Top ports deal myths and falsehoods

Faced with widespread criticism in recent weeks, the Bush administration and some of its supporters have promoted numerous false and misleading claims intended to downplay the approval of a deal that would turn over control of terminal operations at six U.S. ports to Dubai Ports World (DPW) -- a company owned by the government of Dubai, a member state of the United Arab Emirates (UAE) -- and cast critics of the transaction as racist, politically opportunistic, or both. The media, in turn, have often repeated these claims without challenge or correction.

On February 11, the Associated Press reported that Dubai Ports World (DPW) -- a company owned by the government of Dubai, a member state of the United Arab Emirates (UAE) -- intended to purchase the British company Peninsular and Oriental Steam Navigation (P&O) in a $6.8 billion deal, thereby acquiring the leases to terminals at six major U.S. ports. The AP's disclosure that the Bush administration had approved the takeover a month earlier sparked a bipartisan outcry from members of Congress, governors, and national security experts. Many cited what some major media outlets have described as the UAE's “mixed” record on terrorism and further claimed that the administration flouted federal law by failing to conduct a full review of the national security implications of the deal. In response to these concerns, DPW -- which had reportedly been working in close coordination with the White House -- requested on February 26 that it undergo the full investigation. While the deal is expected to be finalized today, DPW has suspended the part of the transaction relating to U.S. ports pending the results of the additional review. If members of Congress and the Bush administration ultimately agree to the transfer of these leases, DPW would assume control of the terminal operations at ports in New York, New Jersey, Philadelphia, Baltimore, Miami, and New Orleans.

Faced with widespread criticism in recent weeks, the Bush administration and several of its supporters have promoted numerous false and misleading claims intended to downplay approval of the DPW transaction and cast their critics as racist, politically opportunistic, or both. The media, in turn, have often repeated these claims without challenge or correction, as Media Matters for America documents below.

#1: DPW is simply “Dubai-based”

In reporting on this controversy, numerous news outlets have ignored the fact that DPW is state-owned, referring to it simply as an “Arab company” or “Dubai-based.” But the distinction between a company owned by a foreign government and one simply based in a foreign country is critical as a matter of law.

Indeed, critics argue that, in approving the deal, the administration ignored a federal law governing the transfer of American assets to foreign, government-owned companies. Enacted in 1988, the Exon-Florio provision established the Committee on Foreign Investments in the United States (CFIUS), the interagency panel that oversees all foreign acquisitions of American assets. As amended by Congress as part of the National Defense Authorization Act for Fiscal Year 1993, the law requires an additional 45-day review if “the acquirer is controlled by or acting on behalf of a foreign government” and the acquisition “could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S.”

In its initial, 30-day examination of the deal, however, CFIUS determined that the deal gave rise to no national security concerns and declared this full review unnecessary. But critics of the deal have noted that the UAE does not recognize Israel as a sovereign state and was one of only three countries to recognize the Taliban-led government in Afghanistan prior to the September 11, 2001, terrorist attacks. Also, they have cited a discovery by U.S. investigators that more than $120,000 was funneled through UAE bank accounts to the 9-11 hijackers, and the 9-11 Commission's finding that the UAE “ignored American pressure to clamp down on terror financing until after the attacks.” These critics contend that because DPW is controlled by a member state of a country with what is arguably a “mixed” record on terrorism, CFIUS' review of the transfer was not in accordance with the law.

But despite the obvious relevance of DPW's state ownership, news outlets such as the Associated Press and CNN, in their reports on the story, have repeatedly failed to inform their viewers and readers of this fact.

#2: There is no difference between DPW and the British company that previously managed the ports

In failing to report that DPW is state-owned, certain news outlets have bolstered the false premise advanced by the Bush administration that the widespread criticism of this deal is based on the company's Arab ownership and is therefore discriminatory. In order to make this point, the White House has repeatedly suggested that there is no difference in legal status between DPW and P&O, the British company that currently manages the ports. For example, President Bush said during a February 28 press briefing, "[W]hat kind of signal does it send throughout the world if it's okay for a British company to manage the ports, but not a company ... from the Arab world." But such comments ignore the fact that, unlike DPW, P&O was not controlled by the British government or any other foreign government prior to its acquisition.

