Monday, February 27, 2006

Dubai Ports Follow-Up

(cross-posted on Daily Kos)

Just wanted to follow up on my Diary of last Friday, Dubai Deal-Making Timeline, which lists developments in the Sheik of Dubai's recent decision to "go global" in ports management as documented by sources in the shipping industry and corporate/investment press.

Today the AP reported that the Coast Guard - the US government agency in charge of American port security - Expressed Concerns About Intelligence Gaps to the bush administration weeks ago. These gaps mean that the Coast Guard could not determine if Dubai Ports World might support terrorist operations.

Administration officials said in a Senate Homeland Security Committee hearing today [Monday] that those concerns had been addressed prior to CFIUS approval of the P&O takeover by DPW on January 17, but both the Congress and the American public are not convinced. I am not convinced either, for reasons that don't have a lot to do with the Bush administrations secret dealings with Dubai's royal house for strategic support within shooting distance of Iran...

First and foremost, it's important in the politics of sorting all this out that we understand the fact that the US government cannot yea or nay the sale of a British corporation to any other corporation they want. All CFIUS can do is yea or nay the buyer's takeover of P&O leases of American port facilities. We all know that CFIUS said 'yea' on January 27, but they forgot to tell the Congress or the port authorities in the states where the 21 ports are located... oops.

The states should pursue (by suit if necessary) their right to review all the information CIFUS considered, along with their duty to make the final determination about terminal leases in their ports. If DPW has to spin off yet another front company (through Carlyle) to handle operations in the US through a US-controlled subsidiary that's okay with me. Or P&O can decide to sell to one of the other bidders - AP Moller-Mearsk, for instance, which just purchased P&O's line division (ships and containers) in December. Or PSA's Temasek offer, though that would put the facilities in the hands of the Singapore government.

The container industry was a great idea in 1956 (when Sea-Land invented it). Allows door-to-door service, easily handled by truck/train in the interior, etc. The deep-water Port of Dubai, built by a Sheik-owned CSX spin-off in 1978, apparently handles trans-shipment of most of the containers in the world right now, so it's obviously a well-run operation. But in a world where terrorists with WMDs are a serious issue, the return of empties on the same ships with sealed containers presents a pretty darned tempting opportunity.

Check ILA [Longshoremen's Union] comments filed as part of the DOT/Coast Guard revamping of maritime security after 9-11:

"In addition, one of the most overlooked of potential security risks to terminals, ships and port infrastructures is the proper handling of empty containers. On any given day as much as forty percent of cargo delivered into any facility is comprised of empty containers.  Containers marked as empty provide easier opportunity to house destructive devices and, therefore, present increased security risks warranting their inspection at port facilities.

In many ports throughout the world, the inspection of empty containers is a requirement for many of the reasons outlined above.  For years, inspections of empty containers was regularly done in America's largest seaports; however this procedure was abandoned some years ago. Once again, if we truly are serious about creating safe and secure seaports, then the return to these inspections is a must."

A Tale of Docks and Mobsters is quite a fun read, with revelations like this...

"In a series of indictments, a reputed Genovese mob captain from New Jersey and three top ILA officials are charged with conspiracy to commit extortion and fraud. Prosecutors say the scheme was aimed at taking control of the 35,000-member dockworkers union — which represents 4,000 workers in the metropolitan area alone — while steering lucrative union-benefits contracts to companies that paid kickbacks to the mob."

Worse, the American mob isn't the only player. One can hope our mob wouldn't knowingly abet terrorists, but who can guarantee such a thing? We wouldn't put our national security in the hands of the Russian mafia or Chinese Triads. Americans are not being unreasonable or "racist" for not automatically trusting a Middle Eastern Emirate that has been notorious for smuggling people, drugs, arms and other contraband in the Middle East for 200 years.

But ultimately, my problem with this sneaky deal is that Dubai's international terminal operation is less than a year old (purchase of CSX WT in March of 2005) - the company we've been introduced to as DPW is just 5 months old. It was created solely so it could enter the bidding for P&O's terminals division and its operations in North America.

There's precisely ZERO history on which to base a rational decision about security threats to the US from this company or from a country with well-documented ties to the 9-11 terrorists.

Trading With the Enemy [Forbes, April 12, 2004] -

"If you want to get around export controls, just sell the product to a front company in Dubai. The middlemen will take it from there."

