[Originally posted at TheDailyFuel.com on February 22, 2006]
Much has been made of the recent sale of six major U.S. ports from P&O, a British company, to DP World, a port operator based in the United Arab Emirates. The Bush administration defends its approval of the sale by vouching that a thorough security review of the deal has taken place, and that Americans have nothing to fear from the acquisition. Still, opposition to the administration's approval of the transfer has been vocal and has united the two political parties like nothing else has in recent memory. Is this just an opportunistic maneuver by a group of senators eager to be perceived as patriots in an election year, or is there cause for real concern?
Perhaps a good starting point for an analysis of this issue might be Homeland Security Secretary Chertoff's statement to Tim Russert on last Sunday's "Meet The Press." To those who are troubled by the fact that financial support for the 9/11 terrorists has been traced back to the U.A.E. and who point out the fact that two of the hijackers where from that Arab nation, Mr. Chertoff responded that no one ever raised an objection to the British ownership of the same ports even though Richard Reed, the would-have-been shoe-bomber on a post 9/11 transatlantic flight to the U.S., was British. In other words, just because a country 's citizenship might include a few people who genuinely hate the United States and would like harm us, we cannot criminalize the whole country. If the same principle were applied to similar situations, what should we say about the Saudi or Chinese interests that control many vital sectors of the American economy? In spite of Mr. Chertoff's other blunders, painfully evident in his handling of the Katrina debacle, it is hard to find fault with Mr. Chertoff’s line of reasoning on this particular count. Why, the majority of port terminals at the Port of Los Angeles is controlled by foreign companies, some of which hail from countries that are not exactly staunch U.S. allies, such as China, and congress has not made a big deal of that little fact.
Defenders of the acquisition also point out that Dubai Ports World would only take over commercial operations at the six ports in question (New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia). Security would remain the responsibility of the U.S. government. Besides, worrying about who operates docks in this country is less important than knowing who operates docks in countries hostile to the United States (where dangerous weapons would be loaded.)
Keeping all this in mind, I would remind those who are genuinely worried about the security of our ports that the real cause for jitters is that less than 5% of the cargo coming into the United States is ever subjected to inspection. Admittedly, the U.S. Coast Guard and U.S. Customs are not adequately staffed and equipped to monitor the humongous volume of incoming traffic. That is the real scandal, and one that both the President and Congress have failed to address in a meaningful way since 9/11. In fact, the inadequacy of port security is such a well known weakness that it has been repeatedly used as an example by those who question the administration's commitment of keeping America secure, long before this latest issue arose.
For congressmen who are vocal about national security issues, there is no lack of areas where their energy and their attention is needed. In one worrisome example, the Nuclear Regulatory Commission has jurisdiction "to review applications for a license, [or for] transfer of a license [...] to determine whether the applicant [for nuclear reactors] is owned, controlled, or dominated by a foreign interest." However, as the staff of the NRC warned in 1999, there was no procedure in place for those cases in which ownership changed after a license has been granted. The remedy instituted by the NRC in 2000 relies on self-certification of changes in ownership rather, than in direct government control of nuclear reactors licensees.
Also, a Government Accountability Office investigation conducted in 1995 on the effectiveness of the Exon-Florio amendment to the Defense Production Act of 1950, an amendment specifically designed to prevent foreign takeovers that could jeopardize U.S. security, revealed that the nation's security interests may not be as well protected as they should be for a number of reasons. For example, notification of a transfer of ownership interest to the Committee for Foreign Investments in the United States (CFIUS), the entity responsible for oversight of the Exon/Florio provision, is voluntary, and not all companies comply with this voluntary requirement. Since there is no official record of how many foreign acquisitions are not reported to CFIUS, it is hard to determine the impact on national security of never-reported deals. However, the GAO identified unreported deals in such sectors as biotechnology, aviation, advanced materials and aerospace. Also, Exon-Florio does not define national security interests in detail, so it is up to the declarant to establish whether a deal jeopardizes national security. To the best of my knowledge, these aspects of the Exon-Florio amendment have not been corrected to date.
Rather than spending time scrutinizing a deal that is far from extraordinary in an increasingly global economy, our representatives in Washington might be inclined to examine the effect that other less advertised threats, such as our ballooning deficit, have not only on the lives of Americans, but also on national security. As this administration continues to dig us into a deeper economic hole, its eagerness to transform the government by offloading more of its traditional functions to private interests, many of which happen to be foreign, is the only thing more pernicious than the deficit itself. For a nation whose dependence on an influx of foreign capital and on imported energy sources has rapidly grown in recent years, the true issue with national security lies not in which foreign nations should be allowed to privately own pieces of U.S. infrastructure; rather, we should ask ourselves if private ownership of public infrastructure is always a good idea, and whether growing reliance on external financial support is wise in a world where divisions are festering and are threatening stability more and more.