Monday, February 27, 2006

What If DP World Were French Owned?

A for profit company will, in most cases, operate in a way that benefits the owners. If management fails to do this, it is usually replaced by the board of directors or the board of directors is replaced by the share holders.

When the owners are a government who may, in some circumstances, have goals other than profit, how much can we depend on their motivations? It has been suggested that the United Arab Emirates (UAE) might deny us access to their ports or airfields if we stop the acquisition of the port contract by DP World. I believe the UAE ports and airfields are considered crucial to the war in Iraq. I haven't heard that these threats have actually come from the UAE, but it does raise concerns about allowing a government owned corporation to control an operation with national security implications. If anyone in the government thinks that there is even a possibility that the UAE might deny us access if this deal fails, that should kill the deal for sure. Better to face the problem now, then have the threat hanging over us.

If DP World wanted to make umbrellas in the US we wouldn't be having this conversation. No one would care that a government owned company were engaged in a business without national security implications. If DP World were a publicly held corporation there would still be questions, but as an international public corporation the questions would be different. Publicly held corporations may or may not always have high ethical standards, but you can generally trust them to go for the money. Even governments who have been allies for centuries can find their self interests sometimes conflict with ours (think of the French). For those who think that the objections to the DP World deal are racially motivated because DP World is an Arab company, ask people how they would feel if DP World were owned by the French government. I suspect the reaction would be just as strong. The possibility that port operations might be disrupted if we had a disagreement with the French government would be unacceptable.

I've heard the argument that a company owned by the Chinese government has been running a port in California. Instead of a 45 day review of a deal we all know is already dead, we should spend the 45 days reviewing that arrangement. If we can't undo it at this point, we should turn the security spotlight on this arrangement. Should the government prepare a contingency plan to take over operation of the port if the Chinese should try to use this company to change US policy instead of generate profits?

Again, I am not suggesting that either the UAE or Chinese companies involved here are anything but businesses trying to make a profit, but we shouldn't compromise national security just to maintain our free market rep. We also shouldn't give ourselves a potential national security problem to pay back the UAE for access to their ports and airfields. I hope that the UAE feels that our use of their airfields and ports is also in their national and regional interests. If we need to pay back the UAE, let's find another way.

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