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Dubai firms agrees to delay taking control of U.S. ports

WASHINGTON—Yielding to intense political pressure, United Arab Emirates company Dubai Ports World said late Thursday night that it will delay taking over management of terminals at six major U.S. ports to give the Bush administration more time to convince skeptical lawmakers that the firm poses no national security risk.

The surprise announcement by Dubai Ports World buys the White House time to soothe angry congressional Democrats and Republicans who oppose the deal because they feel it would jeopardize national security, something the administration strongly denies.

In a written statement released late Thursday night, DP World said delaying its entire $6.8 billion deal to acquire Great Britain's Peninsular and Oriental Steamship Navigation Co.—which manages terminals at the ports of Miami, Philadelphia, New York, New Jersey, Baltimore and New Orleans—would be "unreasonable" and "impractical."

DP World officials say they intend to close the deal on March 2—the scheduled closing date—but will not assume control of the terminals until lawmakers on Capitol Hill and in state capitals have time to study the deal.

"The reaction in the United States has occurred in no other country in the world," DP World chief operating officer Ted Bilkey said in the statement. "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are address to the benefit of all parties. Security is everybody's business."

The company statement came hours after Deputy White House Chief of Staff Karl Rove, in a radio interview, said that Bush would accept some sort of delay in the deal.

Bush had vowed Tuesday to veto any congressional measure that would stop the deal.

But on Thursday, when asked if Bush would now accept "a slight delay," Rove replied "yes."

No aide is closer to Bush than Rove, who oversees political strategy. Rove wasn't involved when the administration approved the ports deal last month, but once a political firestorm erupted on Capitol Hill this past week, he got involved.

Both Senate Majority Leader Bill Frist, R-Tenn., and House Speaker Dennis Hastert, R-Ill., called for a delay earlier this week to permit a more thorough review of the deal, and so had dozens of other lawmakers. They fear past UAE connections to al-Qaida could put U.S. ports at risk.

The administration insists such fears are groundless, saying the UAE is a cooperative partner in the war on terror and that the UAE firm involved has agreed to meet all security requirements.

"Look, there are some hurdles, regulatory hurdles, that this still needs to go through ... that are going to be concluded next week," Rove said on Fox Radio's "Tony Snow Show." "There's no requirement that it close, you know, immediately after that."

"Our interest is in making certain members of Congress have full information about it, and that, we're convinced, will give them a level of comfort with this," Rove said.

White House communications officials seemed to be caught off guard by Rove's remarks, initially declining to comment when asked if he spoke for the president. After a couple of hours, White House Press Secretary Scott McClellan returned a reporter's call, but refused to answer directly whether Bush now supports a delay.

All McClellan would say is that Bush wants the deal to go through, adding, "We're glad to provide (Congress) with more information. We believe once they have the facts, they will be comfortable with the transaction moving forward."

Rove's comments came as administration officials briefed the Senate Armed Service Committee about why the deal should move forward. Testimony there appeared to contradict Rove's assurance that a delay can be arranged.

Robert Kimmitt, deputy Treasury Department secretary, was asked if Bush has legal authority to delay the deal after the administration has already approved it. Kimmitt said the approval process could be reopened only if parties involved in the deal are found to have provided false, misleading or incorrect information.

In light of that reading of the law, it was unclear how Bush and Congress could delay the deal further, although one option could for DP World to request the delay. But Sen. John Warner, R-Va., who chaired the Senate committee hearing, indicated that he didn't think it would be a big problem.

Unaware of Rove's radio comments, Warner said that Congress could pass a law ordering a 45-day delay, then noted that Bush had threatened to veto any such legislation, but concluded:

"I do believe this thing—it's my opinion—can be worked out satisfactorily so that there's a reconciliation of the views of Congress and the executive branch that's in the best interests of our national security."

Many political analysts think a delay is necessary to defuse a political confrontation between Bush and Congress and permit the administration time to allay public fears.

A delay of up to 60 days would "get people to back off the ledge here and give everybody a chance to back down," said Republican consultant Rich Galen.

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(c) 2006, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): PORTSECURITY

GRAPHICS (from KRT Graphics, 202-383-6064): 20060223 Port operations, 20050223 Port volume

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