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Congress expected to seek veto over foreign takeovers of some firms

WASHINGTON—Republicans and Democrats in Congress say they are all but certain to change the rules under which foreign companies can buy businesses in the United States as a result of the controversy over the sale of port terminal rights to a company controlled by the United Arab Emirates.

A growing number of Republicans and Democrats in Congress say they want to prohibit foreign government-owned companies from owning or operating any facilities that play a role in the nation's security. Other lawmakers say they'll push legislation to give Congress the authority to reject foreign transactions with national security implications.

Either outcome would represent a fundamental change in U.S. policy; right now, only the president has the authority to approve foreign purchases of U.S. business operations.

The two tracks of legislation began to emerge this week as debate continued over the Bush administration's decision to approve the sale of operating rights at ports to Dubai Ports World, a company founded by the emir of Dubai. Dubai is part of the United Arab Emirates.

The administration is now conducting a lengthier investigation of the deal in an effort to convince critics that it won't compromise national security.

But members of Congress say the investigation won't stop the growing demand to change the secretive process by which foreign deals are reviewed and approved.

"We're going to see a change," said Sen. Chuck Hagel, R-Neb.

That worries some business groups and their backers in Congress. They say letting Congress have final say over international business deals will introduce politics into the process, something the current law was designed to prevent.

"It creates uncertainty in the economy; it can set a bad precedent for American companies trying to make investments or acquisitions overseas; it can make people more reluctant to do business with the United States," said Sen. John Sununu, R-N.H.

The U.S. Chamber of Commerce would lobby against any legislation that would give Congress the right to block such deals, said Bruce Josten, the chamber's vice president for government affairs.

Proposals to restrict foreign-state-owned companies from owning critical facilities range from outright bans to complex arrangements that would require the foreign company to set up a separate affiliate in the United States with a distinct board composed of only U.S. citizens.

Proposals that would require congressional approval of any deals include one by Rep. Peter King, R-N.Y., the chairman of the House Homeland Security Committee. It would allow Congress to reject the Dubai Ports World transaction.

Sen. Jack Reed, D-R.I., said he favors Congress having the right to reject, perhaps by a two-thirds margin, any transaction with national security implications.

Rep. Duncan Hunter, R-Calif., the chairman of the House Armed Services Committee, said he favored banning ownership by all foreign companies, not only government-owned ones.

It remained unclear Thursday how such congressional action might affect the Dubai Ports World deal. The Bush administration has said that it's certain the 45-day investigation will show there's no security risk to the company's takeover of terminal operations at six U.S. ports from the current operator, Peninsular and Oriental Steam Navigation Company, a publicly traded British firm.

Britain's High Court approved the $6.8 billion transaction Thursday, and the deal is expected to formally close on Friday.

A spokesman for P&O said the company wouldn't speculate on its options if Congress rejects the transaction. At the Port of Philadelphia, where P&O owns 50 percent of Delaware River Stevedores, DRS President Robert Palaima said his company would continue to operate without a hitch. "Regardless of what might happen in 45 days, we have our own management staff, our own insurance," he said.

Meanwhile, lawmakers continued voicing opposition to the deal in House of Representatives and Senate hearings, raising questions as to whether the United Arab Emirates is the faithful ally the White House claims it to be.

The administration, in defending the deal, has said that the UAE allows U.S. military planes to fly through its air space and provides docking facilities for Navy ships.

But Hunter, during a hearing of his committee on Thursday, called the UAE "accommodators" who'll help anyone with enough cash. Two of the Sept. 11, 2001, hijackers were based operationally in the UAE, and the Dubai government was one of only three worldwide that recognized the oppressive Taliban regime when it ruled Afghanistan.

"These are people who you do not want close to American ports," Hunter said.

H. Edward Bilkey, chief operating officer of DP World, defended his company before Hunter's committee.

"DP World is a company that in good faith sought to comply with applicable U.S. legal requirements, and, having been told by the U.S. government that we met those requirements, now finds itself in the position of being told that that was not good enough," Bilkey said in prepared testimony.


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

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