March 10, 2006
Ports Deal Dead
Dubai Ports World gives up. This isn't good. Demogogues win without making a case that DPW was a security threat, and economic nationalists use this to make the case that only American companies should own certain industries. What industries that will be will depend on the political winds, don't let anyone tell you otherwise. Now, we all have to deal with the repercussions.
The Financial Times reports the UAE "concluded that he was no longer in control in Washington."
Reporters Edward Alden and Holly Yeager also write,
More than four years after the September 11 attacks, it brought together a toxic combination of anxieties over Americaís place in the world. Traditional protectionists, worried by foreign acquisitions of US assets and the outsourcing of jobs to distant and little-understood countries, lined up alongside security hawks who warned that even a close Arab ally such as the UAE was vulnerable to terrorist infiltration.
That counters John Hawkins' complaint that Larry Kudlow is being unfair to conservative ports opponents.
Unfortunately for us David Ignatius is right:
I suspect America will pay a steep price for Congress's rejection of this deal. It sent a message that for all the U.S. rhetoric about free trade and partnerships with allies, America is basically hostile to Arab investment. And it shouldn't be surprising if Arab investors respond in kind.
The U.S. is running large trade and budget deficits. Who's funding that? Foreigners, including Arabs, who buy bonds. Who's to say the ports deal collapse won't scare off bond buyers? That could mean significant harm to the American economy. Don't expect short-sighted politicians and knee-jerk pundits to realize the harm that might occur. del.icio.us | Digg it | Furl | reddit | Spurl | Yahoo MyWeb