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Showdown looms on port deal with Arabs Bush threatens veto of bill to block shift of operations

President Bush on Tuesday moved toward confrontation with leaders of his Republican Party on turning control of six of America's largest seaports to a company owned by the United Arab Emirates.

With the president's popularity skidding, Republicans nervous about this year's midterm elections quickly joined Democrats such as Sens. Charles E. Schumer and Hillary Rodham Clinton of New York in supporting legislation to block the proposed deal, which involves shipping operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

Hours after learning that Senate Majority Leader Bill Frist, R-Tenn., would introduce a bill to block the deal with Dubai Ports World, Bush said he would veto such a bill.

"After careful review by our government, I believe the transaction ought to go forward," Bush told reporters who had traveled with him on Air Force One from Colorado to Washington.

"It sends a terrible signal to friends around the world that it's OK for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world," Bush said.

Bush said that protesting lawmakers should understand that his approval of the deal was final.

"They ought to listen to what I have to say about this," the president said. "They'll look at the facts and understand the consequences of what they're going to do. But if they pass a law, I'll deal with it with a veto."

Reacting, Schumer said, "It's hard to believe that this administration would be so out of touch with the American people's national
security concerns that it would use its first-ever veto to save this troubling Dubai Ports deal."

Besides Frist, other Republicans lined up against the transaction include House Homeland Security Committee Chairman Peter T. King of Nassau County, who is co-sponsoring Schumer's bill, and Rep. Thomas M. Reynolds of Clarence, chairman of the GOP's congressional campaign committee.

The storm growing around the deal threatens to undercut the president's and the Republican Party's two strongest political suits as it heads into crucial elections this November -- the war on terrorism and defense of the U.S. mainland.

A British company, Peninsular & Oriental Steam Navigation Co., which has been running major commercial operations in those six U.S. ports, would be acquired by Dubai Ports, a state-owned business in the United Arab Emirates.

The deal was approved weeks ago by a secret board directed by Treasury Secretary John W. Snow.

Despite defending the deal, the White House acknowledged today that Bush was unaware of it until recently.

"He became aware of it over the last several days," Bush spokesman Scott McClellan said. Asked if Bush did not know about it until it was a done deal, McClellan said, "That's correct."

Schumer and many Republicans are concerned about the UAE because of its early support of the Taliban militia in Afghanistan, its assistance in the sales of nuclear technology to Iran and North Korea and the fact that two of the 9/1 1 hijackers came from there.

The UAE is widely believed to be a major source of financing for radical Islamic movements and operates one of the most repressive regimes in the Persian Gulf region.

The Bush administration wants to forge a free-trade agreement with the UAE, which until two years ago was considered by experts to be a haven for operatives from the al-Qaida terrorist network. As opposition to the deal swelled, Defense Secretary Donald H. Rumsfeld said the transaction was given careful review, "and the process worked."

However, Reynolds said the proposed port operations arrangement "brings up serious national security concerns around our ports. We need to make sure . . . our national security is not jeopardized because of this deal."

L.D. Platt, spokesman for Reynolds, said the congressman would prefer a Treasury Department agency, the Committee on Foreign Investments in the United States, study the proposal. He said Reynolds wants the agency to put a 45-day hold on the sale for the study.

But the New York Daily News reported that the Bush administration could have a conflict of interest. Snow was chairman of CSX Corp., which sold its own international port operations to the UAE firm for $1.15 billion less than two years ago.

In addition, the newspaper reported, David Sanborn, who runs the Arab company's operations in Europe and Latin America, has been chosen by Bush to head the U.S. Maritime Administration.

Other Republicans voicing concern about the sale include House Speaker J. Dennis Hastert of Illinois, Rep. James Walsh of Syracuse and Maryland Gov. Robert L. Ehrlich Jr.

Gov. George E. Pataki, from his hospital bed, where he is recovering from an appendectomy, ordered the New York Port Authority to study ways of shutting out the UAE firm from operating in New York or New Jersey.

Frist's threat of legislation came as Clinton and three other Senate Democrats introduced a bill to block the deal. "This sale will create an unacceptable risk to the security of our ports," the Democratic senators said.

"We therefore request that emergency legislation we are introducing to ban foreign governments from controlling operations at our ports be slated for immediate consideration when the Senate convenes on Feb. 27."

To assuage concerns, the Bush administration disclosed some assurances it had negotiated with Dubai Ports. It required mandatory participation in U.S. security programs to stop smuggling and detect illegal shipments of nuclear materials. The Coast Guard also said Tuesday that it was nearly finished inspecting Dubai Ports' facilities in the United States.

The Associated Press contributed to this report.


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