Dubai Ports World today finalised its £4bn purchase of P&O while bowing to US political pressure by agreeing to end its quest to take over operations at US ports.
“DP World will transfer fully the US operations … to a US entity,” the firm’s top executive, H Edward Bilkey, said in an announcement that ended weeks of controversy.
Relieved Republicans in Congress said the firm had pledged full divestiture, a decision that one senator said had been approved personally by the prime minister of the United Arab Emirates.
The announcement appeared to indicate an end to a politically tinged controversy that brought President George W Bush and Republicans in Congress to the brink of an election-year veto battle on a terrorism-related issue.
A leading congressional critic of the ports deal, Republican Peter King, applauded the decision but said he and others would wait to see the details.
“It would have to be an American company with no links to DP World, and that would be a tremendous victory and very gratifying,” said the New York Republican, chairman of the House Homeland Security Committee.
After weeks of controversy – and White House veto threats that spokesman Scott McClellan renewed today – the end came unexpectedly.
The House Appropriations Committee voted 62-2 yesterday to block the deal, and Republican congressional leaders privately informed the president today that the Senate would inevitably follow suit.
Senate Democrats clamoured for a vote, increasing pressure on Senate Republicans to abandon the president, already dogged by criticism over his handling of the war in Iraq and response to Hurricane Katrina.
It was unclear how DP would manage the planned divestiture, and Bilkey’s statement said its announcement was “based on an understanding that DP World will not suffer economic loss.”
British ferry firm P&O runs important port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia through a US subsidiary. It also plays a lesser role in dockside activities at 16 other American ports.
Despite the furore, the company’s US operations were never the most prized part of the global transaction. DP World valued its rival’s American operations at less than 10% of the total purchase.
But that portion of the deal set off a political chain of events unlike any other in Bush’s five years in office. Republicans denounced the deal, saying they were worried about the effects it would have on efforts to make ports safer from terrorist threats.
Democrats did likewise, and capitalised on the issue as well as a way to narrow the polling gap with the Republicans on issues of national security.
Bush defended the deal, calling the United Arab Emirates a strong ally in the war on terror and pledging to cast a veto if Congress voted to interfere.
Senate Republicans initially sought to fend off a vote to block the deal, and the administration agreed to a 45-day review of the transaction. That strategy collapsed yesterday with the vote in the House Appropriations Committee.
“This should make the issue go away,” said Senate Majority Leader Bill Frist, who was one of the Republican leaders who discussed the ports controversy with Bush at the White House during the day.