Wednesday, March 22, 2006

The State of Dubiety

It's very long I know, but the Washington Spectator asked for it! An elaboration of my thoughts on the Dubai deal - and why don't you subscribe to it? whyhttp://www.washingtonspectator.com/articles/20060315dubai_1.cfm

IN DUBIOUS BATTLE
The Dubai Ports Deal and Our American Ship of State
By Ian Williams | March 15, 2006
After the outpouring of enthusiasm we received for his stinging sendup of George W. Bush's monarchical presidency by Ian Williams, we knew it was only a matter of time until we asked our friend Williams to pen another essay. When a controversy erupted over the plan to offer management of several U.S. ports to a company from Dubai, it seemed just the right topic.
With mordant wit, a decidedly internationalist perspective, and an approach that likely will challenge the views of many—if not most—of our readers, Williams skewers the conventional wisdom on this debate. In doing so, he shows us what the Dubai affair says about politics here at home and America's place in the world.
The British-born Williams is a regular contributor to many of the U.K.'s major newspapers and is The Nation's U.N. correspondent. Last summer he published his latest book, Rum: A Social and Sociable History of the Real Spirit of 1776.
hen Bush is on the side of the angels, you know that we live in strange times. Even though the Dubai deal was not nearly as important as all the cavortings in Congress implied, it is nevertheless deeply significant.
It is the perfect storm—in a teacup. Peering into it gives a gloomy prognosis for the American political process and the U.S.'s unique unsuitability for imperial power. As Tip O'Neill famously said, "All politics is local." But it need not be parochial. Forging foreign policy in a crucible of xenophobia is dangerous, not least when the raw material is fed in by domestic lobbyists.
The Dubai affair reveals how insouciantly Washington deals with globalization, free trade, foreign policy and the "global war on terror." It revives questions about the callousness of the administration's response to Hurricane Katrina, and, equally disturbingly, it reveals that leading Democrats, having no "decent respect for the opinions of mankind," are quite happy to stir up a chauvinistic domestic firestorm for short-term expedient gains.
To begin at the beginning, George W. Bush, by the earnestly professed free-trade principles of both his and the Clinton administration, is entirely correct that there was little to worry about in practice, or in principle, concerning the Dubai Ports World (DPW) takeover of the British port operator Peninsular & Oriental Steam Navigation Co. (P&O), even if it did mean that operations at twenty U.S. ports would go to an Arab-owned company.
Even if Bush did the right thing in approving the deal, he almost certainly did it in the wrong way, secretively and insensitively, to do a favor for his chums in the Gulf. His close ties to Dubai and the Emirates' political establishment will give comfort for the conspiracy-minded, who will also note that Halliburton has a major subsidiary in Dubai and that the now deceased ruler of Dubai had made a substantial donation to the senior Bush's presidential library in Texas.
The unprecedented lack of Republican support for Bush suggests that the ineptitude of the administration in its response to Katrina has dissolved whatever protective aura the presidency once gave him. That was epitomized by Jerry Lewis (R-CA), the chairman of the House Appropriations Committee, who on March 8 defied a threatened Bush veto by introducing an amendment to stop the deal. Bemused at the waves of isolationism, paranoia and Arabophobia now swamping his political levee, Bush has no one but himself to blame if his opponents have exploited the ugly and irrational feelings that his phony war on terror has raised.
Bush's almost subliminal messages, since September 11, 2001, equating Arabs with terror have made his opponents' work in this case much easier. Perhaps the least surprising, but still horrifying, recent news was the Zogby poll on the views of U.S. forces serving in Iraq, which showed that 85 percent of G.I.s think that Saddam Hussein was behind the World Trade Center attack. New York's Democratic senators Hillary Clinton and Charles Schumer can congratulate themselves that 70 percent of U.S. voters share their opposition to the Dubai deal. This is the same percentage that, in the year of the Iraq invasion, mistakenly believed that Saddam was responsible for 9/11. On the other hand, although it takes a lot to make the president look principled, sadly, the Clinton family and Senator Schumer succeeded. Last week came the revelation that Bill Clinton, who had been freshened up already with $300,000 for a previous speaking engagement in Dubai, has been advising the Dubai government on how to steer DPW's takeover of P&O through Washington—the very issue on which Hillary Clinton and her Senate stablemate Schumer have been running wild.

