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Fears grow over new Dubai revolt
[Financial Times, 22 Mars]
By Stephanie Kirchgaessner in Washington and James Boxell in London
Published: March 21 2006 20:58 | Last updated: March 22 2006 00:39

US docksArab and US officials are growing nervous at the prospect of a second congressional uprising against the acquisition of American assets by a Middle Eastern-controlled company in the wake of the Dubai Ports World debacle.

A person familiar with the thinking of both the US and United Arab Emirates said officials were concerned that the pending investigation of Dubai International Capital’s £700m ($1.2m) purchase of Doncasters, a privately-held British aerospace manufacturer that works on sensitive US weapons programmes, including the Joint Strike Fighter, could provoke a similar backlash and further damage the relationship between the two countries.

Although the proposed transaction has not yet drawn much attention in Congress, the first signs of unease emerged on Tuesday when John Barrow, a Democratic lawmaker, released a letter demanding a tour of Doncasters’ Georgia facility.

DP World chief says dispute was ‘shock’
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“It is reported that your facility produces turbine engine parts critical to tanks and military aircraft…one must assume [it] plays a necessary and substantial role in the nation’s ongoing military efforts in Iraq and Afghanistan,” Mr Barrow wrote.

The Treasury has said the deal will be subject to an extensive 45-day investigation, pushing back the completion to as late as May.

The review comes as officials from Dubai work to ease tensions in Washington after protests forced DP World, also a state-owned company, to agree to divest five US port terminals acquired from the UK’s P&O.

Sheikha Lubna Al Qasimi, the UAE’s economy minister, who is visiting Washington, said in an interview that the overall relationship with the US, including security and intelligence, remained paramount. She did not want to prejudge the regulatory review of the Doncasters deal but conceded that the UAE needed to do more to “educate” the people in the US, including lawmakers.

President George W. Bush, who defended the DP World deal but was unable to quash the rebellion by members of his own party, has emphasised the UAE’s role as an ally in the “war on terror”.

Even if the administration were to approve the Doncasters deal, the reaction to the DP World deal has signalled to foreign investors in the US - particularly in Arab countries - that Congress has the capability to derail any deal.

Doncasters generated 35 per cent of its sales in the US in 2004 and would be likely to draw interest from private equity buyers if Arab ownership were to be blocked.