Steve -- In a WP article on feb. 27,
" ... John Warner of Virginia, the chairman of the Armed Services Committee, who today stepped up his defense of Dubai and emphasized its strategic military value to the United States.
"It is the only port in the region that we can dock our major super carriers," Mr. Warner said on the Senate floor. "In addition, their airfields are supporting the ongoing operations that we have in Afghanistan and Iraq." "
http://www.nytimes.com/2006/02/27/politics/27cnd-ports.html?hp&ex=1141102800&en=0c463684f551ba45&ei=5094&partner=homepage

What do you think that really means? Is there some kind of threat from Dubai to America, saying that if America does not allow the UAE company to manage those US ports, then Dubai will NOT allow the United States to use their air bases and that UAE will no longer be an friend of America?

If we continue down this path of explanation, if today it is American ports, what might it be for tomorrow?

Steve - I understand your concern about screening containers, but let's be realistic. It's not realistic to think that we could allocate the amount of people, time, and equipment necessary to screen out even 30 percent of all the containers coming into US ports without shutting down the global economy's "just-in-time" movement of goods and materials. Do we need a screening capability? Yes, but not to screen a large majority of the containers. We need better intel on those agents out there that want to smuggle goods into the country. We need to screen the companies that are moving the goods and identify the legitimate movers from the illegitimate. Are we going to miss alot? yep. But "the terrorists win" if we impose measures so draconian that it results in huge financial burdens directed at an effort that represents a very low probability situation among many other more likely and more dangerous terrorist scenarios.

Uh. If I am not mistaken.... The Dubai company that is doing this take over was also the owner of the management company of the port in which the Cole was bombed. Maybe someone should look this up.

Thanks for posting this, Steve.
Like most of your readers, I'm in the dark about port operations in general, and certainly about DPW in particular. I have a couple of questions.
First, there is a lot of talk about how the port of Dubai is particularly porous----a transfer point for arms, drugs, and even nuclear triggers.
Is this true? Is Dubai unusually lax with its own port?
Second, many people say that port security and port operations are separate, and since DPW will not deal with security, there is no reason to worry.
Color me deeply skeptical of this claim. What is the truth?
Another question: are there any real guarantees that DPW won't replace current, American managers, and that it will respect the unions?
I believe there is just hand-waving with respect to the first point, and no guarantee at all with respect to the second. What is the truth?

Steve, thanks for commenting on this issue. I enjoy your blog for its insightfulness and willingness to address the touch issues. I unfortunately think that a lot of our leaders don't understand the need for redundant layers of security like you mentioned. In fact, I addressed this in a couple of pieces I wrote this weekend in the Birmingham News and the Mobile Register. Feel free to check them out at the following addresses.

http://www.al.com/opinion/birminghamnews/index.ssf?/base/opinion/1141553823254200.xml&coll=2

http://www.al.com/opinion/mobileregister/insight.ssf?/base/opinion/1141554344254160.xml&coll=3

Thanks for this post, Steve. It has been bothering me that the race card has been used as a red herring to disguise more serious issues of port security and the global economy. My specific question relates to points made by Marky, above. One of the many issues I find troubling is the special exemption provided in the DPW agreement that allows the company to keep its business records off-shore and inaccessible through discovery and subpoenas should law suits arise. I wonder if unions will be able to hold DPW accountable for breaches of contract, acts of negligence, etc., under such arrangements -- or if the company can be held accountable for breaches of any U.S. criminal or civil laws at all.

Here we are placed in the unenviable position of having to validate Bush's boogie man in order to construct a platform from which to oppose the selling off of American assets and jobs. NO foreign entity, be it from the UAE, Britain, or MARS should be placed in such a position of power over American commerce or security. Unfortunately, because of the Democrat's history of the same kind of actions during Clinton's tenure, and before, we can hardly launch an opposition based on logic and common sense, unless we want to expose our Democratic leaders as being of the same ilk as the current Republican thieves and liars in power are. So instead we harp and cry in the same manner as Bush has used for five years now, using fear and the largely fabricated "threat" of Al Qaeda to propagandize our vision of pseudo "security" when ewe are actually just posturing to regain the White House. Should this Dubai deal go through??? Of course not. But we should be citing reasons REAL and CONSTRUCTIVE for the American people, rather than reinforcing Bush's fear mongering and exagerated threats. How can we rightly oppose and expose Bush's tactics and deflective "terror alerts" if one day we lament his fear mongering, and the next day we engage in the same kind of propaganda and tactics?

" But to reject, America must get itself off the narcotic of cheap foreign financing and inbound investment that are limiting our ability to say "no" ".

Great analogy, Steve.

