WASHINGTON : A Dubai government owned company said it will sell its US port operations in a move that spared President George W. Bush a showdown with Congress.
Dubai Ports World (DP World) made the announcement after leading Republicans told Bush that Congress would block the takeover.
"Because of the strong relations between the United Arab Emirates and the United States and to preserve that relationship, DP World has decided to transfer fully the US operations of P and O Ports North America to a United States entity," said a company statement read by Republican Senator John Warner.
"This decision is based on an understanding that DP World will have time to effect the transfer in an orderly fashion and that DP World will not suffer economic loss," the statement said.
The company said it was looking forward to working with the US Treasury "to implement that decision."
Details of the transfer were not immediately disclosed but while US politicians were relieved, business groups immediately warned of a potential backlash against US economic interests.
Warner read the company statement as the Senate began debating legislation on blocking the deal, which would have given DP World operational control of ports in Baltimore, New York, Miami, New Jersey, New Orleans and Philadelphia.
DP World said that the UAE prime minister, Sheikh Mohammed bin Rashid al-Maktoum, had advised the company that the assets disposal was "the appropriate course to take" in the interest of the UAE and the US.
The company previously had agreed to a new 45-day review of the deal by US authorities as opposition to the transaction mounted.
The announcement was made as DP World earlier said it had completed the 6.9 billion dollar takeover of British firm Peninsular and Oriental Steam Navigation Company (P and O).
Before the statement was issued it became clear the Senate would back fierce and widespread Republican opposition to the deal.
Members of Bush's Republican Party and opposition Democrats had joined forces to block the plan, citing security concerns.
The White House earlier had threatened to veto any legislation that stopped the deal. But the administration's hand was forced after the House of Representatives Appropriations Committee voted 62-2 Wednesday to prevent DP World from acquiring control of the US port operations.
The US Chamber of Commerce expressed concern at potential reprisals against US companies by foreign governments over the affair.
"We need to have more access to more markets abroad, not less access," Bruce Josten, executive vice president for government affairs at the US Chamber of Commerce, told AFP.
But Representative Peter King, one of the Republican lawmakers who went to see Bush on Thursday, rejected the concerns.
King highlighted the UAE's previous recognition of the Taliban government in Afghanistan and insisted there was a difference between allowing a British company and a UAE company to control US ports.
"We have to deal with different countries based on different perspectives," he said.
US Attorney General Alberto Gonzales defended the administration's stance, calling the United Arab Emirates a "terrific ally" that had provided the US military access to its airfields and ports.
He cited the case of Richard Reid, a British national convicted of trying to bomb a US airline with explosives hidden in his shoes. "That doesn't mean that we're not going to do business with British companies," Gonzales told CNN's "The Situation Room."
In Wednesday's House committee vote, Republicans had voted en masse to oppose the deal, citing national security concerns over an Arab company having control of US facilities.
The size of Republican backing for the House measure was highlighted by many political commentators.
With midterm congressional elections looming in November, many Republicans fear they are losing their advantage over opposition Democrats on the issue of national security.
The company's announcement nevertheless failed to satisfy Democrats, who said security at US ports remained in jeopardy.
Democratic Senator Chuck Schumer, a prominent deal critic, said despite the "scent of victory," the Dubai company's move would have to be closely examined.
"The devil is in the details," he said.
- AFP/ir