HARBORING TERROR?
The issue is not security. As someone who lived in downtown Manhattan on September 11, I would think that a more understandable, if equally irrational, cause for hysteria would be that the United Arab Emirates' (UAE) airline flies two large planes a day from what is being portrayed as Terrorist Central directly into JFK Airport, within diving distance of midtown Manhattan. There has been no agitation yet, although one almost hesitates to mention this in case some tub-thumper leaps on it.
There is a form of political algebra well worth practicing in times of chauvinistic panic. Put the shoe on the other foot by substituting the names of countries and see if a statement still makes sense. From such a detached global viewpoint, what is more to be feared, a company like DPW, or one like the Seattle-based Stevedoring Services of America (SSA), which has practiced union-busting around the globe with its 150 facilities worldwide?
Dubai has never invaded any other country, let alone the United States. In contrast, the U.S. has a somewhat outstanding record on the invasion front. To cite but one example, during the Iraq invasion, in 2003, the Bush administration awarded the contract for the port of Basra to GOP-connected SSA—even though the British forces that had actually taken Basra wanted the locals to run it.
In practical terms it is clear that the ports deal offered no significant threat to U.S. security. The P&O management in London, who have been running the ports unchallenged for some years, would remain unchanged. Homeland Security, the customs, Coast Guard and all the usual suspects remain in charge of the terminals, whose staff are American, and unionized. Even the latest compromise that the grateful Emirates have forced on Dubai is an ironic rebuke to the Know-Nothings in Congress. As we went to press they offered to transfer control of American operations to an U.S. "entity." So if an American company runs the ports, and all its equity is owned by P&O in London or DPW in Dubai, what difference does it make in real terms?
But this is not about foreign ownership or port security. It is about Arabs. If it were about ports: Japan (remember Pearl Harbor?); Britain (burned the White House in 1814); and, most interesting of all, a Chinese state-owned company are among the many foreigners who have been running port terminals in the country. Last year the Chinese General Zhu Chenghu threatened the U.S. with a nuclear attack over Taiwan, and remains unreprimanded for his belligerency.
As even Bush realized, if you preach globalization to the world, you cannot without some danger parenthesize your sermon with small print saying "(except for Arabs)." It is not as if Israel has a dog in this fight, but Senators Clinton, Schumer, Barbara Boxer (D-CA), et al. are pandering to those domestic supporters of Israel who recoil in reflex at the mere thought of Arabs. For them, the only good Arab is one in the pillory, at least. They are of course now joined by the many who have absorbed the messages emanating from the White House about the threat of terror from Arab lands.
The recent addition to the bill of charges against DPW, that it enforces the Arab League boycott in Dubai, is on a similar Claude Rains level of "shocked, shocked." In Arab countries, it's the law. Similarly, we can assume that the company will apply Washington's embargo on Cuba and Iran in the U.S., even if it does not at home.
While most defense and security agencies saw little difficulty with the Dubai deal, many of them are deeply concerned about the suggested Israeli takeover of Sourcefire, an American company that makes electronic defense software, not least because of its proven record both of Israeli spying and of selling U.S. technology to China.
If there is a form of licensed racism in America, it is indeed anti-Arabism. For example, the Clinton campaign, back in 2000, returned donations from Arab-American groups rather than allow acceptance of the funds to ruin its pro-Israel reputation. Last week a New York theater cancelled, or "postponed" as it shamefacedly rationalized, a play about the young American volunteer Rachel Corrie, who was killed by an Israeli bulldozer as she protested Palestinian house demolitions in the Gaza Strip.

