Commentary | Trade and Globalization

Behind the Dubai-Gate Debate

Opinion pieces and speeches by EPI staff and associates.


Behind the Dubai-Gate Debate

By  Jeff Faux and  Lee Price  

The recent political eruption over the proposal to have a company owned by the government of Dubai take over the management of 21 American ports reveals how globalization is disconnecting Washington’s political class from the rest of the country.

Most Americans seemed to think that the Bush administration’s rush to approve this deal without a full national security investigation was colossally stupid. With the president’s approval rating in the 30s, its no surprise that the Congress rebelled and forced the company to back away. But the publicity surrounding this contract was exceptional. Deep inside the Beltway, largely hidden from public view, profit opportunities for multinational corporations consistently trump the interests of ordinary Americans. 

The main concern of the administration, the editorial writers and the media pundits that jumped in to support the contract was clearly not port security. It was that  delay or cancellation might inconvenience corporations with American names who want to buy up companies in other parts of the world – particularly in the Middle East. Not coincidentally, the administration was at the same time negotiating an investment agreement with the United Arab Emirates, of which Dubai is member. Like similar agreements of the past 20 years, the lion’s share of benefits will flow to those Americans whose primary income comes from their investments – and whose campaign contributions are the greatest. Costs will be paid by those who depend on their paycheck for a living.

What else could explain George Bush’s threat to produce the first veto of his presidency in order to protect this one government contract? Or big-time politicos like  Republican Bob Dole and Democrat Madeleine Albright lobbying Congress on behalf of a company owned by a government that, to put it mildly, coddled  9/11 terrorists? Or the way so many media pundits – swallowing assertions about security from an administration whose incompetence in these matters is now legendary — savaged those who have merely asked for a delay in order to follow the law, accusing them of racism, demagoguery and ignorance? 

Those who have told us for years that governments cannot be trusted to run enterprises because they will impose political agendas now assure us that Dubai’s rulers would never interfere with the company’s operations –ignoring the fact that, among other things, Dubai World Ports dutifully enforces its government’s boycott of Israel. We were also assured that companies that manage ports have nothing to do with security, despite the concern of the  Coast Guard that it did not  have the information to determine whether the Dubai company was a risk. 

And then there was the president’s complaint that opponents were  guilty of   “ethnic profiling.” This, from an administration that has imprisoned at least 5,000 people — almost all Muslim or of Middle Eastern origin — without charging them, much less convicting them, of terrorist crimes. But of course these “Arabs” were ordinary people – workers, students, small businessmen – with whom our political elites have a hard time identifying. In contrast, the other “Arabs” – the ones who sit on the boards of multinational corporations, who can provide big fees and billion dollar business opportunities — are fiercely protected. The remarkably expeditious flights arranged for upper-class Saudis – including Osama bin Ladin’s brother — right after 9/11 when all civilian airplanes were supposed to be grounded fits with this same pattern of privilege for the world’s rich and powerful. 

The administration’s violation of the law that requires an extra 45 day “mandatory investigation” and explicit presidential decision before approving foreign takeovers of firms owned by foreign governments was business-as-usual among the Washington policy class. For years, under both Republicans and Democrats, the U.S. Treasury officials in charge have treated the law, and any other obstacle to foreign ownership, with contempt. Indeed, the individual who ran the program for four years is now working for an association of multinational corporations promoting foreign investment.

One could argue, of course, that we need foreigners to buy up American assets – after all, those investments help keep our massive trade deficit from crashing around our ears. But it is precisely the slavish promotion of multinational corporations’ interests, including foreign investment and outsourcing that displace production here, an overvalued dollar, and trade agreements that favor imports, which has made us the world’s largest debtor.

The Dubai Ports World controversy was a useful lesson. Watching many of our leaders dismiss concerns for national security in order to protect the business elites of other countries revealed their disconnect from the majority of citizens whose interests they were elected to protect.

Jeff Faux was founding president and now Distinguished Fellow at the Economic Policy Institute in Washington, D.C.  Lee Price is the Institute’s Research Director.


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