A day after Dubai Ports World said it would cede control of the six ports, sparing the Bush administration a showdown with Congress, officials said the trade negotiations with the Gulf state had been postponed.
No date has been set for the next round of talks, which had been scheduled for next week in the UAE, said Neena Moorjani, spokeswoman for the office of the US Trade Representative. [...]
House of Representatives Speaker Dennis Hastert said the postponement was wise coming just a day after DP World's pullout.
"Probably it would be a good time for both countries to kind of step back and evaluate a little bit. We'll move on from there," he said.
The ports deal was part of the UAE's embrace of things Western. Wednesday night, I traveled with the minister of higher education, Sheik Nahayan bin Mubarak, to the dusty city of Al Ain to attend a Mozart festival at which the Vienna Chamber Orchestra performed. And I visited the American University of Sharjah, created nine years ago as a beacon of liberal arts education. On a wall next to the chancellor's office is a photo of the twin towers in New York, taken by one of the students on June 8, 2001. "There are no words strong enough to express how we feel today," reads a statement signed by UAE students. [...]
Arab radicals will be gloating, admonishing the UAE leaders, "We told you so." But officials here recognize that they're in a common fight with us against al-Qaeda. And unlike some Arab nations, the UAE really is fighting -- reforming its education system to block Islamic zealots and taking public stands with the United States despite terrorist threats. They have created one of the best intelligence services in the Arab world, and their special forces will be fighting quietly alongside the United States in Afghanistan tomorrow, and the day after.
President Bush tried to do the right thing on the Dubai ports deal, but he got rolled by a runaway Congress. The collapse of the deal was a measure of Bush's political weakness -- but even more, of America's traumatized post-Sept. 11 politics. The ironic fact is that the UAE is precisely the kind of Arab ally the United States needs most now. But that clearly didn't matter to an election-year Congress, which responded to the Dubai deal with a frenzy of Muslim-bashing disguised as concern about terrorism. And we wonder why the rest of the world doesn't like us.
Neena Moorjani, a spokeswoman for the U.S. Trade Representative said Friday in Washington that both sides in the free trade talks needed more time to prepare and she refused to say whether the postponement was related to the ports issue.
UAE government officials could not immediately be reached for comment on Friday, a weekend day in the Mideast. But UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi was quoted Friday as saying the move by U.S. lawmakers to block DP World's port takeover could harm chances of resolving final issues holding up the pact.
"It is something that doesn't reflect well," Al Suwaidi said of the controversy, according to the local paper Gulf Today.
In Dubai and elsewhere in the Gulf, the controversy was largely seen as reflecting an anti-Arab bias. DP World's concession was likely to solidify that belief. [...]
"It's a sobering moment," said Eddie O'Sullivan, Dubai-based editorial director of the Middle East Economic Digest. "People are going to have to be much more careful. There's a fear they (members of Congress) may move on to other targets in the Arab world. If it happened once it can happen again."
Investors and businesses in the United Arab Emirates, Kuwait, Qatar and Saudi Arabia will be reviewing portfolios for U.S. holdings that could spark a similar uproar in Congress, O'Sullivan said.
"Most of (the holdings) are in dollar-denominated assets. They'll want to see how vulnerable it is to the U.S. Congress," O'Sullivan said. "It'll be more difficult to finalize an investment proposal that involves an American bank or an American asset."
"I think we are all very grateful that the government of U.A.E. has taken this statesmanlike step," Secretary of State Condoleezza Rice told reporters on her plane traveling to Chile.
The United States will now do "everything that we can to continue to strengthen" ties to the United Arab Emirates, Ms. Rice added.
But even Mr. Bush could not completely dismiss concerns that there could be repercussions in the United Arab Emirates and other Middle East countries over widespread suspicion that anti-Arab bias lay at the center of the Congressional opposition to the ports deal. In a speech to newspaper executives in Washington, he said he was "concerned about a broader message this issue could send to our friends and allies around the world, especially in the Middle East."
On Thursday, The Hill, a newspaper that closely covers Congress, quoted "a source close to the deal" who described members of Dubai's royal family as furious — "They're saying, 'All we've done for you guys, all our purchases, we'll stop it, we'll just yank it,' " the source said.
The UAE's main trading relationship with the United States is the purchase of Boeing airplanes.
Last year Emirates Airlines of Dubai ordered 42 long-range 777 wide-body jets, worth $9.7 billion. Boeing is pitching Emirates to order 50 of its new 787s and also its enlarged 747-8 jumbo. Etihad Airways of neighboring emirate Abu Dhabi ordered five 777s the previous year.
Boeing said its orders aren't threatened. "Nothing has been done or said since the ports controversy erupted that would indicate to us that our relationships with customers in the UAE have been damaged," said Boeing spokesman Tim Neale.
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