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Archive for Friday, March 10, 2006

Dubai firm withdraws from U.S. ports deal

March 10, 2006

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— With President Bush unable to contain a Republican congressional rebellion, a company owned by the United Arab Emirates vowed Thursday to turn over its just-acquired operations at six major U.S. port terminals to an American entity.

The surprise move came after congressional leaders told Bush on Thursday morning that there was no way to stop lawmakers from blocking Dubai Ports World's takeover of terminal operations at the ports.

Republican and Democratic lawmakers reacted cautiously to the company's apparent surrender, saying they needed to learn more about the details before abandoning their attempts to block DP World.

DP World obtained the terminals as part of its acquisition of Peninsular and Oriental Steam Navigation Co., a British firm. That transaction, which the Bush administration approved in January, aroused a public furor that drove Congress into open conflict with the White House.

The announcement was an extraordinary retreat that signaled a shift in the power relationship between the White House and Congress. Bush has been unused to losing. But this time, the Republican-led House of Representatives, which has been a rubber stamp for the president for the past five years, was the first to revolt.

Republicans were furious when the president promised last month to veto any legislation that blocked the deal. Congress ignored Bush's threat, and a 62-2 vote to block the deal by the House Appropriations Committee on Wednesday left no doubt that Congress would override a veto if the president dared to cast one.

After Thursday's meeting of congressional leaders with Bush at the White House, DP World's chief operating officer, H. Edward Bilkey, surprised lawmakers when he issued a statement promising that the company would divest itself of its U.S. terminals.

DP World would have taken over terminals in Miami, Philadelphia, New York, New Jersey, Baltimore and New Orleans as well as some stevedoring operations at 15 others.

The question that loomed late Thursday was who would buy the U.S. interests, and whether the firm would sell the assets in pieces.

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