Pres. George W. Bush's fast-waning political authority
is far and away the biggest immediate casualty in what the Wall Street Journal
Friday called "a debacle of the first order."
But the U.S. "war on terror" may also have suffered a major blow
from what is widely perceived as a gratuitous slap in the face given to the
United Arab Emirates (UAE), a staunch ally and generous host to scores of U.S.
warplanes and warships – within a stone's throw of Iran – as well as a major
oil and gas exporter, and chronic consumer of billions of dollars of advanced
U.S.-made weaponry and commercial aircraft.
Bush suggested as much Friday. "In order to win the war the war on terror,
we have got to strengthen our friendships and relationships with moderate Arab
countries in the Middle East," he said, noting that "Dubai services
more of our military ships than any country in the world" and that the
UAE, of which Dubai is a part, "is a valued and strategic partner."
But those are hardly the only potential casualties of the ports affair. The
U.S. Treasury and corporations that are increasingly dependent on investment
from overseas, particularly from cash-flush Arab oil exporters, are anxiously
awaiting the aftershocks, as well.
Indeed, some analysts suggest that the deal's collapse will contribute mightily
to a growing popular revolt both here and abroad against economic globalization
and may even tip the balance in favor of economic nationalists against internationalists
and free traders, who find themselves increasingly on the defensive in many
"This might be one of those turning points in economic and political affairs,"
wrote Irwin Stelzer, director of economic policy studies at the Hudson Institute
here, in the neoconservative Weekly Standard earlier this week.
"In economics, we might be seeing the end of the era of free trade. In
politics, we might be witnessing the reemergence of nationalism and its close
cousin, protectionism," he added, noting recent efforts by European governments
to fend off takeovers of local companies by foreign interests.
Bush's political standing, already at its lowest ebb, according to the latest
public opinion polls, has now taken yet another major blow, following last fall's
fiascos over Hurricane Katrina, the aborted nomination of his long-time personal
attorney to the Supreme Court, and the continuing flow of bad news from Iraq.
His domestic problems were underlined by the overwhelming 62-2 vote Wednesday
in the Republican-dominated House Appropriations Committee to block Dubai Ports
World from taking over management of port terminals.
Democrats, who have turned increasingly sceptical of the "free-trade"
consensus that has long guided Washington's international economic policy, were
more than eager to attack the administration's approval of the deal on national
security grounds. But the speed with which the vast majority of Republican lawmakers
deserted the president – especially after he pledged to veto any effort to
thwart the deal (reminiscent of his "bring-it-on" swagger in Iraq)
– confirmed that the White House's once-matchless ability to enforce party
discipline is no more.
Bush's swift surrender after the House vote – apparently designed to cut his
losses as quickly as possible – and the fact that his chief political adviser,
Karl Rove, was reportedly tasked with informing Dubai Ports World of the bad
news underlined the frailty of his political authority.
That he was so badly beaten on a policy on which he had taken an unequivocal
position naturally raises major problems for foreign leaders who until now have
generally ignored Congress, confident that its Republican leadership would push
through whatever the White House desired. In the wake of Congress' defiance
this week, however, that no longer appears to be the case.
"(T)he question for the world is now whether the U.S., in fact, will be
better off if this White House is forced to cede more power to Capitol Hill
than any president would normally allow," asserted "The Nelson Report,"
a closely-followed insider newsletter, Thursday night.
While foreign leaders may have to reassess Washington's power relationships,
however, national security policy-makers, particularly those leading the "war
on terror," are worried that their job of maintaining strong ties with
strategic allies like the UAE, as well as winning "hearts and minds"
in the Islamic and Arab worlds, has just been made more difficult.
That was made clear by none other than the head of U.S. military operations
in the Persian Gulf and Central Asia, Gen. John Abizaid.
"I am very dismayed by the emotional responses that some people have put
on the table here in the United States that really comes down to Arab- and Muslim-bashing
that was totally unnecessary," he told reporters Thursday, praising the
UAE's close cooperation with the U.S. military.
That concern translates into the economic sphere, as well. Policy-makers and
corporate leaders here have expressed growing concern about the broader impact
of the deal's collapse on inflows of desperately needed foreign capital that
keeps the U.S. economy afloat in the face of unprecedented trade and fiscal
"I suspect America will pay a steep price for Congress's rejection of
this deal," wrote Washington Post columnist David Ignatius from
Dubai Friday. "It sent a message that for all the U.S. rhetoric about free
trade and partnerships with allies, America is basically hostile to Arab investment.
And it shouldn't be surprising if Arab investors respond in kind."
Nor might that be confined to Arab investors, even if, with the sharp rise
in the value of their portfolios due to high oil and gas prices, they accounted
for a major portion of the 1.4 trillion dollar increase in foreign investment
here last year.
That the deal's collapse came only six months after the cancellation – once
again in the face of Congressional opposition – of a multi-billion-dollar bid
by a Chinese oil company for the California-based Unocal has compounded the
concerns of both U.S. businesses and the U.S. Treasury that they will find it
increasingly difficult to attract the investment they need to keep interest
rates low and corporate profits healthy.
"This is the... second such mugging of a foreign investor in recent months,"
noted the Journal, in reference to the aborted Unocal deal. "If
Members of Congress want a REAL security crisis – a financial security
crisis – they'll keep this up."
While the Journal suggested that this may be the latest resurgence of
"'national security' protectionists" who last appeared in the late
1980s when they opposed the acquisition by Japanese companies of blue-ribbon
U.S. assets, others, like Stelzer, suggest that more fundamental shifts may
be taking place.
The New York Times Friday pointed to recent controversies in Europe
over foreign takeovers which, in light of the stalled European Union integration
process, may be part of a broader trend. "It may be well part of a global
backlash against globalization," the paper quoted Michael Grenfell, a London-based
international lawyer, as saying.
"America could usually be relied on to champion free trade," he said.
"If that changes, things could get quite chilly."
(Inter Press Service)