Yes, where is the $ allocation for border and port security upgrade? Where is the upgrade in at home in America EMS communications systems and training? How did the fiction that we are fighting in Iraq because Saddam Hussein was connected to 911 get marketed so thoroughly as to have so many people, soldiers included, believe it?

The ignorance surrounding the Dubai port debate is astonishing. Has Hillary every taken an aegis cruiser into Jebel Ali (where US Navy ships berth every day under Dubai Ports management)?

Does Lieberman have any first hand experience of ship “force protection” in foreign ports? More to the point, did Hillary or Lieberman bother to consult any seagoing US Naval officers about the issue?

My ship-driving U.S. Naval Officer daughter emailed to remind me what every American Naval Officer already knows.

Dubai has the most modern port facilities in the world. The gigantic, ultra-modern, Port Rashid is the technologically most advanced commercial port in the region.

The even larger Jebel Ali Port in Dubai services, among others, the US Navy with docking facilities specially tailored for nuclear powered American Aircraft carriers. Jebel Ali is the port most frequently visited by the US Navy of all ports worldwide.

A third Dubai port, Arkansas Anchorage, was purpose-built to service the American Military Sealift Command and the ships and personnel of its Prepositioning Squadron Number Four.

This Dubai port based “pre-po” combat support equipment at Arkansas Anchorage in Dubai supplies the entire gulf-area needs of the US Army, Marine Corps, Air Force and it supports the US Navy's 5th Fleet.

My daughter, like all Surface Warfare officers in the US Navy has a seafarer's appreciation for the high quality of Dubai port management not only in the emirates, but in other Dubai-managed ports in Africa, Asia and the Western Hemisphere.

Perhaps this is really an issue better left to the experts rather than to glib foolishness of silly Senators.

John Stuart

John Stuart,
Thanks for your post. As I said earlier, I have no doubt that DPW is fully up to the job, but that still leaves my questions, among many others, unanswered.
Also, it appears that the approval of DPW did not follow proper process, and there is a question of conflict of interest in a couple of cases.

This is a really fascinating topic. For one, it expose the real reason that both parties don't want to tackle this from any rational point of view...namely that having better security at American ports would require an increase in costs for goods and services in the US. And also an increase in available jobs within the US to maintain that security. But, its not surprising that Republicans would object to increasing jobs in the US and the cost of goods and services here. No, that's not surprising. What is surprising is that no national politicians on the Democratic side have decided to use this as an argument for employing more people...in privately held corporations. I doubt there are any free trade issues with requiring that port facilities be American owned on American territory. None. So, why can't the labor unions, and the Democratic Party get behind an idea that maybe, just maybe, there should be more American investment in the management of our own port and shipping facilities? What's preventing that?

The more and more I look at politics in the United States, the more and more it looks like French in the 1930s...and that's not a joke of an observation. We need leadership that is more attuned to rectifying the problem of dullness that makes American leadership in the world dunderheaded and foggy, not more worrying about how we might give American ports to foreign countries to control without pissing off voters! So, who is benefitting, and by how much graft, from these "deals"?

Nice post, Steve. And that IS the issue: if "things have changed," then the change is general and applies across the board. It's not about an Arab country at all.

Moving from a high trust to a high fear globalized environment requires a higher standard for deciding who's eligible to buy into national assets, industries, and infrastructures that are critical to economic and national security. At current rates of technological improvement, we're not going to hold that edge much longer, either.

The only way we're going to end American dependency on "the narcotic of cheap foreign financing and inbound investment" -- is to ensure that American companies profit off of American infrastructural investments. We don't have ANY obligations to other nations in that regard.

PO'd American is right: it's a huge mistake to allow ANY other country -- including Britain -- to run facilities that fall into these categories.

John Stuart: Dubai's modern ports mean nothing to this debate. Dubai is also a notorious nexus for money-laundering and smuggling. Knowledge of port operations and a single chain of command from port to port will only facilitate and ensure success in that area. Operations also have everything to do with security: if you own an apartment building, you don't say, "Oh, the State Highway Patrol is still on the job, so there's no security risk." Nuh-huh. You buy locks, and insurance. And an alarm system.

Perhaps most disturbing -- and revealing -- is where the trust and loyalties really lie here: No civil liberties for us -- no oversight for them.

Bob Kerr wrote a 2/28 column detailing how --if you pay too much on your credit card -- your money will be frozen by "Homeland Security."

http://www.shns.com/shns/g_index2.cfm?action=detail&pk=RAISEALARM-02-28-06

"Walter Soehnge ....merely paid a hefty chunk of their credit card balance. . . . [then] checked online to see if their account had been duly credited. They learned that the check had arrived, but the amount available for credit on their account hadn't changed.
....
They were told, as they moved up the managerial ladder at the call center, that the amount they had sent in was much larger than their normal monthly payment. And if the increase hits a certain percentage higher than that normal payment, Homeland Security has to be notified. And the money doesn't move until the threat alert is lifted."

