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Federal Agencies Defend Ports Deal

A 45-day investigation of a deal that would turn operation of Baltimore, New York and other ports over to the United Arab Emirates was not initially conducted because there were no objections to the deal, federal officials told senators probing the arrangement on Thursday.

Because no members of the Committee on Foreign Investments in the United States, a panel that reviews business arrangements with foreign entities, spoke out against the deal, the investigation was not performed, officials from the departments of the Treasury, Defense, and Homeland Security said. The 1992 Exon-Florio Amendment requires such an investigation if a foreign-government-owned company acquires a company that affects U.S. national security.

Stewart Baker, the Homeland Security assistant secretary for policy, said terminal operators, such as current operator British Peninsular and Oriental Steam Navigation Co. and its suitor, Dubai Ports World, do not oversee security and that they operate "a pier, a crane . . . and a parking lot." The U.S. Coast Guard is mainly responsible for security.

The comments came in testimony to the Senate Banking, Housing, and Urban Affairs Subcommittee, one of several congressional panels probing the deal after public outcry against it.

Baker also said Dubai Ports World gave "unprecedented" assurances by allowing the U.S. access to its American financial records, including employee information, and alerting U.S. authorities of all shipment contents within 24-hours.

Sen. Paul Sarbanes, D-Md., the committee's top Democrat and a co-sponsor of the Exon-Florio Amendment, asked for the names of the 12 government representatives on the Committee on Foreign Investments involved with the decision not to hold an initial investigation.

"The administration can't run around and do what it wants, willy-nilly," Sarbanes asked. "They're not buying a toy company to make toys."

Robert Kimmitt, Treasury deputy secretary, defended the committee's decision but said communication problems between the government and foreign businesses can always be improved.

"There are gaps but we're working very closely with the UAE to close those gaps," he said.

Kimmitt has said he learned of the deal after its approval and then told Treasury Secretary John T. Snow.

The officials told senators the deal was similar to other foreign business transactions, and that roughly 70 to 80 percent of the nearly 300 U.S. ports are foreign-controlled.

Since the Clinton administration there have been 92 instances of government-owned foreign company contracts, and five of those were investigated, according to Kimmitt.

Both Republican and Democratic lawmakers have criticized the deal, claiming the U.A.E. has terrorist ties and connections to al-Qaida, while supporters have said the agreement enhances global trade and rescinding it would show a lack of confidence in a growing partnership.

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