Reuters, Wed Mar 1, 2006
UAE to invest in US but port row may spook others
By Ghaida Ghantous and Miral Fahmy
DUBAI (Reuters) - Opposition in the United States to a UAE firm taking over U.S. ports will not deter the Arab state from more investments there, but could make other countries divert funds to Asia and Europe, the UAE’s economy minister said on Wednesday.
Sheikha Lubna al-Qassimi also told Reuters in an interview that the controversy over the takeover would have no impact on talks for a free trade deal between the United States and the UAE, adding the pact could be signed this summer.
The minister said that if U.S. politics become obstacles for commercial deals, other markets such as India, China and some European countries may prove more attractive to wealthy Arab and other investors.
"There is no hesitation, this will not deter the UAE from investing further," Sheikha Lubna said, referring to objections over Dubai Ports World managing six major U.S. ports.
"This is a business deal that somehow got politicized," she said. "(But) when you have deals that are prolonged by interference of a political nature ... it may encourage many countries in terms of going into investments in other places."
The deal with government-owned DP World has come under fire from some U.S. lawmakers who said it would undermine security, but President George W. Bush has insisted it was safe to let an Arab firm run terminals at six major U.S. ports.
The Bush administration said on Monday it would grant a request by DP World for an additional 45-day review of its contested takeover.
DP World has said it would proceed with its $6.85 billion takeover of Britain’s P&O on March 2 — making it the world’s third-largest port operator — but not immediately assume management of the U.S. port terminals involved.
"This (controversy) will affect not only Arab or Gulf Arab (investors), this can affect any country that wants to invest in the United States," Sheikha Lubna said. "This could also discourage investment in the United States or cause hesitation."
The flow of Gulf Arab petrodollars to the United States is becoming increasingly important to the global economy. A lot of that money is channeled through central banks and state bodies.
Gulf investors plowed more than $30 billion into foreign takeovers in 2005 — more than in the previous five years combined.
Sheikha Lubna said the United States and the UAE, an OPEC oil producer, would resume talks on a free trade agreement (FTA) on March 13 and that it would not be overshadowed by the ports row.
"This is an FTA between friends. I am very confident that we will conclude it this year, maybe by the summer," she said.
The UAE, and especially Dubai, is a major trading and business hub in the wealthy Gulf region. It has so far been spared from attacks by Islamist militants who have struck Western interests in other Arab countries.
Sheikha Lubna highlighted her country’s support for the U.S. war on terrorism and its strong political and military alliance with the United States.
She said more than 600 U.S. warships dock annually at Jebel Ali port, which is also run by DP World, and that Dubai became the first Middle Eastern port city in 2004 to sign a U.S. pact aimed at deterring the use of shipping containers for terrorism.
Sheikha Lubna said there was a "percentage" of truth behind Arab accusations that DP World’s takeover was being questioned because it was a Middle Eastern firm. But she made clear that U.S. political opposition went beyond nationality, noting that a Chinese oil company had failed in an attempt to buy a U.S. firm.
The minister said the UAE had taken strides in combating money laundering and terrorist financing after the September 11, 2001 attacks on the United States, which strained U.S.-Arab ties. Two of the 19 Arab suicide hijackers were from the UAE.
The UAE also provides logistical support for some U.S. military operations in the region, including Afghanistan.
"What is important is to focus on what happened after September 11, not what happened before," Sheikha Lubna said.