So there you have it -- the American principle of guaranteeing privacy and liberty turned on its head. Tighter controls on ordinary American citizens -- and looser restrictions on global corporations. And who gets special treatment? Who resisted financial audits, as the FBI tracked al Quaeda's financial backers? Dubai/UAE, that's who. Poor judgement all the way around.

Maybe I have just missed this, but my question is how would a company (& country) which is observing the Israeli boycott handle Jewish workers in our own local ports. No Jews need apply? What about Jewish ships putting into port? Would they be turned around? I saw a CEO type on C-SPAN admit that the boycott would stay in effect even after they moved to our shores.

1. Ex-Sentaor Hart, on his book tour, points out that the U.S. most likely has significant spook activites in UAE--look at it on a map.
2. Most broadly, the DP World deal is a perfect storm of incoate fear fostered by W, terrorism, and dissatisfaction with workers' negative experiences with prior globablization. All these issues come together here. It's important to analyze pieces, but even more important to understand the totality of the issue.

Dianne, DPW, if it actually succeeds in getting its contract approved, would have to follow US law inside the US, it couldn't bring UAE law over to the US and demand that ports be operated under UAE law, or the law of anywhere else. It would, of course, be illegal in the US to refuse to hire someone simply because they are jewish as it would be illegal to refuse to work on an Israeli vessel coming into a US port. Our laws don't go away simply because a foreign company is operating in the US. They'd have to follow OUR laws.

Inside the UAE, they are free to do whatever they want, including boycotting anyone they choose.

From my perspective, the reasonable concern over the port deal has more to do with trying to understand exactly what this administration is saying.

For the last 5 years, this administration has been hammering about "militant Arab nations" and "Islamoterrorists" in what I believe to be a racist and religiously biased manner. With the port deal, folks are reacting to what appears to be an administration about-face and many, myself included, are taking the opportunity to get some long-awaited clarification on something.

Here's what it looks like to ordinary American citizens:
1. You don't trust me to get on an airplane to fly from Chicago to Orlando; but
2. You trust a foreign government to manage port access to and from our nation.

That this foreign government happens to be one that this administration said has direct ties to "terrorists" makes the arrangement even curiouser.

IMHO, it looks like American citizens can't even ask for a justification about this port arrangement without an accusation of racism. Nothing could be further from the truth. If this administration, after making numerous associations between Luxemburg and "terrorists," had turned over management of our ports to Luxemburg, I would have the same questions.

Pulling the race card, to me, is simply a tactic to make potential questioners back off. Fear is the management tool of this administration. It's the one thing this administration does well.

All some of us want is a straight story. Given that we aren't going to receive a straight story from this administration, my goal is to press on what is clearly an uncomfortable spot -- and a vulnerability. It has nothing to do with race, at least not for me and most of the people I know who express concern.

Steve, your point is well taken that we Americans need to understand about who owns our debt, etc. But most Americans have to start somewhere. Many haven't paid any attention to such matters, but hopefully many are getting a wake-up call.

The port deal is just for starters.

Actually, I don't recall anyone in this administration saying anything about militant Arab NATIONS. Militant islamists, yes. But nations? No.

"Here's what it looks like to ordinary American citizens:
1. You don't trust me to get on an airplane to fly from Chicago to Orlando;"

I think this administration would use racial profiling to determine who should get extra scrutiny at the airport, but liberals refuse to allow that. Conservatives have always said that some 80 year old grandma doesn't present the same danger as a 25 year old muslim male does.

"2. You trust a foreign government to manage port access to and from our nation."

We've done that for some time. This isn't new. It looks to this American that some people want to use racil profiling in some cases but not in others. The inconsistency is a problem.

You have touched a couple of times in this post on a phenomena of which Dubai Ports World is but a harbinger of things to come, namely the involvement of foreign controlled money in the USA economy. With the US economy so heavily dependent on financial inflows to balance huge government deficits, foreign oil purchases and asian-originated goods, American owned assets are bound to be snapped up. China and the oil Arabs will buy only so many T-bills before they look to other assets like airports, energy companies and high tech companies. To impede these types of transactions will cause the foreign money to go elsewhere, sending the US economy into a tailspin. The irony here is that there is a suitable work-around to the security problem but Pres. Bush's past fear-mongering is threatening to upset an otherwise sound and essential financial decision. But this is just the beginning.

