Administration officials say port takeover underwent rigorous review

Bush administration officials on Thursday sought to calm the furor over the proposed takeover of operations at six U.S. ports by United Armed Emirates-based Dubai Ports World, telling members of the Senate Armed Services Committee that agencies within the administration agreed unanimously that the deal did not pose a threat to U.S. national security.

Deputy Treasury Secretary Robert Kimmit said DP World officials approached Treasury staff informally last October about the proposed deal and a potential review by the Committee on Foreign Investment in the United States.

"In contrast to some accounts, this was not rushed through the process in early February," he said.

Kimmit said that Treasury followed up in early November by requesting an intelligence assessment of the transaction and alerting Homeland Security officials. In early December, staff from several agencies met with company officials to review the transaction, and the company on Dec. 16 filed a formal notice of the transaction with Treasury.

CFIUS approved the transaction Jan. 17. Kimmit said members of Congress had not been briefed prior to that approval because CFIUS has no authority to do so.

"We can respond to request for information, but we cannot initiate a briefing on a pending decision," he said. He also said he was surprised at the outcry of the past several days, given that the Dubai deal had been reported by major news outlets going back several months.

Panel Democrats charged that the administration officials ignored a statutory requirement that any takeover involving a state-controlled company be subject to a seldom-used 45-day investigation phase, provided that the takeover "could affect the national security of the United States."

"If 9/11 was a failure of imagination and Katrina was a failure of initiative, this matter was a failure of judgment," said Sen. Hillary Rodham Clinton, D-N.Y.

Kimmit claimed that the CFIUS statute leaves it up to the discretion of administration officials whether to initiate the more rigorous investigation. He said that the 45-day phase is triggered only if one of the agencies that sit on the CFIUS panel believes there is a national security threat, and that was not the case with the Dubai ports acquisition.

Clinton said she planned on introducing legislation -- likely with Republican co-sponsors -- that will require CFIUS to undertake a 45-day investigation of the take-over. Kimmit promised to provide the committee with an agreement the administration reached with DP World that was a condition for CFIUS approval, and said he would also provide the intelligence assessment and whatever minutes of CFIUS meetings are available.

Deputy Defense Secretary Gordon England portrayed the United Arab Emirates, of which the Emirate of Dubai is a part, as a vital ally in the war on terror. He noted that more U.S. warships reside there than anywhere in the world outside of the United States, including 590 military sea-lift command ships in 2005.

"We rely on them for the security of our forces there," he said. England warned Congress of reacting too strongly against the Dubai deal. "The terrorists want us, they want our nation, to become distrustful, they want us to become paranoid and isolationist, and in my view, we cannot allow this to happen," he said.

Armed Forces ranking member Carl Levin, D-Mich., challenged the view of UAE as a squeaky-clean partner in the global terrorism conflict, noting that the 9/11 Commission report concluded that UAE is "both a valued counterterrorism ally of the United States and a persistent counterterrorism problem."

Meanwhile, House Homeland Security ranking member Bennie Thompson, D-Miss., on Thursday asked GAO to review the process CFIUS followed in approving the firm's bid to buy British firm Peninsular and Oriental Steam Navigation Co.

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