Friday, February 24, 2006

The Dubai Deal

By Joy
(cross posted on Daily Kos)

The Dubai Ports deal we've heard so much about in the past week is a spectacular and sordid tale of robber barons, fancy business maneuvering over decades of time, of power-building and power-breaking. It's about long-term manipulations affecting nations politically all over the globe and aiming toward a single overarching goal - a 'New World Order' where a small group of people rules the world with an iron fist in a corporate-controlled (and corporation-controlling) oligarchy.

Whether the deal does in fact represent a significant threat of further terrorist attacks in the US - thus is a national security concern on the level of 9-11 - is debatable. To measure such threat it would be necessary to first answer questions still unanswered about the 9-11 attack, which the administration on whose watch it was allowed to occur has no intention of answering. Ever. And, ultimately, we'd have to get an answer to the question of whether there is any such thing as national security in the corporately globalized world our leaders have volunteered us to serve.

I have spent this most interesting week doing some net-surfing (I'm sure the NSA watchers are spinning their heads around) to see what there is to see out there. Bush's Tuesday reaction - to pitch a toddler-sized hissy fit and threaten to veto anything launched to stop this deal (that Scotty said on Wednesday the President didn't know about anyway, and the Sec. Treas. chair of CFIUS said Thursday he didn't know about either, wasn't really secret. That's just the spin to account for why this dirty deal got all the way to approval before anybody found out about it. There's months and years' worth of public information out there about both this deal and the deals that led up to it, released by the corporations themselves, by news media, and by government announcements.

I have put together a timeline and highlighted pertinent cross-connections with very brief references. Included are links to the material still available on the internet, so anyone interested can go to those sources and confirm information or gather further informational links. It's gotten unwieldy fast, so now (Friday) it's going to be pretty bare-bones to anyone who hasn't been following developments or wondering about certain connections. I am not a lawyer, not a congresscritter, and not a stockholder with a financial interest in any of this.

I'm just an American, and I think this travesty represents a unique opportunity to honestly examine our true current position and circumstance in the world. Only by putting it together in our minds can we rationally decide if it's a 'good' thing or a 'bad' thing and act accordingly.

Dubai's monarchy - an "Emirate" of Sheiks - is 200 years old, and the royal family controls or holds controlling interest in almost all significant economic activities in the kingdom, and holds important positions in the collective UAE's governance and military organizations. Before the discovery and exploitation of oil and gas in the Gulf region, the Port of Dubai enjoyed a storied past as a pirate port and smuggling center. Smuggling of opium/heroin, "re-export" of arms, gold to India (where trade in gold is illegal) are all still accomplished through Dubai. But now it's a financial and tourist center too, and UAE's wealth (actually the wealth of the royal families) is being invested in globalized industries as well.

1978 - 22-year old Jones Act container shipping company Sea-Land, a division of RJ Reynolds Industries, establishes a private, limited corporation responsible to the Ruler of Dubai for the design, operation and maintenance of a state-of-the-art, 66-berth, deep-water port and trucking operations center at Mina Jebel Alik, UAE. This is the largest port complex in the Middle East.

This spinoff company allows Sea-Land to maintain a non-Jones Act-regulated port facility in a strategic trading region, where shipping containers can be transferred around the globe on foreign-flag ships. The immensely lucrative business of "re-export" is established, answerable to (owned and controlled by) the Dubai royal house directly, a means of circumventing protectionist laws (like Jones Act), political embargoes, and trade restrictions. Container service expands to India in 1979 with bi-weekly service, and between the US and Shanghai in 1980.

Jones Act (Merchant Marine Act)
Horizon History

1984 - Sea-Land separates from RJ Reynolds to become an independent, publicly-traded company, and achieves its highest revenues and earnings in its history.

1986 - Richmond-based CSX Corporation buys Sea-Land, allowing CSX to combine rail, sea and overland cargo movement. The company retains its name, Sea-Land.

1990 - Sea-Land announces an agreement to pioneer containerization in the former Soviet Union, including development of the Trans-Siberian Land Bridge.

1991 - Sea-Land and Maersk [Rotterdam] announce a vessel-sharing agreement in trade between North America and Asia, John Snow becomes Chairman and CEO of CSX, a position he holds until being confirmed as Treasury Secretary by G.W. Bush in 2003.

Source Watch: John Snow

1994 - Sea-Land and Maersk announce a consolidation of their management alliance, with centers in Rotterdam and Charlotte. Sea-Land moves to occupy the Charlotte Tactical Planning Center in 1995.