China invests in the US becuase they see it as a profitable place to invest, not because they want to prop up the US economy. If the Chinese saw France or Germany as the better investment, that's where they'd invest. China won't suddenly decide that Italy is a good place to invest if the US "impedes these types of transactions".

I demand a refund.

Hey Steve,
Just wanted to thank you for all the info you provide. So amny of these isssues have background I am not aware of. Before 2002 I was without internet and busy as a single mom....since then my son is on his own, I've got a job where I can get internet and I spend a lot of time trying to catch up. Anyway, thanks for all the info and links, your work is appreciated in the rural, Republican area where I live. thanks

Three weeks ago, Nouriel Roubini, former advisor to the Treasury Department and Senior Economist for International Affairs on the White House Council of Economic Advisers, slammed the nationalistic political backlash against this foreign acquisition of US capital as altogether hypocritical. Roubini's point: America's foreign debt holders are starting to realize that exchanging their goods and services for low-return IOUs of the US government is a most lousy deal for them:

Foreigners are selling us their high quality goods and services because we are on a national consumption binge and they are getting tired of getting in return useless low-return IOUs of the US government. There are plenty of great assets and gems in the US that are worth much more and provide much higher returns in the long run than T-bills. So, they rationally want to buy those assets, i.e. lend us in the form of equity rather than debt. And these foreigners are, increasingly, not just private investors but also central banks and other public authorities that have accumulated low-return dollar reserves to the tune of almost $400b last year alone with a total stock of such dollar reserves that is close to $3 trillion now. Altogether hypocritical is the behavior of US politicians who lobby hard all for the world to open up their markets to US foreign direct investment [can you say Washington Consensus?] and now they are screaming, under the fig leaf of national security, about the foreign FDI into the U.S. And a big fig leaf it is as "national security" arguments have always been the first and last refuge of protectionist scoundrels. In France, the attempt by a US company to buy Danone, a yogurt producer, was repelled based on similar national security - or national pride - arguments; and such French resistance led to rightful mockery and scorn of such French yogurt nationalism. Now, both in the CNOOC-Unocal case and the Dubai-port case, national security scoundrels are hiding behind a flimsy national security argument to stop an altogether legitimate business transaction. Unfortunately, since the US is hollowing out the only goods and services that we are still producing at home are weapons, airplanes, high tech good, oil and other important commodities, financial services and other high tech services. And for each of these goods/services, one could make the argument that they are of some "national security" interest; any of these goods may have in principle military or security implications, even our ports as the current saga suggests. Unfortunately, for a country like the US whose core industrial base is hollowing out these are the goods and services that are up for sale and that foreigners want to buy. So, we may want to get used to it.

But America's fiscal recklessness isn't the only thing 'limiting our ability to say no' -- protectionist sentiments are simply not an option in a global economic system that isn't so much shaped by movement of people or goods but by unrestricted movement of capital. Want to secure the Homelandâ„¢? Why not start by reducing the number of idiots -- Garance Frank-Ruta's words, not mine -- populating Homeland Security headquarters?

A bind no doubt this is & will continue to be while there are major externalities in the current extant monetary systems

Major change is needed & not just in where the money goes or who directs the fire hose of global capital flows

our global monetary setup is sooo pre 21st Century

no value most locales & undervalue over there

Continue to fiddle & move the deck chairs around while the props are dissolving beneath ya

"Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." - John Maynard Keynes

I've looked at the UAE port deal, and wanted to share my observation: Nothing adds up, and it appears to be a ruse to distract Congressional attention away from the NSA unlawful activity. Basis for the allegation: [ Click ]

"Actually, I don't recall anyone in this administration saying anything about militant Arab NATIONS. Militant islamists, yes. But nations? No."

Oh bullshit. You don't recall Bush naming SPECIFIC nations as "evil doers"??? Face it troll, your hero monkey boy is full of crap.

Our ability to say "no" is cheapened by the "narcotic of cheap foreign financing" --

and whatever variance may be left is then erradicated by the rather expensive domestic taxpayer financing of the war on terror -- the current euphemism for providing contracts to the
administration's close circle of insiders. Makes previous cases of insider trading look like pikers.

btree,

Roubini is dead wrong to say there is something "altogether hypocritical" about rational and rightful control over national assets.

The people of this country didn't agree to a globalization as Trojan Horse -- nor to the American foreign policy that forcibly gained US access to national assets belonging to other nations -- which was only established as policy over the objections of many American citizens.

So how the hell can those Citizens be hypocrites when they never agreed with or condoned that foreign policy in the first place?

