ANALYSIS: Gulftainer's US move is a storm in a teacup
It all feels a bit like déjà vu. Eight years after DP World’s move to buy the rights to run six ports in the US sparked a national security debate, forcing the firm to withdraw from the deal, a similar drama involving an Emirati company appears to be unfolding on the other side of the Atlantic.
This time it’s Gulftainer, the Sharjah-based port operator owned by Crescent Enterprises and run by well-known entrepreneur Badr Jafar. At the end of June, the firm announced it had secured a 35-year deal to run Port Canaveral on the east coast of Florida. The contract made Canaveral Gulftainer’s first terminal in North America, although it does operate ports and manage logistics firms on four other continents. As part of the deal, Gulftainer will invest $100m in expanding the port’s capacity from a few hundred twenty-foot equivalent units (TEUs) a year to 700,000. The plan is to employ 500 jobs in a part of Florida that has been hit hard by the current administration’s decision to close down NASA’s space shuttle programme three years ago.
So far, so good. Then, on 29 July, Duncan Hunter, a Republican member of the US House of Representatives and chairman of the House Subcommittee on Coast Guard and Maritime Transportation, sent a letter to Secretary of the Treasury Jack Lew, whose department oversees the Committee on Foreign Investment in the United States (CFIUS).
“It is critical that — before this agreement proceeds — CFIUS determines whether a terminal operation agreement with Gulftainer presents any risk or impact to US national security,” Hunter wrote. “Understanding that companies based in other countries and global regions undertake port responsibilities mirroring the agreement with Gulftainer, a review by CFIUS, as being requested, is not for the purpose of immediately terminating the agreement but rather making appropriate determinations in the interest of US national security.”
The point he raises in his letter seems fair enough. However, Gulftainer had applied to the CFIUS two months previously and the standard review process had already begun — a fact that would have been obvious if Congressman Hunter had bothered to check on the status of the deal instead of firing off his letter to Lew. The fact that he didn’t suggests that the letter was more calculated to pander to his conservative support base than anything else.
Needless to say, the issue has now been picked up by the American press. “Ports of peril” ran a headline in Pittsburgh’s Tribune Review. The blogosphere has been alive with bigoted remarks about Arab-owned companies, “wolves in sheep’s clothing” and so on. To be fair, some newspapers have derided the knee-jerk response of the conservative media. In an article in Florida Today, one journalist pointed out that “the scariest thing anyone can insinuate about Gulftainer is that the private company is based in the United Arab Emirates, just like former vice president Dick Cheney’s old company, Halliburton”.
The US is right to be worried about security, and the estimated 12 million shipping containers that travel the world are a source of particular concern. But Gulftainer has implemented all of the International Ship and Port Facility Security (ISPS) procedures (a new code of security rules at ports brought in after 9/11) since 2004. In any case, the Canaveral Port Authority has already confirmed that the terminal will be “subject to all security laws with US Customs and Border Patrol [CBP] responsible for processing all incoming containers… CBP will clear or pull any container as it exits the gate, including radiation portal monitoring, x-ray and manifest review”.
If that’s not enough to convince the naysayers, perhaps they would do well to remember that the most frequent port of call for the US Navy outside America is Dubai. Rarely a day goes past when a Navy vessel is not moored alongside the piers at Jebel Ali. And who provides services and helps arrange security at the port? None other than DP World, the company that was forced out of the US back in 2006. It would be a huge shame if reactionary politics — rather than hard facts and common sense — were to get in the way of a deal that could do much to help the US economy.