excerpts.

Here's a roundup of the port related political bullcrap that's going on. It's shameful that people've waited until now to talk about port security and doubly shameful that it's directly interfering with America's economic feasabilty in favor of... in favor of what? "Security"? No, in favor of Congressional grandstanding.  Congressional midterm elections are fast approaching and the free-for-all 2008 Presidential gladitorial events, even faster.  Everyone wants to grab the low-hanging fruit of looking like they're strong on security via calling on less foreign-government owned companies managing our ports regardless of how it effects our position in the global economy or, for that matter, actual port security.

It seems to me that our inability to come to terms with an Arab nation, domestically, almost five years after 9/11, and where American companies don't even manage most port berths in this country speaks volumes about the level of sophistication we bring to understanding the situation in Arab countries, themselves. AQ's now attacking Saudi areas and able to foment really deep discontent in Iraq, playing off our evident dunderheadedness and what appears to be racially-motivated fear mongering.

Committee on Foreign Investment in the United States - CFIUS was created in 1988, as concerns about Japanese investment in the US rose when Mitsubishi purchased the Rockefeller Center in New York. Since then, the interagency group, led by the Treasury Department, reviews and has the potential to block foreign acquisitions of US assets if they are deemed to have the potential to harm national security.

Coast Guard Saw 'Intelligence Gaps' on Ports, Washington Post, 02/28/2006

"Security measures were thoroughly reviewed, including intelligence matters," White House spokeswoman Dana Perino said. She did not know whether the White House was briefed on the Coast Guard assessment, but, she said, "I do know that at the end of the day, when the process was completed and the transaction was approved, homeland security questions were resolved."

Clay Lowry, the Treasury Department's assistant secretary for international affairs, told Homeland Security Committee members the Coast Guard's concerns "were addressed and resolved."

The Coast Guard document, completed about one month before the ports deal received government approval Jan. 17, was the strongest indication that members of the administration had expressed security concerns over the transaction. Officials from the departments of Treasury, Defense and Homeland Security told the Senate Armed Services Committee last week that the secretive interagency Committee on Foreign Investment in the United States, which reviewed the DP World deal, was unanimous in its position that no concerns had emerged to trigger the 45-day national security review required by the law that established the panel.

Later, the Coast Guard said in a statement that the excerpts of its preliminary evaluation "when taken out of context, do not reflect the full, classified analysis" that eventually concluded "that DP World's acquisition of P&O, in and of itself, does not pose a significant threat to U.S. assets in ports" in the continental United States.

• "Given the red-flag questions that the Coast Guard raised, very serious questions about operations, personnel and foreign influence, how could there not have been the 45-day investigation that's clearly required by law?" asked Senate Homeland Security Committee Chairman Susan Collins (R-Maine).
• "This report suggests there were significant and troubling intelligence gaps," Collins said. "That language is very troubling to me."
• Sen. Robert Menendez (D-N.J.) said, "Since the president won't act to keep our ports safe, we will."
• Rep. Mark Foley (R-Fla.) said he will introduce legislation today mandating that security reviews by the homeland security and intelligence committees run concurrently with administration security reviews of company purchases. "We have tried our best to support this administration at every turn, but to be blindsided by an issue of this magnitude demonstrates we have a lot of work to do," he said.
• A bill introduced yesterday by Coburn, Menendez, Collins, and Sens. Charles E. Schumer (D-N.Y.), Rick Santorum (R-Pa.), Norm Coleman (R-Minn.), Olympia J. Snowe (R-Maine), Hillary Rodham Clinton (D-N.Y.), Jack Reed (D-R.I.) and Frank Lautenberg (D-N.J.) would halt the sale of P&O pending the 45-day review and would give Congress the authority to reject the deal after the investigation.
• A bill by Menendez, Clinton, Lautenberg and Sens. Barbara Boxer (D-Calif.) and Bill Nelson (D-Fla.) would block the sale and ban companies owned by foreign governments from controlling U.S. port operations.
• "Congress has a right and responsibility in this case to conduct aggressive oversight and block a deal that could seriously undermine our national security," said Sen. Tom Coburn (R-Okla.). "This deal should not go through without an open investigation and congressional input."

But in a Dec. 13 intelligence assessment of the company and its owners in the United Arab Emirates, the Coast Guard warned: "There are many intelligence gaps, concerning the potential for DPW or P&O assets to support terrorist operations, that preclude" the completion of a thorough threat assessment of the merger.

"The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities," says the document, released by the Senate Homeland Security and Governmental Affairs Committee.

Excerpt of Coast Guard statement

At the massive Port of Los Angeles alone, 80% of the terminals are run by foreign firms. And the U.S. Department of Transportation says the United Kingdom, Denmark, Hong Kong, Japan, South Korea, Singapore, China and Taiwan have interests in U.S. port terminals.

Allowing Dubai Ports World to control up to 30% of the port terminals in New York, New Jersey, Baltimore, Philadelphia, New Orleans and Miami shouldn't really be a cause for concern, says James Loy, former deputy secretary for the Department of Homeland Security and a retired commandant of the Coast Guard. "We're making a mountain out of a mole hill here."

He and other analysts say that instead, politicians should focus on gaps in port-security programs that have left the global shipping system and the nation's 360 ports vulnerable to terrorism. The vulnerabilities extend from companies that load cargo containers abroad and the inspection process at overseas ports, to the need to install radiation detectors at most U.S. ports.

Stephen Flynn of the Council on Foreign Relations estimates that most port terminals across the nation are run by foreign interests.

In Los Angeles, port spokeswoman Theresa Adams Lopez says, foreign operations include Yusen Terminals Inc., a subsidiary of Japanese shipping giant NYK Line, established in 1885.