We could have had an open debate about the wisdom of a foreign policy that basically demanded access to the national assets of other countries at the point of a gun in the form of US military "adventurism." Neither conservatives nor liberals would have condoned suborning the national interest and national honor to the profit motives of corporations so disloyal they've lined up to incorporate in Bermuda to avoid fair US taxes.

Further, Roubini's economic argument is a self-fulfilling argument -- it's b.s. If foreign investors are "tired of" buying low-return debt/bonds/T-bills -- then don't buy them. It's called the free market. Roubini says that "Foreigners are selling us their high quality goods and services" -- since they got paid, what's the complaint here?

For once we have a HEALTHY nationalism, one that's already put the lie to globalization as an absolute good -- and all we get is more crap from pundits who can't figure out whether they stand with their country or with someone else's zillion dollar profit levels (Carlyle Group +DPW).

If this is what it takes to haul these misguided politicians back to their primary and only responsibilit -- their constituents -- then so be it. It doesn't make those constituents hypocrites.

My big question is what is the United States getting in return for this Bush/UAE port deal?

Well, we already know that Dubai Ports World is getting a very lucrative contract running some of our most strategic U.S. ports.

So, what's the quid pro quo? What's the United States getting in return that is just as valuable, if not more valuable, than Bush selling off our ports to the United Arab Emirates?

Our military's access to UAE ports? The use of the United Arab Emirates as a staging site for when Bush launches an attack against Iran?

Something smells.

Steve, you wrote: "any Americans -- Republicans, Democrats, and Independents -- don't trust the Dubai Ports Worldwide deal because fundamentally they don't trust the UAE during this time of serious tension with the Middle East."

Some of us have a memory Steve. I did not trust the UAE after I began to read about the BCCI and its connection to the Bush Family and to the national security community in general. So please spare me. This ain't about fear. At least not for all of us. Its about common sense. They have turned the ports over the Arab version of Johnny Friendly.

jonst has a point.

There are solid reasons, both historical and current, not to trust the UAE -- or at least hold them to a very high standard of proof/review.

BCCI, the Carlyle Group, -- isn't it possible that they were intentionally allowd to be used as a money laundering and smuggling point by Bush? The AQ Khan nuclear network could have been payback to the Pakistanis, and what's more, any such revelation that nukes had been sold to Iran and/or North Korea could only further Bush's objectives and agenda by inciting fear and "proving" the notion that 'something must be done about Iran.' In Bush's mind, perhaps the more nukes in NKorea, the more Japan, etc, "need" us.

Steve, I think, understands the very reasonable and good reasons to substantively increase US caution/prudence -- though he terms it a "high fear" globalized environment.

The responsibility for fearmongering, of course, goes to Bush. If there's nothing to be afraid of, then every one of Bush's repressive, Constitution-violating measures go right out the window -- and will be seen for the betrayals that they are.

More largesse and more access and fewer security restrictions and fewer audits for the big boys, whether DPW, the UAE, or Halliburton -- and fewer civil liberties, and more restrictions for the American citizen.

That's the issue that's exposed Bush's fraud.

Note especially that DPW will not be accountable to US law, according to the contractual language of the deal.

That is a lowering of security and accountability relative to similar deals. What could account for that? It implies an intention. If not to actually plan a violation of the law, then a conscious attempt to be "legally" unaccountable should something go down.

How US courts can hold such laws, clearly written to evade a higher law, can stand -- is beyond me. US companies incorporating in Bermuda to evade taxes is a prime example. If I fled the country to avoid an IRS audit -- and cited the Constitutional right to travel as my escape clause -- I wouldn't get far. Yet I'd have the better case. One being the supreme law of the land; whereas incorporation in a drop box in Bermuda doesn't change the facts on the ground for a company wholly operating in the US.

Via Atrios:

Lou Dobbs said that:
"Dubai Ports World tonight is making what I consider to be a rather astonishing new attempt to silence me and our coverage of this ports deal and our reporting of what at least I consider to be legitimate national security concerns about this transaction. Dubai Ports World has actually refused to grant CNN anymore interviews from Washington or London, and it's refused to allow CNN to videotape its operations in the United Arab Emirates and Hong Kong if we were to show you the video on this broadcast."

So IS THIS the way the UAE / DPW practices its obligation to respect and uphold the principles of liberty, democracy, and civilized behavior?

As so many have said in response the ports controversy, Dubai/UAE is modern, civilized -- why, you can shop there? You can buy liquor there, or even a prostitute, if you want one. Very modern.

But are they?

Is this the same concern and attention to our security and to accountability before the law -- that Dubai has applied to the those characteristics that define us as a nation? If they cannot heed the basic ideals of open, democratic debate, of the rule of law, and respect "our freedoms" -- then how can they be trusted with our security?

