£3.9bn ($6.8bn) sale of UK-based ports and shipping group P&O to
Dubai Ports World (DPW) has raised security fears in the US.
Mr Bush has given unqualified support to the
In an effort to defuse the controversy surrounding the deal, DPW
has now offered to "transfer" its US interests to a "United States
The White House believes that offer should be enough to ease
concerns of politicians trying to block United Arab Emirates-based
DPW taking control over management at six key US ports.
Why is there such opposition to DPW taking control of the six
Lawmakers say they are concerned about the security implications
of the deal - which is unpopular with the public.
"We want to make sure that the security of our ports is in
America's hands," Jerry Lewis, a California Republican, has said.
Opinion polls have shown an overwhelming majority of Americans
think the White House is wrong to back the deal.
With an election due in November and the popularity of both the
president and Congress low, some Republicans apparently fear that
Democrats could use the deal against them.
Where does it leave DPW and, indeed, P&O?
P&O will be glad that the furore over the ports - at
Baltimore, Miami, Newark, New Orleans, New York City and
Philadelphia - is no longer their worry, but the concern of DPW.
The Peninsular and Oriental Steam Navigation Company has now been
formally bought by the Dubai firm, which thus owns the assets of the
UK-headquartered company, including the US ports.
P&O has been delisted from the London Stock Exchange and
shareholders are set to be paid their portions of the £3.9bn
For DPW, the White House is confident the transfer of its US
operations should make the uproar surrounding the deal go away.
And according to reports, DPW also came under pressure from the
government in Dubai to resolve the issue to protect the country's
close ties with the US.
But DPW is no doubt somewhat bewildered by the vehemence of the
opposition to its deal.
It says the deal covers terminals in 18 nations, and the US
operations only represent a small part.
Furthermore, there is a precedent for a US-Dubai ports link-up.
DPW was formed in September when the Dubai Ports Authority joined
with DPI Terminals.
In January 2005, DPI bought CSX World Terminals, an international
port business of the CSX Corporation in the US.
What happens now?
DPW is widely expected to sell off its entire US operation - with
critics of the deal demanding they be sold to a firm with no links
to either DPW or the United Arab Emirates.
In 2005 P&O handled a total of 15 million 20ft containers
worldwide, of which 2.4 million were handled in North America.
A large proportion of these were handled in Vancouver, Canada,
which is not subject to US political decision-making.
The US ports of Miami and New Orleans largely handled "bulk"
items and not the containers. Bulk traffic produces less profit than
container traffic, as competition is more intense.
DPW has worldwide rights and concessions to handle up to 33
million containers. So it could conceivably dispose of the US
operations while still retaining a healthy operation in other parts
of the globe.
One expert says: "These US figures are not really significant in
the bigger picture. They could shed the US operations and still have
lucrative trade around the world, including in the growing economies
of China and India."
However, prospective buyers for DPW's US business will also be
closely vetted by US politicians.
For example, the world's biggest independent port operator is
Hutchison Port Holdings - a subsidiary of Hutchison Whampoa, whose
interests include mobile phones.
Yet it is a Hong Kong-based firm, and no doubt many US
politicians would baulk at the prospect of a Chinese firm - from a
Communist state too - getting its hands on the ports.