The Dubai Ports World acquisition of the London-based Peninsular & Oriental Steam Navigation is being portrayed as the operation of free markets in which the United States should have no objection or interference. Nothing could be farther from the truth.
DPW was formed by a September 2005 merger of Dubai Port Authority and Dubai Port International. DPW is 100 percent owned by the government of the Emirate of Dubai via a Dubai government holding company called the PCFC (Ports, Customs, and Free Zone Corporation). The government holding company is headed by the ruler of Dubai, Shiek Mohammed bin Rashid Al Maktoum, who took over on Jan. 4, 2006, following the death of his father, Sheikh Maktoum.
The financing for the transaction reveals even more clearly that DPW is a governmental agency fronted as a commercial entity. Barclays Capital, the investment banking division of Barclays Bank PLC and Deutsche Bank AG are organizing an international lending syndicate to create a $6.3 billion term loan and a $200 million revolving facility in a $6.5 billion loan deal to finance the acquisition.
This nearly-100 percent leveraged takeover is possible only because the debt will be backed by A1 Moody’s rating of Dubai, one of the seven Emirates comprising the United Arab Emirates. The borrowing entity will be Thunder FZE (Free Zone Enterprise), an acquisition vehicle set up by DPW, with a 100 percent guarantee provided by PCFC. Some 30 international banks are expected to participate in the $6.5 billion acquisition, plus refinancing a $1.65 billion loan DPW raised last year. Debt issues are not foreign to Dubai – last month PCFC issued a separate two-year $3.5 billion Islamic bond, the largest Islamic bond ever raised.
DPW also appears wired into the Bush administration. Last month, George Bush nominated one of DPW’s senior executives, David C. Sanborn, to serve as maritime administrator, an important transportation appointment reporting directly to Secretary of Transportation Norman Mineta. Mr. Sanford, a graduate of the U.S. Merchant Maritime Academy, joined DPW in 2005. Before being nominated to be maritime administrator, Mr. Sanford served as DPW’s director of Operations for Europe and Latin America.
Dubai has been far from faultless in the War on Terrorism. The 9-11 Commission Report documents how al-Qaida and the 9-11 terrorists who flew the airplanes into the World Trade Center and the Pentagon used Dubai as a banking facility and a country of transit. Dubai continues to work actively with the radical religious clerics ruling Iran, serving both as a vacation home and a capital haven to many of the wealthy mullahs and their families, including former Prime Minister Hashemi-Rafsanjani, who is the first mullah to be considered a billionaire while the Iranian per capita GDP continues to be calculated at around $1,800.
By the end of 2006, Dubai calculates that some $300 billion will have been moved from Iran to Dubai by over 400,000 Iranians. Iranians who travel to Dubai for business are estimated to constitute 25 percent of Dubai’s population. The Dubai Chamber of Commerce shows that more than 6,500 Iranian-owned companies are now registered in the UAE under Iranian nationality. Some 10,000 Iranian students live and study in Dubai. Some 20 percent of the investments in Dubai shopping centers are now registered under Iranian names. In one week, at the end of June 2005, Iranians bought 31 percent of the luxurious villas of Al Hamra tourism-residential complex, located in Ras Al Khaimah, north of Dubai. The UAE is a popular tourist location for those Iranians lucky enough to have the funds to travel, with many visiting several times a year, spending considerable sums on shopping, hotels and the beach.
With Iran defiantly pursuing a nuclear program believed to be building weapons, and with Dubai having established financial connections with al-Qaida operatives, is President Bush having another “Harriet Miers moment” in allowing Dubai Ports World to gain operations control over American ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia?
Maybe the explanation is that President Bush takes seriously the idea of establishing a Bush-Clinton dynasty and he just seized the opportunity to allow Hillary Clinton to move to the center, leading with Senate hawks who see the Bush administration decision as risking our national security by turning over control of our ports to an Arab Islamic state that is obviously too comfortable with terrorists.
In “Atomic Iran,” I specifically chose the scenario that terror sleeper cells in America would seek to obtain an improvised nuclear device manufactured in Iran and shipped into the United States in a container delivered to a New York area port. The Bush administration has been lax in patrolling our porous border with Mexico. Evidently, the Bush administration proposes to deal with our ports with a similar lack of concern that we are turning over operations of key American ports to what amounts to the government of Dubai. The DPW deal is giving me serious concern that we might see yet another prediction I made in “Atomic Iran” become reality.