a broader review of potential terrorism risks. Rep. Vito Fosella, a New York Republican, said the administration should more fully explain why it concluded the sale was safe.

The announcement came amid a persistent political furor over the business deal, otherwise expected to be completed in early March. Republicans and Democrats alike have threatened to introduce legislation to block or delay the deal, citing unease over what they describe as inconsistent support against terrorism by the United Arab Emirates.

Raising concerns about national security in an era of terrorism, Republicans and Democrats alike are crafting legislation blocking or delaying the deal with an Arab country tied to some of the Sept. 11, 2001 hijackers. But CBS News chief White House correspondent Jim Axelrod reports White House officials emphasize Mr. Bush won't back down from his threat of a veto if Congress passes legislation to try and stop the deal.

"People don't need to worry about security," Mr. Bush told reporters Thursday. "This wouldn't be going forward if we weren't certain that our ports would be secure. The more people learn about the transaction that has been scrutinized and approved by my government, the more they'll be comforted that our ports will be secure."

The White House noted the United Arab Emirates contributed $100 million to help victims of Hurricane Katrina just weeks before Dubai Ports sought approval for its business deal. It said the money was nearly four times as much as the administration received from all other countries combined, and said there was no connection between the money and the pending deal.

CBS News correspondent Sharyl Attkisson reports there was no sense of backing down on the port agreement by Bush agency officials, but there was acknowledgement if could have been handled better.

At the first Senate oversight hearing since the controversy erupted, lawmakers challenged the adequacy of a classified intelligence assessment that played a crucial role assuring administration officials that the Dubai Ports deal was proper. The report, which is closely guarded, was put together during four weeks in November by analysts working under the U.S. director of national intelligence.

Sen. Carl Levin of Michigan, the top Democrat on the Senate Armed Services Committee, asked whether the intelligence report examined purported links between government officials in the UAE and Osama bin Laden before the September 2001 terror attacks.

"I did not see that in the report," said Robert Kimmitt, deputy secretary at the Treasury Department.

Levin said such questions about the relationship between the UAE and bin Laden were well documented in the 9/11 Commission report. "I'm glad that the UAE has taken some steps apparently afterward to address some of the antiterrorism needs the world has, but there's some evidence ... that was not true just not too many years ago," he said.

Clinton accused the administration of ignoring provisions of a federal law that require more extensive reviews when deals involve purchases by government-owned companies. Administration officials explained their long-standing practice was to conduct such broader investigations only when deals raised serious national security concerns.

Kimmitt responded: "We didn't ignore the law. Concerns were raised. They were resolved."

The White House homeland security adviser, Frances Fragos Townsend, said the UAE's cooperation in fighting terrorism has changed since Sept. 11, 2001.

"They have been critical allies in Afghanistan," she told reporters at a news conference on a separate matter. "They have been critical allies in fighting the financial war against terror. They've been critical allies in terms of our military-to-military relationship."