Nonetheless, numerous news outlets and media figures have uncritically repeated such claims without noting there is a substantial difference as a matter of law between DPW and P&O. In some cases, they have done so without even reporting that DPW is state-owned. For example, a March 1 Associated Press article quoted Bush's February 28 comment suggesting anti-Arab bias on the part of those criticizing the deal, but at no point informed readers that DPW is controlled by the government of Dubai.

In a February 24 article, Washington Post staff writer Jeffrey H. Birnbaum went a step further, reporting the administration's suggestion as fact. He wrote that “lawmakers said they feared that national security might be compromised by letting a Middle Eastern firm manage key U.S. ports.” While Birnbaum noted later in the article that DPW is state-owned, he did not explain the legal significance of this fact. Nor did he note critics' argument that because the company is controlled by a foreign government with a mixed record on terrorism, the administration should have conducted the full review required by law in such cases.

In his February 28 column, Washington Post columnist Richard Cohen also concluded that the opposition to the ports deal was “really about security anxiety and a dislike of things and people Arab.” But Cohen based this position on the Bush administration's false premise that there is no difference as a matter of law between P&0 and DPW. He quoted the president's comment on February 23 that "[w]hat I find interesting is that it's OK for a British company to manage some ports, but not OK for a company from a country that is a valuable ally in the war on terror."

#3: DPW decided on its own to request an extended security review

In response to the escalating criticism of the Bush administration's approval of the ports deal, DPW offered on February 26 to submit to an additional review of the national security implications of the transfer. But in reporting on this development, media outlets have repeatedly credited DPW for taking the initiative, while failing to note critics' argument that the additional investigation should have occurred prior to the administration's approval of the deal.

As noted above, the Exon-Florio provision requires CFIUS to carry out an additional 45-day review -- on top of the customary 30-day investigation -- when the acquisition of American assets by a foreign, government-owned company provokes national security concerns. Lawmakers from both parties, including Rep. Peter King (R-NY), Sen. Charles Schumer (D-NY), Sen. Hillary Rodham Clinton (D-NY) and Sen. Susan Collins (R-ME), have specifically argued that because CFIUS declined to carry out this full investigation during its original examination of the deal, the initial review was not in accordance with the law.

The substance of these objections is crucial to understanding DPW's decision to undergo the additional scrutiny -- not to mention the controversy at large. Nonetheless, news outlets such as the Associated Press, The New York Times and The Wall Street Journal have reported on the development without providing this context.

#4: The administration's review of the deal was very thorough

In the days after the ports controversy erupted, a chorus of Bush administration officials asserted that CFIUS' review of the DPW deal had been adequate and thorough. On the February 19 edition of CNN's Late Edition with Wolf Blitzer, Secretary of Homeland Security Michael Chertoff described the transaction as having gone through “a very thorough review.” A February 21 AP article quoted Attorney General Alberto R. Gonzales saying that the administration employed a “very extensive process” for reviewing such deals. White House press secretary Scott McClellan told reporters on February 22 that the panel “went through a very thorough review process before this transaction was allowed to proceed forward.” The State Department also joined in; spokesman Adam Ereli stated that the administration's approval was the “result of this very thorough, very exhaustive, very careful review,” and spokesman Sean McCormack claimed that CFIUS “did a thorough review of all aspects of this proposed sale.”

Numerous news outlets and media figures uncritically reported these expressions of confidence in the review process. On the February 17 edition of Fox News' Special Report, for example, correspondent Major Garrett reported McCormack's comments without noting critics' claim that the review had been insufficient. Former Secretary of Defense William Cohen, now a CNN world affairs analyst, appeared on the February 20 edition of The Situation Room and granted the administration the benefit of the doubt on this issue: “I have to assume that they made a very thorough examination of this before signing off. ... I assume that has been done.” A February 22 Washington Post editorial claimed, “None of the U.S. politicians huffing and puffing seem to be aware that this deal went through normal security clearance procedures.” More recently, a February 26 Los Angeles Times editorial argued, “No one can dispute that ... the deal has been vetted by the Department of Homeland Security.”