WWW.DUBAI.AE


Almost all the media discussion of Dubai has been in the abstract. "Arabs, oil, anti-Israel" is the litany, with the inevitable subtext of "terrorism." With customary parochialism those leading the charge against Dubai Ports World do not seem to have paid any attention to the real Dubai, the UAE and their role in the region.
The rulers of Dubai have been investing heavily in the knowledge economy, and they actually have a quite comprehensive website telling all about them. Yet I do not remember seeing anywhere in the media that the previous monarch, Sheik Maktoum Al Maktoum, died this past January, not even as a footnote; and I have read several current articles referring to his successor, Mohammed, as Crown Prince.
If the media sources had just checked his website, they would have found that the new sheik said in Davos two years ago, "If the cart is politics and the horse is the economy, then we have to put the horse before the cart and not the other way around," which in its gnomic way applies with knobs on to the American political classes. If they had paid attention to the fundamentals of the American economy, then Dubai would not be in a position to recycle its petrodollars into buying up American assets.
The rulers of Dubai have been quite farsighted. Instead of spending their short-lived oil income on conspicuous consumption, they have tried to invest it in, among other things, other people's conspicuous consumption. While trying hard to be a world financial center, they are developing a tourist industry, whose sybaritic splendors, namely the shopping festivals, horse races and sporting fixtures, are unlikely to endear them to either the Wahhabis of Saudi Arabia or the Ayatollahs of Iran.
It is simplistic to call DPW a "state-owned" company, since the state itself pretty much belongs to the ruling Al-Maktoum family. One can't help thinking that DPW is state-owned in the way that Halliburton is, with its connections to Vice President Cheney.
Dubai and the Emirates are the major supply base for the U.S. forces in Iraq, and, outside of Kuwait, they are the nearest thing to an Arab ally in that venture. The Emirates are not exactly eager to advertise their quasi-allied status; they can probably only get away with it because they haven't bought into Bush's democratization campaign. As the Palestinian elections show, when Arabs vote, they tend to show strong feelings about the U.S.'s role in supporting Israel.
In the privacy of their palaces, the feudal sheiks of the Gulf do not applaud U.S. support of Israel, and are probably less than ecstatic about events in Iraq, but they are stuck between two hard places, Saudi Arabia and Iran. Cultivating the U.S. administration is a sensible move. Neither Senator Clinton nor Schumer has yet declared the war in Iraq to be the disastrous mistake that most of their New York constituents think it to be. So it is even more unprincipled of them to attack one of the key components of the "success" of the war effort. It would be nice to see Teamsters demonstrating against allowing in a company from a country that supports the war—but unlikely.
As part of that kiss-up to Uncle Sam's policies, and doubtless also for charitable reasons, the United Arab Emirates made a $100 million donation for relief after Hurricane Katrina last October. We should applaud Bush for not emulating Rudolf Giuliani's refusal of a $10 million donation from Saudi Prince Alwaleed bin Talal, for differing publicly from the mayor's Likudnik views on the Middle East. But Bush did not exactly shout about it from the rooftops either.
It is an interesting comment on the standing of the administration that the donation went into the general federal Treasury, with two-thirds of it earmarked for FEMA, and the rest for housing reconstruction. Third-world governments may need budgetary support in the wake of a catastrophe—but the United States? If, as seems likely, the cash was simply put into the budget, it did not augment the aid that actually reached the victims. It just gave a hundred million more for the administration to enact tax cuts for their friends, whose idea of a disaster is an IRS bill.

BETTER A LENDER THAN A BORROWER BE
This brings us to what the Dubai affair says about America's place in the world economy. When the sun never set on the British Empire, the City of London exported capital on a huge scale—and indeed, largely financed American industrial expansion. As recently explained in these pages, 21st-century America is a huge importer of capital, much of it recycled from the balance-of-payments deficit the country runs with the rest of the world. Dubai has sensibly been investing in its own future, but has more petrodollars than its own relatively small economy can absorb.
American consumers need to ask themselves where they would prefer those foreign dollars to go. If they are invested in other countries, it accelerates America's relative economic decline. If they are invested here, it will continue to cover the deficit, but in the end those pesky foreigners will end up owning the whole show. If the U.S. continues to run a negative savings balance, and a negative balance of payments and trade, with the rest of the world, it's unavoidable.
Of course, one factor in the adverse balance of payments has been the rush of U.S. corporations to offshore their operations, whether to Mexico, India or China. Politicians complaining about the Dubai deal seem less concerned about their corporate donors offshoring, and at least DPW is not proposing to send the terminals elsewhere.
So, is there a point to all of this? Well, the senators of Rome in most circumstances ignored what other nations felt. The cash that flowed in was tribute, and the provinces had no option but to pay up and to do what they were told.
But the U.S., despite a ruthlessly Roman tendency to send in the legions, does not get tribute. The honorable senators from New York should consider that because of the free trade and open markets they have preached to the rest of the world, the U.S. has made itself uniquely vulnerable. If the U.S. is going to live off the rest of the world, it should at least occasionally check what is happening out there.
If American leaders want to worry about security, and to ensure a free flow of capital and oil, they might think twice before expediently insulting the people who provide it. That is particularly true of the Arabs, but it is also true of the rest of the world, the Asians and the others, who may be tempted to think that the money from their trade surpluses would be better invested elsewhere.