Bush- Ports deal collapse could hurt War on Terror

WASHINGTON -- President Bush said Friday the collapse of the Dubai ports deal could hurt U.S. efforts to recruit Mideast governments as partners in the worldwide war on terror.

Separately, in what may have been an aftershock to the failed transaction, a new round of trade talks between the U.S. and the United Arab Emirates was postponed.

On Thursday, Dubai-based DP World backed away in the face of unrelenting criticism and announced it would transfer its management of port terminals in major U.S. cities to an American entity.

Bush struck a defiant tone Friday with the Republican-led Congress, saying he was open to improving the government's method of reviewing such transactions, but he insisted his administration's approval of the deal had posed no security risk -- and that the reversal could have the opposite effect.

"I'm concerned about a broader message this issue could send to our friends and allies around the world, particularly in the Middle East," said Bush during an appearance before a conference of the National Newspaper Association. "In order to win the war on terror, we have got to strengthen our friendships and relationships with moderate Arab countries in the Middle East."

The United Arab Emirates, of which Dubai is a part, is just such a country, Bush said.

Dubai services more U.S. military ships than any other country, shares useful intelligence about terrorists and helped shut down a global black-market nuclear network, the administration says. This week, though, the State Department's annual human rights report called the UAE's performance "problematic," citing floggings as punishment for adultery or drug abuse.

The president said he would now have to work to shore up the U.S. relationship with the UAE and explain to Congress and the public why it's a valuable one.

"UAE is a committed ally in the war on terror," he said.

Thursday's action spared Bush an embarrassing showdown, which he seemed likely to lose, over the veto he had threatened of any attempt by Congress to block the transaction.

After weeks of questions from lawmakers of both parties about whether giving a state-owned company from an Arab country control of significant port operations could increase terrorist dangers, the silence from Republicans on Friday was telling. The only statements came from Democrats who sought to keep the issue alive.

Sen. Charles Schumer, D-N.Y., a chief critic of the Dubai deal, said lawmakers needed more detail on DP World's planned divestiture. It wasn't clear which American business might get the port operations, or how the U.S. entity would be related to the Dubai government.

"Make no mistake, we are going to scrutinize this deal with a fine tooth comb," Schumer said.

And the Democratic Party planned a mobile billboard in Memphis, Tenn., where GOP activists were gathering for a weekend conference, accusing Republicans of standing in the way of providing enough funding for port security. "Republicans owe the American people answers as to where they really stand," said party spokesman Luis Miranda.

Republicans, too, have said the deal's end does nothing to address the nation's continuing vulnerability at its ports, where the vast majority of shipping containers are not inspected. In fact, work continued on Capitol Hill on two fronts: reworking the process under which the government approves foreign investment and boosting port security.

Senate Homeland Security Chairwoman Susan Collins, R-Maine, promised a committee vote by the end of April on legislation to strengthen cargo inspections and port security. Rep. Dan Lungren, R-Calif., was readying a nearly identical measure for the House. Both bills have Democratic co-sponsors.

House Homeland Security Chairman Peter King, R-N.Y., said the secretive process in which a U.S. committee considers security risks of foreign companies seeking to buy or invest in American industry should be changed to make security as important as the now-dominant financial considerations. He said this could likely be accomplished by making the Homeland Security Department the lead agency.

Without getting into specifics, the White House said Bush would be open to such reforms as well as to giving Congress additional oversight.

There were some signs the president's worries about the impact abroad were warranted.

Analysts said the developments could make cash-rich investors in the Persian Gulf, where there is the widespread belief that the furor was rooted in anti-Arab bias, wary of high-profile investments in the United States.

And the latest round of negotiations on a new free-trade arrangement between the U.S. and the UAE, scheduled for Monday in the United Arab Emirates, was postponed.

Both sides hastened to dispel speculation that the delay was the result of the ports controversy.

Neena Moorjani, spokeswoman for U.S. Trade Representative Rob Portman, would not directly address that question, but said it's not unusual for delegations to need more time to prepare. A UAE official said there was no connection, and that working groups would continue discussions by phone.

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Associated Press writers Liz Sidoti and Devlin Barrett contributed to this story.