In repeating or advancing such claims however, media have ignored evidence that the review may not have been so “thorough” after all. For example, Secretary of Defense Donald Rumsfeld, a key member of CFIUS, and one to whom national security considerations would presumably be highly relevant, acknowledged in a February 21 press conference that he possessed “minimal information” about the deal because he had “just heard about this over the weekend.” Nonetheless, articles appearing in the February 22 editions of The New York Times, The Washington Post, and the Los Angeles Times all reported the administration's claim that the review had been thorough but failed to note Rumsfeld's admission that he had been in the dark about it.

Continued scrutiny of the CFIUS review soon yielded more disclosures regarding the actual nature of the investigation. On February 23, the Post reported that “CFIUS met only once during a 23-day review of the sale and that the few objections raised were quickly addressed.” On February 27, Collins released an unclassified version of a document showing that the U.S. Coast Guard had “cautioned the Bush administration that it was unable to determine whether a United Arab Emirates-owned company might support terrorist operations.” A February 28 Scripps-Howard column underscored the Coast Guard's concerns, noting that Al Qaeda -- in a 2002 letter translated by the U.S. government -- claimed that it had infiltrated numerous UAE agencies and that the emirates were “well aware” of this fact.

Most recently, Rep. King asserted on March 1 that officials from the Homeland Security and Treasury departments had told him that the CFIUS review did not examine possible ties between the UAE and terrorist groups. “There was no real investigation conducted during the 30-day period,” King told CNN. Over the course of the following day, however, most news outlets ignored King's allegation .

#5: The administration extracted “extra security concessions” from DPW

Some media figures, such as NBC chief White House correspondent David Gregory, have uncritically reported that the Bush administration, in outlining conditions by which DPW would assume control of the six U.S. ports, “extracted extra security concessions” from the company prior to approving the deal. But these “concessions” are reportedly little more than pledges to comply with U.S. law. According to a February 23 AP article, the administration “secretly required” DPW to merely “cooperate with future U.S. investigations.” A February 24 New York Times article similarly reported that the secret “assurances” the administration drew from DPW were primarily “centered on compliance with existing United States law.”

#6: Federal agencies control and conduct all port security

In their reporting on the ports deal, certain news outlets have advanced the administration's claim that the ownership of port terminals has no effect on the level of security. For example, Fox News chief White House correspondent Carl Cameron reported on February 27 that DPW “will simply operate terminals, loading and off-loading cargo. Security and port ownership remain entirely in U.S. hands.” A February 24 Washington Post editorial claimed that “the six ports now in question will be far less dependent on Dubai's goodwill, because security there is controlled by the Coast Guard and U.S. Customs and Border Protection, no matter who's doing the accounting.” But, according to Clark Kent Ervin, the former Department of Homeland Security inspector general, the company managing the port is responsible for significant security operations.

The claims made by Cameron and the Post editorial page echo recent Bush administration statements in defense of the deal. At a February 22 press briefing, McClellan asserted that DPW “won't control security at the ports. The security is under the control of the Coast Guard and under control of the Customs and Border Patrol, and it will remain that way.” On February 23, Frances Fragos Townsend, assistant to the president for homeland security and counterterrorism, said of the DPW deal, "[T]his not about outsourcing port security, which is in the very capable hands of the United States Coast Guard and the Customs and Border Patrol. This is about commercial operations at a port." On February 28, Bush himself said, “I can understand people's consternation, because the first thing they heard was that a foreign company would be in charge of our port security, when, in fact, the Coast Guard and Customs are in charge of our port security.”

But in a February 24 article, Post staff writers Paul Blustein and Walter Pincus countered that such a claim “overstates the role government agencies play.” The article included a quote from Carl Bentzel, “a former congressional aide who helped write the 2002 act regulating port security,” who said, “They've been saying that customs and the Coast Guard are in charge of security; yes, they're in charge, but they're not usually present.” Blustein and Pincus also noted that “private terminal operators are almost always responsible for guarding the area around their facilities.”

Moreover, in a February 23 New York Times op-ed, Ervin noted that “the Coast Guard merely sets standards that ports are to follow and reviews their security plans. Meeting those standards each day is the job of the port operators: they are responsible for hiring security officers, guarding the cargo and overseeing its unloading.”

