Blogs > Liberty and Power > Silver Lining?

Feb 28, 2006 6:22 pm

Silver Lining?

Whatever one thinks of Dubai Ports World acquiring leases to manage terminals at U.S. ports, there is one bright spot: People don't believe George II. He's basically asked for trust in his judgment on the deal, but today's New York Times shows he's not getting it:"Seventy percent, including 58 percent of Republicans, said Dubai Ports World, a company controlled by the emir of Dubai, should not be permitted to operate at United States ports, while 21 percent supported the arrangement." Bush's job-approval rating has fallen to 34 percent, and the percentage saying Iraq is going badly has increased from 54 to 62. Given a world of government-owned ports and government-owned companies, I don't see a problem with DP World's acquiring the leases. But it's nice to see the people expressing their distrust for a president who has systematically misled them.

Cross-posted at Free Association.

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Sheldon Richman - 3/1/2006

Sometimes entrepreneurs see things other people don't see and have innovations in mind that others haven't thought of. Your speculations strike me as so unrealistic that I find it hard to believe that the principals at DP World have those things in mind.

Andrew D. Todd - 3/1/2006

Well, here's a stock chart.

DP World seems to have bid up the price of P&O shares to round about double what the market thought they were worth, and it hasn't backed off in the face of evidence that something like 70% of Americans object, which means that there will have to be all kinds of costly concessions before the deal ultimately goes through. DP World has been behaving as if cost was no object, when trying to buy a firm with limited growth prospects. That is rather an odd thing for a businessman to do.

The other bidder, Singapore, makes no bones about doing mercantilist industrial policy, but Singapore dropped out of the bidding when the price went too high for industrial policy.

Sheldon Richman - 3/1/2006

DP World already opeates port terminals around the world. No untoward incidents have been reported. So your theory of why it wants the leases doesn't ring true. The profit motive seems to be the best explanation. What does the administration have to do with this anyway? One foreign (government-owned) company wants to buy another foreign company. Period. If the port owners (port authorities) want to terminate the leases, let them do so and fight it out in court if necessary. The feds should butt out.

Andrew D. Todd - 3/1/2006

Well, in the first place, DP World is just a front for the United Arab Emirates. Governments do not usually go into business to make money-- they can do that simply by taxing. Their motives are usually political. When the Saudi government took over Aramco, the company's number of employees something like quadrupled, without any increase in output. P&O is traditionally almost an extension of the British navy. It has certain contracts, which not just anyone could get, on that account. A certain type of third-world foreigner tends to buy private assets which have the trappings of state power, not realizing that the state power is not for sale, and that the trappings will wither away once the assets are sold to foreigners.

In the nineteenth century, what later became the United Arab Emirates was a string of pirate's lairs. The same applied for the whole east coast of Arabia, all the way up to Kuwait. With a desert behind it, and extremely few sources of fresh water, about the only thing the area was good for was as a base for piracy upon the shipping moving through the Persian Gulf. It was the Middle Eastern equivalent of the Isle of Tortuga. The British navy moved in to suppress the piracy, and as a byproduct, eventually created little semi-independent client states. When the British pulled out, circa 1970, they left behind four of the most infantile regimes on earth, even more than the Saudis. With the coming of oil, the Sheikdoms found themselves rich, but completely without the skills and population necessary to run a modern country. They brought in "guest workers," but refused to make a political accommodation, even when the guest workers came to outnumber the original population. They are now facing a political crisis as the younger generation of immigrants grows up, having lived nowhere else, and yet being "foreigners." Of course that is a breeding ground for revolutionary ideologies.

There are number of interpretations for the United Arab Emirates' actions in buying P&O. One possibility is that they are trying, in effect, "to buy the Royal Navy," expecting to become the colonial power in eastern North America. This, besides being entirely unrealistic, would presuppose an extremely childish mentality, of course. Alternatively, they might be seeking to intercept and control our foreign commerce, pretty much the way the British navy did in eastern seas.

The question ultimately becomes one of why does the Administration want to involve American ports in Arabian politics.

Sheldon Richman - 3/1/2006

But this is a problem no matter who manages the ports. DP World arguably has an extra incentive to keep things as safe as humanly possible.

Andrew D. Todd - 3/1/2006

Ships carry huge quantities of material. Likewise, ports store huge quantities of material to load onto the ships. Even if this material is not nominally explosive, it can become so under the right conditions. Anything which will burn will also explode if it can be sufficiently finely mixed with air. A sufficiently large explosion will itself do some vigorous mixing, promoting a still larger explosion. Grain elevators sometimes explode (wheat dust in air). Anytime you have a large pile of combustible dust lying around-- beware! Disaster is kept at bay only by the expert application of rigorous safety precautions. If you put a Bad Guy in charge, he may very well be able to subvert the safety precautions. One recurrent element in the investigation reports of small-scale disasters is that there was a capitalist, intent of making money, and he cut corners on safety precautions. Greed is not always good, Gordon Gecko to the contrary.

Sheldon Richman - 3/1/2006

Re Halifax: Two ships collided. What's your point?

Anthony Gregory - 2/28/2006

Savage is no partisan shill. He is not bound by politically correct consideration. He's willing to call for censorship, the nuking of innocents, and a government campaign to smear Arabs the way the Japanese were smeared in WWII. Ah. What a breath of fresh air.

Andrew D. Todd - 2/28/2006

Two words: Halifax Explosion. There's Chernobyl, there's Bhopal, and there's Halifax Explosion. [affects rural New England drawl] Wasn't even a very big ship, neither, only 'bout 3100 tons.

Sheldon Richman - 2/28/2006

The irony is that I think Bush got something right for once, even if it might be for the wrong reasons, and the public has been influenced by demagogues like Lou Dobbs and Michael Savage. But I am delighted that they refuse to take Bush on faith.

William Marina - 2/28/2006

If we had a different system, even a corporate one, such an onging crisis of confidence would result in a call for elections, or the CEO might just resign!