Dubai Ports World might be one of the biggest influences on the global political landscape for years to come. The United Arab Emirates-based company recently tried to gain authority over six American port authorities through its acquisition of P&O Navigation Company, based in the United Kingdom. The deal immediately came under intense bipartisan scrutiny when news that it had received the approval of the White House became public. The ensuing firestorm resulted in the collapse of the deal and more significantly, a blow to both globalization and the American ideal of free trade.
The immediate uproar caused by the announced acquisition in the United States was the result of a mixture of misinformation, protectionism and xenophobia. The putative claim found primarily among legislators was that allowing a foreign-owned company control of U.S. ports would degrade the security of these places, and hence the United States in general. Yet, what many conveniently bypassed in their logic was that foreign investors, in fact, already own many American ports.
For example, the ports that DP World was trying to acquire were already owned by a foreign investor, namely P&O. Secondly, ports owned by foreign entities are still subject to U.S scrutiny. This necessitates a uniform standard of security among all ports that would still be executed by the government through the Coast Guard, Customs and local harbor security.
The lack of public knowledge about the daily logistics of port maintenance allowed for increased exploitation of fears about terrorism and Homeland Security. The protectionist and xenophobic undertones of these messages were more than apparent, yet like all such claims, was surrounded by hypocrisy and ignorance. Many legislators claimed that by allowing a foreign government, no less one in the Middle East that harbored Sept. 11 terrorists, would increase the potential for a terrorist attack on American soil. This is a claim that seems to ring fairly hollow. Saudi Arabia, one of the United States' closest allies in the Middle East, produced more terrorists on Sept. 11 than any other country, and yet there was no backlash about Saudi investments in the United States somehow risking national security.
While debating the merits of the deal now would be beating a dead horse, the economic repercussions of this fallout still portend significant ramifications for the United States. As the leader of the free world and the free market economy, the United States must give commensurate attention to these facts when analyzing similar situations in the future. By rejecting DP World's offer, the United States is limiting future foreign investors from seeking American investment opportunities. This is a critical factor in an economy that needs to raise $10 billion in foreign capital a week to cover the difference between domestic savings and spending.
Furthermore, as economies and societies become increasingly globalized, a strong U.S. presence is necessary to ensure stability. The social impact of American soft power is progressively becoming the United States' primary diplomatic tool in influencing others towards the American objectives. This goal is best accomplished through the unburdened flow of capital, ideas and culture through the stream of globalization. Additionally, the UAE is one of the more liberal and progressive Middle Eastern states, and one that is looking for more and more foreign investment vehicles in which it can place its significant financial reserves. Thus, it is a perfect candidate as both a financial partner in the Middle East and a mitigating factor in escalating tensions between the two societies. By creating an additional ally in the region, the United States could dilute its reliance on Saudi Arabia, a country that has been inconsistent in its support of American political goals.
In the future, the United States must be more conscious of its leadership role in the global economy and the effects that a perceived protectionist decision can have. It is not just a matter that is solely relegated to keeping the ports safe, but about keeping American influence stable in the world as well.
Mike Skelly ([email protected]) is a senior majoring in finance and political science.