Is this the same concern and scrupulousness with which Dubai/ DPW will guard American national interests and national security?

Is it the same regard as they've shown for "our way of life"?

For Lou Dobbs' right to speak freely? And not be censored, blacklisted, shut down?

At long last, Sir, have they no decency?

Really, this whole debate hinges on cutting through the propaganda and attempting to bring it back into the realm of common sense. If the UAE had been irrefutably connected and linked to numerous acts of espionage against the United States, would we even be debating the wisdom of placing them in such a position of power over our security and commerce?? Well, then why aren't we debating the wisdom of having had given ISRAEL such powers, when IN FACT they HAVE BEEN irrefutably shown to be waging covert acts of espionage against the United States???? This whole thing is NOT about security, it is about the GREED of corporate entities that hold BOTH parties hostage to the corruption of "politics as usual" in Washington.

It sickens me to see the complete disconnect from reality and truth that provides the foundation for so many of these debates. Saddam bans Islamic radicalism in Iraq, and is removed, militarily, from power. A tinpot military dictator's top nuclear scientist sells nuclear weapons technology to N. Korea and Iran, his country provides haven to Taliban and Al Qaeda operatives, and he is declared a "valuable ally in the war on terror". Israel conducts espionage operations against the US, and we ship them millions of dollars, literally DAILY.

This ain't the United States, its the God damned Twilight Zone, where Bushworld defies all logic and common sense.

RichF,

many interesting points, but I guess disagree on quite a few.

I think there are two things that stand out about this deal. First of all, it is about port operations, not port security. I'm by no means well informed about all of this, but as far as I know, Dubai Ports World just happens to be one of a handful of operators worldwide (none of which are owned or controlled by Americans) that are actually capable of running huge and sophisticated port operations in the global marketplace. The only real competitor to Dubai Ports World with respect to running operations on this scale is a company from Singapore -- and perhaps a few other companies that are currently running ports up and down the Chinese coast.

America's ports aren't peripheral to its comsumption-based economy - they are mission-critical. America simply can't afford to hand port operations (as opposed to port security) to companies that happen to be owned or controlled by 'Americans' but that are simply not capable of running them. It mystifies me how people can even think of trying to make an argument for rigging a market (port logistics) that is both absolutely mission-critical for the global economy and dominated by a handful of global players, one of which happens to be Dubai Ports World.

With respect to economic imbalances, I think the argument might go something like this, in a nutshell:

With America on a consumption binge and living beyond its means, Asian Central banks are currently accumulating huge dollar reserves. So far, these Central Banks have then turned around and invested these amazing reserves in US Treasury Bills, thus essentially underwriting America's debt. Japan's Central Bank holds the largest amount of T-Bills, followed by China.

The 'plan' of the Federal Reserve in the face of these global imbalances seems to be a determination to flood the market with money, thus extricating America from underneath its debt mountains by way of a (more or less controlled) dollar devaluation. Or at least that's the idea.

So what is a holder of massive amounts of Dollar-denominated debt, such as the Central Banks of China and Japan, to do? Well, either they reduce their exposure to the Dollar and move into Euros - a move that in and of itself could trigger the avalanche, the 'correction', that they are so keen to avoid - or, as Roubini argues here, to move up from low-return investments (T-Bills) into higher-return assets (real estate, equity).

NY Federal Reserve President Timothy Geithner's Jan 23 speech is certainly well worth having a look at (more here).

The one thing I find highly questionable about Roubini's point of view is his assertion that the Dubai Ports World deal is "entirely legitimate". In total absence of any transparency regarding the way this deal was reached - and given the administration's determination to stonewall absolutely anything and everything - how exactly did Roubini arrive at that conclusion on Feb 22?

Given that it was put in place by this administration, I would consider that deal about as legitimate as Brent Wilkes' buying $1.5M worth of off-the-shelf Dell computers and then turn around and sell them to the DoD for $6M under a super-secret contract arranged by his best buddy, Duke Cunningham.

btree,
It doesn't pass the laugh test to say that port operations are separate from port security.
The fact the administration relies on illegitimate arguments to bolster its case causes more suspicion.

btree wrote: (I appreciate the response)
"First of all, it is about port operations, not port security."

This is a false distinction and a red herring, and it's been thoroughly disposed of. If you've ever worked in operations, it has everything to with security. When you say port operations are "mission critical," you're acknowledging that operations are a lifeblood of the economy.

W/o going into great detail about the false distinction btw operations and security, consider this. If you live in a crime-ridden city, you don't say "Gosh, I don't have to worry about security here in my warehouse/apt bldg, because I'm in operations!" You buy locks. And an alarm.