The Port of Seattle has five container terminals. Three are run by U.S. companies, one is managed by a South Korean company, and the fifth is managed by a company partly owned by the Singapore government.

The Port Authority of New York and New Jersey owns five primary cargo terminals, three of which are run by foreign firms. The terminal that would be run by the Dubai-based company is operated in conjunction with a Danish firm. The terminal is leased to the two companies and is five years into the 30-year lease, port authority spokesman Steve Coleman says. The other two main cargo terminals in New York and New Jersey are run by the same Danish firm and by a Hong Kong-based company.

Deputy Treasury Secretary Robert Kimmitt, "We're not aware of a single national security concern raised recently that was not part of the CFIUS staff review."

SEN. HILLARY CLINTON: The process used to review this transaction appears to be cursory at best.

ROBERT KIMMITT: It doesn't suggest the security concerns were not raised; they were raised, they were resolved. We moved on.

Margaret Warner, NewsHour: Mr. Dinsmore, this Dubai Ports World, that's commonly referred to as a port operator, what does a company like that actually do?

M.R. Dinsmore, CEO, Port of Seattle: Margaret, thank you. Terminal operators really run the terminal. They lease the terminal from the Port Authority -- in our behalf, the Port of Seattle. And if they're a terminal operator and stevedore, they actually load and unload the containers from the vessel.

MARGARET WARNER: So what you're saying is the port is really the geographic area and you may have many terminals within a port, say, New York.

M.R. DINSMORE: I am. Many times I've listened to the news and talking about they bought six ports. They clearly haven't bought six ports. They bought terminals within a port authority.

STEPHEN FLYNN, CFR:The people are actually in the port picking up the containers, working the cranes, moving the carts around and so forth. These are all longshoremen, and they're American citizens, and they don't change no matter who is in charge - who is the owner of the lease in the port.

STEPHEN FLYNN: Basically the terminal operator often has an office that looks like an industrial park kind of office that you might imagine inside the port, and they're doing a lot of the paper shuffling and call making and other kinds of things to facilitate -- It's an incredibly complex activity of moving containers from all over the world and getting them to the customers that ultimately end up in our shelves or in our manufacturing plants. Now virtually all those folks are Americans as well.

Typically if it's a foreign-owned company who leases this terminal, there will be a few senior managers who report from the home office but they're not having any contact physically with the box. That is done by only the longshoremen. So on the West Coast, those are members of the ILWU, the International Longshore and Warehouse Union. On the East Coast it's the International Longshore Association. These are pretty red-blooded Americans who get these jobs; they're in the cranes, they're driving the carts and basically anything that happens in that terminal is in the union's hands largely.

M.R. DINSMORE: Margaret, let me start by saying I concur with Stephen's comments and in answer to your question, I believe strongly that the U.S. government, this administration needs to do a good job of due diligence in making sure there isn't any loopholes on behalf of any company coming in to be a terminal operator.

Now, that being said, in our port, there's three major terminal operators. One is SSA Marine, a very large U.S. corporation, very large customer. Another is American President Lines, NOL, Singaporean company and part of that company is owned by the government. And another is HanJin Shipping, and they're a terminal operator, and that is a South Korean company. I think after we do our due diligence, we need to move on and make sure that issues like this do indeed go forward and ultimately get approved.

"The current CFIUS process was designed to deal with this on a case-by-case basis because outright prohibitions would not be good for the US," says Nancy McLernon, senior vice president of the Organization for International Investment, which represents US operations of foreign companies. "If an American company had acquired P&O, there wouldn't be any security review at all. Let's remember that just because it's a US-owned company doesn't mean there are no security concerns with them at all."

American companies began withdrawing decades ago from the unglamorous business of stevedoring, ceding the now-booming industry to enterprises in Asia and the Middle East.

So it is no accident that American companies are not in the top ranks of global terminal operators, who have ridden the coattails of the explosion in world trade. That shift has transferred growing financial clout to a handful of seafaring centers in Hong Kong, Singapore and now the emirate of Dubai.

Though two American companies now rank eighth and ninth among the world's top 10 operators, it would not be easy for other American companies to get into the business. The retreat began decades ago amid rising labor costs and slow growth, while foreign companies spotted opportunities.

P&O earned $383 million on revenues of $2.4 billion in the first six months of 2005. The company itself grew in the United States through an earlier wave of industry consolidation, taking over local companies like Gulf Service of New Orleans in 2000 and International Terminal Operating Company of Jersey City in 1999. Similarly, Neptune Orient Lines of Singapore in 1997 acquired one of the oldest American terminal operating and shipping companies, American President Lines, which originated in the Gold Rush of 1848.

A terminal operator is now expected to manage where and when a ship will berth, the use of gantry cranes, relations with unionized stevedores and arrangements with trucks or rail cars to take goods to market. This is all done with specialized software intended to minimize the amount of time a ship stays in port, allowing owners to use the vessels as much as possible.

Even with assurances from DP World and its supporters that it would hew to American security requirements, analysts, regulators and bankers have been scratching their heads at demands by politicians to review the deal, in part because the deal is already completed under British law.

"God knows how you'd reverse it," said one London-based executive involved in the sale, who did not want to be identified because of client confidentiality agreements. British regulators have approved the deal, and shareholders have already voted for it, he said.

"The Arabs own it, what are you going to do? Force them to sell it? Revoke their licenses for United States ports?" he asked.

Either of those measures might spark some sort of retaliation from Dubai in the form of legal action, he said, or even something as extreme as some sort of a restrictions on American-bound shipments passing through the port of Dubai.