Politics & Policy


A disappointing and damaging response to the Dubai deal.

Islamophobia, not national security, is at the heart of the raging controversy on Capitol Hill over a United Arab Emirates-based company, Dubai Ports World, assuming ownership and management responsibilities at six major seaports in the United States. U.S. lawmakers might bristle at the thought of letting the UAE own and operate U.S. ports. After all, it was a citizen of the UAE, Marwan al Shehhi, who piloted United Airlines Flight 175 into the second World Trade Center tower, and it was through the banks of this country that the 9/11 attacks were partially financed. But their fiery rhetoric and threats of congressional action mask an increasingly patronizing racism fueled by illogical paranoia rooted in past events. Let’s deal with what the UAE is now.

Simply put, the reaction to the Dubai deal is un-American.

President Bush has therefore rightly threatened to veto any attempts to block the Dubai deal, although Congress, eager to insure the burden of responsibility falls squarely on his shoulders if another terrorist attack takes place on American soil, is sure to force him to pull out the presidential ink pen next week.

Congressional moves to reverse the administration’s support for an Arab company to run American ports exposes dangerous prejudices in America’s dealings with important Muslim countries at the time when they are needed most as front-line allies to fight terrorism. In Dubai’s case, this reality is reflected by deep suspicions that the sheikdom’s cordial relations with leading state sponsors of terrorism, like Iran, might somehow become the basis for DP World’s port operations allowing nuclear, chemical, or biological weapons to be smuggled into the U.S. in ship containers from unregulated ports.

Dubai, known for innovative investing in antiterrorist technology, should be encouraged to fund and deploy a revolutionary array of security initiatives, such as neutron pulse scanners and smart container-tracking chips that can track and detect illicit materials in cargo containers. U.S. technology is already being developed in prototype form to create CAT-scan-like reports identifying nuclear and chemical materials inside containers in less than two minutes, without opening them or materially affecting port management economics. Rather than penalize Dubai for suspicions no one can prove, the U.S. Department of Homeland Security should find a common investment and implementation basis with DP World for moving such technology development forward at a more rapid pace.

Simple corporate restructuring of the deal could also address concerns over how foreign-government-owned businesses are allowed to exert control in operating U.S. ports. DP World’s operations could be conducted under a U.S.-limited liability company framework with two classes of shares–voting and non-voting. DP World would own 100 percent of the non-voting shares, which in turn would accrue 99 percent of the deal’s economic benefits. The voting-rights shares would be 100 percent owned by U.S. citizens with one percent of the economic benefits. The voting shares would have sole authority to set port operations policies, and importantly, to change any policy promulgated by DP World deemed a threat to national security.

Under such a proposal, the U.S. shareholders could be, for example, the chief-executive officeholders of the port authorities that DP World proposes to manage, along with a few presidential appointees, such as former law-enforcement officials, to provide oversight. Such arrangements already serve to channel important investment into private U.S. companies engaged in sensitive technology development that are regulated by International Traffic in Arms Regulations (ITAR). Port security, as opposed to a port’s commercial activities that DP World would be responsible for, will remain the task of the U.S. Coast Guard and Customs Service.

Such changes would not be discriminatory going forward–even a British company, like the ports’ present management owners, Peninsular and Oriental, would also be subjected to the new regime.

Washington’s bout with Islamophobia also ignores the reality of Dubai’s future direction. A metropolis already, it is rapidly becoming the prototype city-state that could serve as an important example for the future in Muslim societies bedeviled by high unemployment, low literacy rates, bad trade policies, and authoritarian political structures. It is managed and led by a cadre of young, highly educated Arab and Muslim professionals who seek to transform the world’s stereotype of Islam by developing and running businesses transparently, with integrity and with an increasingly democratic and accountable corporate culture.

Whatever the UAE’s policies in the pre-9/11 world (whether as home to A. Q. Khan’s illicit nuclear network, one of three Taliban embassies, questionable banking practices, or as an alleged repository for Iranian-terror funds), Dubai’s record under these young leaders in the post 9/11 world reflects serious and structural change in national strategy. As Jim Robbins noted Tuesday, in December 2004, Dubai was the first Middle East government to accept the U.S. Container Security Initiative as policy to screen all containers for security hazards before heading to America. In May 2005, Dubai signed an agreement with the U.S. Department of Energy to prevent nuclear materials from passing through its ports. It also installed radiation-detecting equipment–evidence of a commitment to invest in technology. In October 2005, the UAE Central Bank directed banks and financial institutions in the country to tighten their internal systems and controls in their fight against money laundering and terrorist financing.

These are not the actions of a terror-sponsoring state.

The Dubai port deal could also serve to increase the depth and breadth of people-to-people contacts between America and important Muslim countries in the Reaganesque “trust but verify” mold. It is useful in this regard to remember the example of the U.S. International Military Education and Training (IMET) program, which for decades has trained foreign armies in unstable countries to stay out of politics and improved U.S. understanding of complex societies. It seems patently hypocritical that America wants democracy in the Middle East, champions capitalism and global integration, pushes for reform, transparency, and anti-corruption practices in business, and then turns around and tells those who are practicing what America preaches, Sorry, we think you folks are a bunch of terrorists, so we don’t want you on our shores and don’t trust you running our ports.

It is understandable that American politicians would want to seek clarifications, safeguards, and accountability on the DP World deal in honor of all those who were mercilessly murdered on that tragic September morning. But the best way to honor their memories is to use the Dubai deal as a model to build effective bridges to the Arab and Muslim world–as we did in Pakistan, Iraq, and Afghanistan–instead of erecting barriers that reveal America’s paranoia and fear about some Islamist doomsday scenario no one can predict, all the while alienating the very people we need to help raise up the Muslim world’s disaffected so they are not so desperate to tear us down.

Mansoor Ijaz is chairman of Crescent Investment Management LLC, a New York private equity firm developing homeland-security technologies related to Internet security, air and seaport-cargo security, and airship-surveillance technologies. He also serves as chief executive of Crescent Hydropolis Resorts, a London Stock Exchange (AIM) quoted company that is developing the world’s first permanent underwater living facilities, including a planned location in Dubai.

Mansoor IjazMansoor Ijaz is an American hedge-fund manager and venture capitalist. He is founder and chairman of Crescent Investment Management Ltd, a New York investment firm that operates a proprietary trading ...


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