Oct 12, 2007 5:06 pm


No. All companies should not be treated alike. State owned or controlled companies must be treated differently. Pretending that private companies located in tyrannies are independent, is bad enough. Treating a government controlled Chinese oil company or a port service company owned by Dubai as mere businesses is absurd. Profits motivate businesses. Geopolitical strategy motivates governments and, ultimately, the businesses they control. Arguing that willingness to ignore this major difference is a test of one's belief in free trade is pure sophistry.

No one understands this better than the tyrants as evident from Lenin's famous quip that capitalists will sell you the ropes on which to hang them. The profit motive produces economic growth which enables those living in Capitalist democracies not only to live a longer, healthier and securer life, but as Benjamin Friedman demonstrates do so in a more moral society. The same profit motive also leads private companies to place the welfare of the company above national interests. Note the compliant behavior of IBM during the Nazi era, the American oil companies during the 1973 Arab embargo or the behavior of Yahoo and Google today.

It is true that Democratic legislators may pass prohibitions limiting the freedom of action of their privately owned companies. Indeed, Congress is currently considering just such legislation. But Congress cannot order Google to take positive actions which would cause harm to other host countries. For example, it may prohibit Yahoo from turning over emails to the Chinese government but it cannot order Google to pay Chinese dissidents to spread democracy in China.

The same limits do not apply to government owned or controlled companies. Imagine the national security nightmare resulting from a pro-Iranian or another Jihadist coup in Dubai at a time when a company controlled by Dubai is running 6 American ports. Not only will that company not be motivated by the profit motive, it would be directly controlled by a government dedicated to the destruction of the American republic. Its orders may not only include a refusal to examine certain cargo but also to use its position to ensure the delivery of"particular" cargoes.

So, no, this is not a case of racial or ethnic prejudice, economic nationalism or hypocrisy of the type involved in the French outcry against a possible takeover of Danone by Pepsi or Arcelor bid by Mittal Steel. The problem with Dubai Ports World is not that it is owned by Arabs but that it is owned by an Arab government. Those needing proof should examine the use Russia made of its state owned Gazprom in its quarrel with Ukraine just a few weeks ago.

Indeed, just as the time has come to end the practice of treating tyrannies and democracies as equals when it comes to international law, the time has come to treat private companies differently from government owned ones when it comes to international trade. Doing otherwise is just too dangerous. Therefore, do everything you can to stop the dangerous port deal.

comments powered by Disqus