1999 - CSX divides Sea-Land into 3 different companies: a Global liner division, a Domestic division, and a Terminals division in March. In July Maersk announces an acquisition bid for the Global liner division of $800 million US. The acquisition is completed in December of 1999. CSX maintained control of the Domestic and Terminals divisions.

Meanwhile, back in the UAE

2001 - CSX Lines [Domestic] announces the creation of Horizon Services Group [HSG] in a restructuring of the existing organization of CSX Lines. HSG operates separately from other existing CSX Lines operations.

2003 - In January, CSX Lines receives C-TPAT certification [Customs-Trade Partnership Against Terrorism]. Sale of the CSX Lines to the Carlyle Group for $300 million US is completed two months later. Re-named Horizon Lines, the headquarters remained in Charlotte.

2004 - Horizon Lines sold by the Carlyle Group in July to Castle Harlan of New York for $650 million US. Horizon Lines is the largest domestic [Jones Act-regulated] ocean carrier in the United States.

CSX launches CSX World Terminals and announces plans to further develop operations in Hong Kong, Mainland China and the Asian Pacific under this name, then promptly sells CSX WT to Dubai Ports International, Terminals division [DPI Terminals]

Lots of CSX TW dealings

2005 - The Dubai royal family's spinoff (and control) portion of the Sea-Land/CSX empire, meanwhile, has been kept pretty quiet. Dubai Ports (apparently a separate royal-owned enterprise) had confined itself primarily to operations in the Persian/Oman Gulfs and Arabian Sea, servicing the ME region as it had traditionally done. In March of 2005 DPI "stunned" the shipping industry by announcing its acquisition of CSX TW "just days" after its late entry into the bidding (dominated by Singapore's Temasek PSR group), for $1.142 billion dollars US. Which, btw, is $8 million less than its original offer of $1.15b.

World Cargo News: Stop the Press
Business Journal

In September of 2005, DPI reorganized into a single global business as Dubai Ports World [DPW]. The next month (November) the DPW board approved cash outlay for acquisition of British ports giant Peninsular and Oriental Steam Navigation [P&O]. DPW announced the acquisition in industry press on February 11, 2006, and the rest is history in the making. This is the deal for control of 6 (or maybe 21) US ports before us today, and the price now stands at $6.8 billion US.

DPI reorganization
DPW approves cash for P&O
P&O Bidding War
Gulf News

Wiki: Anti-Trust

...oh, yeah. Mersk bought P&O's shipping division (containers and ships) just this past Christmas - December 2005. So this is just about who controls the ports, not who sails into or out of them.

That's the timeline and connections I've traced thus far. There is much political hay being made, and dozens of further links following the public revelations this week, but there's not room for them here. I just wanted to give an overview. The fact that Sandborn went straight from DPW to a position to waive this deal through a process that other of the by-law principals (like Snow and Rummy) claim they knew nothing about is a more specific factor in the determination of whether or not this deal is strictly legal (or if legal corners were 'cut'). The strategic position of UAE in our current foreign adventures is also a factor no doubt considered, along with UAE (Dubai in particular, Kuwait as always) allowance for basing of US troops and military assets.

And the involvement of UAE in issues of national security to the US (both for us and against us) seems here to be overcome by simple cash investment and controlling ownership in the Sea-Land Global division from its very beginning.

It's all very twisted and complex, but what matters to Mom and Pop America is what hits them in the gut. Nothing about the shady and not-so shady business dealings of shifting monopolies (somewhat fluid, but always kept 'in-family') in the world's shipping industries justifies allowing compromise of vital US national security information - or even the "appearance of" possible question to be raised.

I'll wrap this up with a short statement. If we are indeed at war with Islamic extremists, and any countries that provide sanctuary or support to Islamic extremists, Dubai's well-documented connections to 9-11 disqualify it from even thinking about taking over operations of any port in this country. So long as Americans are fighting and dying in Iraq for what we were told were (even more tenuous) connections to 9-11, we won't turn over a single dock or pier. We must stand with the Stevedores and Longshoremen who have filed suit to block this deal. And our leadership in Congress must spotlight the shady dealings that led us here.

Making secret 'treaties' (agreements of national interest) with foreign nations/nationals which serves or could serve to transfer any strategic or national security defense information to the 'enemy', is the definition of treason.