#7: With the Dubai Ports deal, Democrats have just discovered the issue of port security

In response to the controversy over the DPW deal, some media figures have claimed that the Democrats criticizing the Bush administration's approval of the transaction had previously ignored the issue of port security. On the February 22 edition of PBS' The NewsHour with Jim Lehrer, following a report that highlighted criticism of the deal by Sen. Schumer and Gov. Jon Corzine (D-NJ), New York Times columnist David Brooks said, “I think a week ago, none of the people we just saw in that report knew a thing about port security or cared anything about port security.” That same day, syndicated radio host Rush Limbaugh similarly claimed that Sens. Schumer and Clinton had only recently emphasized port security in an effort to “mak[e] the American people think they have any interest in our national security.”

In fact, contrary to these suggestions, congressional Democrats in recent years have repeatedly stressed the need for greater port security and have urged Congress and the administration to act on the issue.

For example, the Democrats specifically cited by Brooks and Limbaugh have a substantial track record of promoting port security. In 2004, Schumer proposed an amendment to provide $70 million for research and development to stop nuclear materials from entering U.S. ports. In 2005, Clinton and then-New Jersey senator Corzine co-sponsored a successful amendment that provided $150 million for port security grants. Clinton also co-sponsored a 2005 amendment to provide an additional $450 million for such grants

Other Democratic critics of the DPW deal that have previously put forward legislation to bolster port security include Sens. Bill Nelson (FL), Patty Murray (WA), Robert Byrd (WV), and Ernest Hollings (SC) and Rep. Jane Harman (CA).

Moreover, most Republicans in Congress have resisted Democrats' efforts to secure U.S. ports, as the Senate Democratic Policy Committee has documented. In fact, many of the Senate Republicans now calling for the Bush administration to revoke the DPW port deal have continually voted against Democratic attempts to strengthen port security.

#8: National security is a right-wing value

In a similar vein, numerous media figures have characterized Democratic criticism of the port deal as an attempt to move “to the right” of Bush and congressional Republicans on the issue of national security. For example, Time magazine national political correspondent Karen Tumulty said on February 24 that Democrats “rushed in to have the chance to get to the right of the Republicans.” On February 26, Newsweek assistant managing editor Evan Thomas said that the Democrats “need to get to the right of President Bush on something, and so, they have picked this moment.” On February 22, Fox News Washington managing editor Brit Hume said that “this issue has clearly enabled Democrats to appear at least to be to the right of the president.” NBC News Washington bureau chief Tim Russert and Fox News Sunday host Chris Wallace also depicted Democrats as using this controversy to position themselves to the right of Republicans.

Implicit in such claims is the assumption that national security is a right-wing value. But as noted above, some of the Democrats who have most strongly denounced the deal have in recent years been among the most active proponents of enhancing port security.

#9: The Dubai Ports deal is a partisan issue

In reporting on the ports controversy, some news outlets have attempted to cast the criticism of the deal as coming strictly from Democrats. In fact, numerous Republican lawmakers have joined Democrats in objecting to the Bush administration's approval of the transfer. They include Sens. Collins, Lindsey Graham (SC), and Trent Lott (MS), Reps. King, Tom DeLay (TX), and Curt Weldon (PA), New York Gov. George Pataki, and Maryland Gov. Robert Ehrlich, among others.

Nonetheless, Fox News correspondent James Rosen reported on February 28 that Bush had “suggested Democratic opponents are engaging in a form of ethnic discrimination,” in reference to a comment that the president directed at "members of Congress" in general.

In another example, on the February 22 edition of Fox News' Special Report with Brit Hume, Cameron reported that congressional Democrats are “hoping for an election-year chance to appear more hawkish than the president on national security,” in “pushing legislation to block” the DPW deal. Cameron went on to cite a pledge by Harman to propose a house joint resolution disapproving of the DPW deal and instructing CFIUS to conduct the additional 45-day review. But he ignored that Harman proposed this resolution jointly with Collins -- a Republican. (Harman introduced the House version of the measure on February 28, while Collins had introduced the Senate version a day earlier.)