The impact of rejection

Congress' spurning of ports deal could spell a turn in oft-cordial relations with United Arab Emirates

BY JAMES RUPERT | Newsday Staff Correspondent

March 27, 2006

DUBAI, United Arab Emirates - In many ways, America's ties here seem quietly back to normal after Congress scuttled a Dubai firm's purchase of U.S. port facilities. U.S. Navy ships are docking for shore leave at the main port south of town and the government is warmly welcoming American business, celebrating a regional office being opened here by the Manhattan-based financial services firm Morgan Stanley.

But people here say the public humiliation of the United Arab Emirates and Dubai (whose ruling family owns the repudiated company, Dubai Ports World) is likely to damage America's stature here, its relations with friendly Arab states and its effort to win Arab help in the U.S.-declared "global war on terror."

The United Arab Emirates is a close U.S. military and commercial partner, and Dubai Ports World already provides logistical services to U.S. Navy and Air Force units deployed here. Given those close ties, Congress' declaration that the firm would pose a risk of terrorism at U.S. ports has sent a message that no Arab can really hope to be treated as a friend by America, so it is useless to try, said Abdulkhaleq Abdullah, a political science professor at United Arab Emirates University.

The damage to America's relations here is psychological and is likely to take effect slowly, said Abdullah and others interviewed in recent days.

"The mood has shifted," Abdullah said. "The UAE's business community has been the most pro-American in the Arab world. But demonizing and Arab-bashing ... showed that America is in an anti-Arab mood.

"People feel offended. It won't be business as usual at this end."

Following the U.S. invasion of Iraq, the scandals of Abu Ghraib and Guantanamo, and the generations-old Israeli-Palestinian conflict, humiliation by America is no new feeling among Arabs. But for UAE Arabs, much of the earlier shocks tended to be cushioned by their country's heavy focus on commerce, notably with the United States.

The ports issue, by contrast, has hit them where it counts. Several analysts said UAE firms are likely to be slower now to leap toward business opportunities in the United States, and more careful in weighing possible alternatives in Europe or Asia.

Here and throughout the Middle East, Arabs noticed that Americans seemed untroubled at having a foreign company manage the six ports when it was a British firm, said Massoud Derhally, the business and diplomatic editor of Dubai-based Arabian Business magazine.

"This has a powerful psychological effect," he said. "More than anything, it reinforces the feeling among Arabs across the region that the U.S. has an underlying sense of bigotry, tending toward racism, against them."

The American politicians who led the campaign against Dubai Ports World - notably New York Democratic Sens. Charles Schumer and Hillary Rodham Clinton and Rep. Peter King (R-Seaford) - "are playing into the hands of people like Osama bin Laden and [Abu Musab al-] Zarqawi," Derhally said. Such extremists "can use it to propagate their own violent agenda."

With Dubai's immaculate new highways and downtown boulevards, it seems ironic that this brash, vibrant, commercial city became the season's political dirty word back in America.

More than perhaps any other Arab city, Dubai resembles the United States in its devotion to free-market entrepreneurship and consumerism, and in its tolerant mix of immigrant and native cultures. And the business of Dubai is not simply business - it's largely business with America. The shopping malls are stuffed with American chains and brands - JC Penney, Radio Shack and Ace Hardware among others.

In three blocks on Al-Rigga Road downtown, you can eat American-style every few steps, at Burger King, Hardee's, KFC, Pizza Hut, Dunkin' Donuts, Chili's, Popeye's, Subway and Kenny Rogers Roasters. The government is full of officials with degrees from U.S. universities and the 11-year-old American University in Dubai is growing on a campus south of town.

The UAE's ports berth and service more Navy ships per year than any other port abroad, and its airbases host Air Force planes that fly missions to Iraq and Afghanistan.

"The United Arab Emirates has been, at least since 9/11, as good a partner and friend as we could have possibly asked for," Gen. Peter Pace, chairman of the Joint Chiefs of Staff, told reporters this month.

Emirates residents concede and lament that two of the Sept. 11 hijackers were from here, and that the UAE's once wide-open banking system was used to move al-Qaida funds. "But Americans are not punishing Germany five years later because it allowed the plot to be organized in Hamburg," said Munir Muhammad, a middle-aged computer specialist who was shopping downtown last week.

He and others said their frustration is deepened because Congress seemed not to listen to officials such as Pace and President George W. Bush, who have praised the UAE's cooperation on security issues since 9/11.

In general, though, political sentiment here cannot be felt in the streets. The UAE, a desert country the size of Maine, feels almost like a place without politics. There are no political parties and the real voting constituency is tiny. Seven emirs, or princes - one from each emirate - form the country's ruling council.

Any official expression of anger over the issue seemed quickly suppressed. In the days after Dubai Ports World renounced its purchase of six U.S. port facilities, the UAE and U.S. governments postponed a round of talks on a free-trade agreement. And the UAE central bank announced that its cash reserves would be shifted slightly from dollars to euros.

But relations quickly resumed their usual friendly tone. Top UAE officials hosted a congressional delegation from Georgia last weekend and the aircraft carrier USS Ronald Reagan, with about 5,000 sailors, docked for leave last week at the main port.