The port business

Except for one brief foray - in which I say essentially that I'm bored - I've been pretty quiet about the Dubai ports dustup. We know the administration is inept. As for the rest, it smacks of anti-Arab sentiment more than a real security issue. And, anyway, the US tends to fetishize security issues, which in turn demands a patriarchal government to help us frightened and insecure citizens. This administration has been adept at one thing only: causing greater fear than necessary in the population and then overreacting in response through self-interested means. Ultimately, however, the dynamics of global trade - of which the US has been Head Cheerleader - are such that there's simply no way around foreign-controlled ports and shipping. If you want global trade, economic liberalization, and the proliferation of the American way of life - which is premised mainly on economic liberty - then you get the Dubai ports issue.

Because of the Dubai ports flap, the public has learned that the majority of terminals at U.S. ports -- especially big ones such as Los Angeles and Long Beach in California, and New York and New Jersey -- are managed by companies from Singapore, Taiwan, Denmark, South Korea and other countries. And as President Bush pointed out in defending the Dubai Ports World deal, the port-management company targeted for takeover, Peninsular and Oriental Steam Navigation Co., is British.

In this highly globalized business, crews typically come from Southeast Asia or Eastern Europe, flags are often Liberian or Panamanian, and few large container ships are owned by U.S. interests. (A 1920s-era law called the Jones Act requires ships plying routes between U.S. ports to be U.S.-owned, but they are minor exceptions.)

There is an important reason why terminals are usually managed by foreigners: The shipping companies themselves are largely foreign, and they have generally sought to control terminals so that they can be certain of having the most reliable, efficient facilities possible for loading and unloading their vessels quickly to reduce costly time in port. That arrangement has suited local port authorities; they want to ensure that their ports will draw enough traffic to generate revenue and employment.

"Why are there so many foreign terminal operators? There are no global American liner companies anymore -- that's really the crux of it," said Peter Shaerf, managing director of AMA Capital Partners LLC, a merchant bank that specializes in transportation.

See also this NY Times piece, which puts the issue more firmly in the terms of where priorities truly lie.

DP World's decision yesterday to transfer a handful of American port terminals, rather than chilling interest in investing in the United States, may actually have made it safer for foreigners by relieving some of the political pressure that was building up against them.

But as part of a pattern of other antiforeign actions in Washington, fears remain that the United States is becoming a less welcoming place for investment from overseas.

"We need a net inflow of capital of $3 billion a day to keep the economy afloat," said Clyde V. Prestowitz Jr., a former trade official in the Reagan administration who is president of the Economic Strategy Institute. "Yet all of the body language here is 'go away.' "

See, also, Stygius here for a related version of the security fetish.

UPDATE:

Here's my colleague, Benjamin Barber, from American Public Radio's Marketplace yesterday:

"Missing from the outcry over who controls our ports is privatization's role. The issue isn't whether a firm that wins an outsourcing contract is based in London, Dubai, or New York. The issue is whether a function so intimately associated with sovereignty is to be outsourced at all, or should remain in Washington where the constitution put it. Privatization erodes our own sovereignty in areas that shouldn't ever be yielded, transportation, infrastructure and national security. We exercise our sovereignty over the public good when we manage our own ports and guarantee their security. But this administration fails to notice that, when contracts related to transportation, infrastructure and port security are privatized, passed around from one firm to another the way your mortgage is sold from one bank to another without you even knowing about it."