And maybe you hire security guards. Hey, didja know DPW and other operators will be responsible for hiring security? Will have access to security plans, schedules, etc., etc. Point is, unecessary risk -- and here I'd thought "things had changed after 9/11." Apparently not.

Also, issue of double standard. The contractual language lowers security standards from legal obligations to "pledges" and "promises. And eliminates accountability under US law. Simultaneously, American citizens are subject to greater scrutiny -- in violation of the Constitution. That's a substantive and legitimate grievance -- not nationalist hysteria or racial bias.

2. What kind of nation would eliminate its national capacity to run its own "mission critical" infrastructure??@?!? Prticularly ports? Esp in this "post-9/11 world"?!? I thought that everything had changed. This is the height of recklessness -- which is why your argument is fundamentally unpersuasive.

NO ONE is rigging a market here. It's an error to say so. Pragmatic, sound regulation at worst. In fact, w/only a handful of port terminals and only two operators, it's not a market at all, is it? There's no competing buyers, and the products are incommensurable, and not every one has perfect knowledge.

American capability is a non-issue. Finance, train and launch a suite of competing American operators. From scratch, or from related industries. But don't play helpless baby crying "I can't! I'm an American, and I can't do it myself!" Some Yankee ingenuity! Some independence!

Finally, I'm well aware that Asian banks finance our debt. The answer is NOT to allow foreign corporations to profit off American infrastructure. That ships profit made off American assets overseas on top of everything else.

My point was that when they make low-return investments "and tire of it," or "resent it" -- too bad. It's a free market. By those terms we have no obligation to hand over the farm.

Further, just because there's a willing buyer with loads of cash -- indicates no obligation to sell -- NONE WHATSOEVER. If they find better investments, fine.

But that does NOT mean that ports -- where there is no market operating, and where it's in the public interest to maintain both control and ensure that return on assets stay in America -- can be for sale/lease or should be for sale/lease.

Further, with these immense quantities of cash floating around, the US's only viable response, and an impending devaluation -- EVEN the ostensibly high price paid for these assets will not really be very much money (no matter how many dollars in quantity they be)not so very far down the road.

It's just pooor policy all the way around. Free market? Would that it were.

Will they?

re third paragraph in previous post.

I neglected to insert a key phrase. Should read:
"because I'm in operations! Because The Police [Coast Guard] is in charge of security!" You buy locks."

So the Coast Guard is in charge of security? So what? As anyone knows, that don't mean squat.

It doesn't prevent crime. It doesn't end your responsibility in the area of operations. And it doesn't respond to the issue at hand.

It just doesn't acknowledge the security issue involved in operations. And resulting from foreign terminal operations -- and that includes the Brits

Port ops and port security are -- necessarily -- deeply intertwined, but they are just as clearly not one and the same thing. If the Coast Guard is unable to secure America's ports then it is the Coast Guard that needs proper financing, training and equipment.

I am thoroughly amused that I actually find myself in agreement with Tom Friedman and David Sanger on the security issue:

If there were a real security issue here, I'd join the critics. But the security argument is bogus and, I would add, borderline racist. Many U.S. ports are run today by foreign companies, but the U.S. Coast Guard still controls all aspects of port security, entry and exits; the U.S. Customs Service is still in charge of inspecting the containers; and U.S. longshoremen still handle the cargos.

The port operator simply oversees the coming and going of ships, making sure they are properly loaded and offloaded in the most cost-effective manner. As my colleague David E. Sanger reported: ''Among the many problems at American ports, said Stephen E. Flynn, a retired Coast Guard commander who is an expert on port security at the Council on Foreign Relations, 'who owns the management contract ranks near the very bottom.'

What is truly scandalous in my view is how the administration reached this deal - and how it totally ignored the security question. Once again, as one has come to expect, they have arrived at this deal by what can only be described as imcompetence or criminality: they have either not bothered to investigate or have actively scuppered any investigation into the "security agreement" and thus nobody knows if there is a is real security issue here. Media Matters has the details on that.

A company poised to take over management of some of the busiest ports around the planet should be thoroughly vetted. The vetting process should be transparent, it should never be allowed to be conducted behind closed doors (or not at all!) by the adminstration's cronies. Congress should have oversight of this vetting process. I agree with the deal's critics that DPW should not be allowed to take over the port management without a full and proper vetting process, but I do not agree with the notion that they shouldn't be 'allowed' to manage (very visible and highly symbolic) American assets because they are foreigners.

btree:
Agree with you about the super-double-secret process that substitutes an economic metric for security-national interest criteria.

