The furor centers around the $6.8 billion acquisition by Dubai Ports World, owned by one of the United Arab Emirates, of London-based Peninsular and Oriental Steam Navigation Co. P&O had been running operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami, and Philadelphia.
Citing what they say are fears of lax security, politicians from both parties called on President George W. Bush to cancel the deal and several began drafting legislation to block it. The issue was also increasingly being aired on conservative talk radio stations and in Internet blogs.
"I find some of the rhetoric being used against this deal shameful and irresponsible. There is bigotry coming out here," said James Zogby, president of the Arab American Institute.
He said politicians were exploiting fears left over from September 11 to gain advantage in a congressional election year.
"Bush is vulnerable so the Democrats jump on it. The Republicans feel vulnerable so they jump on it. The slogan is, if it's Arab, it's bad. Hammer away," Zogby said.
According to some industry analysts, the change in management would have no real effect on security, which would still be carried out by American workers to international standards. The UAE, whose government owns Dubai Ports World, is an international financial hub and close U.S. ally.
"The Emirates have been very pro-active partners in helping our security. They have a solid track record of cooperation," said Peter Tirschwell, publisher of the Journal of Commerce.
Rabiah Ahmed of the Council on American-Islamic Relations said members of her organization also believed anti-Arab bigotry was driving the debate.
"The perception in the Arab-American community is that this is related to anti-Arab sentiment," she said.
Despite the UAE's close ties to the United States, some critics say lax controls allowed some of the September 11 hijackers to exploit its banking sector to transfer funds to support the attacks. Others have suggested its commercial links with Iran are a cause for worry.
"It is obviously an emotional, political and security issue, but I don't see xenophobia involved in this," said Peter Brookes of the conservative Heritage Foundation.
The opposition was reminiscent of a similar controversy last year when China National Offshore Oil Company Ltd. tried to purchase Unocal, a U.S. oil services company. The Chinese company ultimately withdrew its offer in the face of fierce political opposition.
South Carolina Republican Sen. Lindsay Graham said Americans were not against foreign acquisitions as such but were suspicious when they involved security infrastructure.
"Americans right now want free trade, but when it comes to national security issues, we want to maintain the infrastructure ourselves," he told Fox News Sunday.
"I don't think now is the time to outsource major port security to a foreign-based company," he said.
Daniel Griswold of the libertarian Cato Institute said opposition to the Emirates acquisition had more merit than the opposition to the Chinese energy bid.
"Here, there are legitimate questions of port security. Experts have long warned us that U.S. ports could be an entry point for weapons of mass destruction and we can only search one container in every 20 that come in," he said.
But Griswold conceded anti-Arab feelings were also playing a role. "It's obviously part of the mix and there's also some misunderstanding and a lot of political grandstanding going on," he said.
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