WASHINGTON (Reuters) - President George W. Bush vowed on Tuesday to veto any attempt to block an Arab company's takeover of management of major U.S. seaports, defying members of Congress who insisted the deal posed security risks.
Setting the stage for a showdown, Bush brushed aside objections from Republicans and Democrats, including likely 2008 presidential contenders, to reassert his backing for a takeover covering six shipping terminals.
"After careful review by our government, I believe the transaction ought to go forward," Bush told reporters aboard Air Force One. If Congress passed a law to stop the deal, "I'll deal with it with a veto," he said.
Bush said the Dubai firm would not be in charge of security, that the deal had been thoroughly reviewed and the country would be no less safe as a result of the transaction. Dubai is a U.S. ally, he said.
The question of whether state-controlled Dubai Ports World of the United Arab Emirates should be allowed to control the ports has sparked a political storm for Bush at a time when he is struggling to boost sagging public approval ratings.
His fellow Republicans on Capitol Hill joined Democrats in questioning whether the company could be trusted to guard the ports at a time of terrorism. Arab-Americans said bias and bigotry, not security concerns, lay behind the uproar.
With mid-term congressional elections looming in November, Republican leaders appeared willing to confront their lame duck president to prevent Democrats from gaining traction on the issue of national security, something the Republicans under Bush see as their strongest political card.
Seeking to defuse the controversy, Sen. John Warner, chairman of the Senate Armed Services Committee, set a meeting on Thursday for a briefing by Bush administration officials on the ports deal.
Senate Republican leader Bill Frist and House of Representatives Speaker Dennis Hastert added their voices to the outcry against the decision to allow the Dubai company to run the ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
Concerns about the vulnerability of U.S. ports have grown since the Sept. 11 attacks.
"If the administration cannot delay the process, I plan on introducing legislation to ensure that the deal is placed on hold until this decision gets a more thorough review," Frist, a Tennessean and potential 2008 presidential contender, said in a statement.
Hastert, usually a strong ally of the president, called for a moratorium on the deal in a letter to Bush. "I am very concerned about the national security implications that this could have for the safety of the American people," he wrote.
The Republican leaders' decision to join the fray was significant because they set the agenda in Congress. Other lawmakers from both parties said they already had legislation ready to go to block the decision by a Treasury-led interagency panel known as the Committee on Foreign Investment in the United States.
But Arizona Republican Sen. John McCain, another possible 2008 presidential contender, said while Congress should seek answers, it should not rush to judgment before finding out the facts. "Surely his administration deserves the presumption that they would not sell our security short."
The uproar went beyond Congress. Miami's mayor demanded an investigation and a Florida company filed suit to block the deal. New Jersey's Democratic Gov. John Corzine said his state would sue the federal government seeking to reverse the merger's approval.
New York Democratic Sen. Hillary Rodham Clinton, also likely to run for the presidency, and New Jersey Democratic Rep. Robert Menendez planned to submit legislation that would prohibit companies owned or controlled by foreign governments from purchasing port operations in the United States.
Dubai Ports World is on the verge of taking over Britain's P&O, which now manages the ports.
"It's hard to believe that this administration would be so out of touch with the American people's national security concerns, that it would use its first ever veto to save this troubling Dubai ports deal," said New York Democratic Sen. Charles Schumer.
Bush said that not to go ahead with the deal "sends a terrible signal to friends around the world that it's OK for a company from one country to manage the port, but not a country that plays by the rules and has got a good track record from another part of the world."
Schumer and Republican Rep. Peter King of New York vowed to try to block the deal with legislation as soon as Congress is back in town next Monday. King is chairman of the House Homeland Security Committee.
A similar hail of criticism from American lawmakers last year drove off a bid by China's state-controlled CNOOC Ltd. for American oil company Unocal.
P&O shareholders last week approved Dubai Ports World's $6.8 billion takeover, which would create the world's third-largest ports group. A British court is expected to give its final approval at a hearing scheduled for Feb. 27.
A UAE government official said the security concerns were unfounded given his country's close ties with Washington and Dubai Ports' record as global operator. U.S. warships often call at the UAE's Jebel Ali port, run by Dubai Ports.
U.S. seaports handle 2 billion ton(ne)s of freight a year. Only about 5 percent of containers are examined on arrival.
(Additional reporting by Dayan Candappa in Dubai, Daniel Trotta and Claudia Parsons in New York and Jim Loney in Miami)
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