Just as the existence of the Police does not keep you from locking your doors at night -- the presence of the Coast Guard does exactly nothing to fix the security issues raised on this.

You admit that the Coast Guard is not solely responsible for security -- so how does ignoring those other responsibilities and their intertwining connections, port-wide, address concerns?

So the assertion that 'Hey, just the fix the Coast Guard' is guess what -- extremely disingenuous and insulting, not to mention utterly unresponsive to the issue.

The mere existence of the Coast Guard does not relieve or wish out of existence the security obligations of port operators. Nor does it address the potential risks for any foreign operator to assist in, or be the conduit for groups wanting to do harm. Simple prudence, nothing more. After all, "things have changed."

This has precisely ZERO to do with racism -- It's about Bush not bothering to act on his own claims that "that things have changed" -- and it radically undermines the notion that there is ANY threat to the US. Even Tom Ridge said the terror alerts were bogus, baseless, political. This has merely provoked a much wider realization that Bush takes liberties FROM American citizens -- while handing freebies TO pals and corporations and leaving them UNACCOUNTABLE before the law.

Friedman, btw, has zero credibility. This is the cheerleader for invading Iraq, who couldn't even read the newspapers -- or listen to the sound reason of dissenting, but far more informed citizens. 'We can be nation-builders! Just like in Germany & Japan!' he said. 'It'll be a lark!'

Let me be frank: Friedman's claim that anti-DPW deal sentiment is "borderline racist" is nothing short of profoundly amoral. It is dishonest -- and I firmly believe Friedman is aware of it. This guy has been deeply patronizing to the American public from the get-go. Even when they had better facts and clearer sight about costs of war -- and the lack of evidence for it. On that last point, note that Friedman couldn't even be bothered to read the newspapers accounts that discredited/disproved every one of Bush's claims -- pre-war.

Take an honest look at Friedman's record. Iraq? 'A cakewalk! Nation-building can be a good thing!' How's that going for him right about now? When has Friedman EVER taken on Bush, really, for racial profiling? For racist policies? For surpassing Nixon in breaching his oath to uphold the Constitution? For degrading Muslims and allowing Jerry Boykin to treat this as a crusade? For Friedman to cry wolf or cry racism is much, much worse than hypcritical.

Even when Friedman was mocking those oh-so-rich-and-powerful anti-globalization activists -- [What courage! Brave, brave Sir Robin/Friedman!] -- they were light years ahead of him. Half their message was that a too-suddenly "flat" world would have costs and consequences -- and sure enough, years after the fact, after refusing to listen and mocking and deriding them, along comes Friedman to preach that a "flat world" means we'll lose out, have to hustle to stay competitive.

Gotta say, there are some fast talkers who've talked themselves right off the cliff -- and there are more than a few lemmings in mid-flight.

One more thought:

It is extra-ordinarily telling to take a good look at just who is spouting this "racist" line to characterize anti-DPW deal sentiment.

"Muslims will think it's discrimination, they cry! It'll really give the US black eye!"

What unmitigated gall. What utter horseshit.

It's beyond ludicrous to claim one port deal will ruin the American reputation among Muslims -- mot after all the routine violations of Muslim cultural taboos of Iraqi homes and of Iraqi women, not after Abu Ghraib, after Jerry Boykin, Korans in the toilet, CIA estimates of innocent prisoners at Gitmo and in Iraq, after racial profiling, after the rendition & torture of innocent men (one of whom was denied redress of grievances even in our judicial system), the menstrual blood in interrogations, etc.

It's beyond hypocritical and Orwellian to claim this is about racism; that word is not available to them. Nor is it accurate.

If Thomas Friedman was so concerned about American racism, wouldn't he and all his pals have said something about the much-higher level of racism and demagoguery post 9/11?

If the American sense of fair play or the principle of non-discrimination were at issue, wouldn't they have insistently and harshly called Bush to account for any and all of the above-listed items? Wouldn't they have called for impeachment?

To suddenly suffer an attack of concern for fair treatment is just beyond the pale.

Thing is -- everybody -- EVerybody -- knows it.

Besides which, you can't discriminate against a monopoly. There's no free market princple at issue here -- ports economics don't behave that way, and throwing out nonmarket values, along with the market values I might add, is as blind as it is foolhardy.

Friedman is the fascist who said that the US needed to attack an Arab country after 9/11; any Arab country would do, he said, regardless of ties to Al Qaeda.
Racist pig---and extremely stupid too.

"To suddenly suffer an attack of concern for fair treatment is just beyond the pale."

I have it on good authority that in an effort to counteract the appearance of racial prejudice against the Muslims, Cheney has ordered the Pentagon to immediately begin sodomizing and wash-boarding Britishers.