In a deal similar to what led to the U.S. ports furor, Dubai International Capital purchased for US$1.24 billion Doncasters Group Limited, a private British aerospace manufacturer that works on sensitive U.S. weapons programs such as the Joint Strike Fighter (J.S.F.). The Bush administration is currently conducting a security review of the takeover, and then it will present its findings to the U.S. Congress. Many of the same factions that expressed concern over the ports deal are having their voices heard on the Doncasters takeover.
For instance, the ports bid would have given control of security at several major U.S. ports to Dubai Ports World, which is owned by the UAE government. Democrats and Republicans alike attacked the Bush administration’s approval of the deal since it would place national security interests in the hands of a foreign government that many in Congress labeled as being an unreliable partner in the war on terrorism.
The failed ports deal forced Washington to postpone talks with the UAE on a free trade agreement (F.T.A.). The proposed pact is part of a greater U.S. goal to create a Middle East Free Trade Area by 2013. The U.S. currently has an F.T.A. with Israel, Jordan, Morocco and Bahrain, and is expected to approve a pact with Oman in the coming months.
The White House and others that support deals with the UAE warn that restricting trade over putative security concerns would turn away investors in Arab states awash with petrodollars and ultimately harm the U.S. and global economies. However, Dubai seems to have taken the matter in stride. In a conciliatory move, Dubai Ports World agreed to sell its stake in U.S. port operations, which allows the firm to turn its attention to more profitable port operations in emerging markets. During a visit to Washington, Sheikh Lubna al-Qasimi, minister of economy in the UAE, stated, “We are long-standing allies of the United States. Our relations are larger than that. This is global trade.” U.S.-UAE trade has increased steadily in recent years, punctuated by major deals involving Boeing, ExxonMobil and Lockheed Martin.
While not yet garnering much attention in the U.S. media, certain members of Congress have challenged the proposed Doncasters deal. Two members of the House Armed Services Committee, Democrats John Barrow and Ike Skelton, have raised questions about national security. “I am not against foreigners investing in this country as long as we don’t sell them something we are not supposed to sell them,” Barrow said. “But I am concerned about selling off our national security infrastructure. We are selling off the military industrial complex bit by bit.”
The US$250 billion F-35 Joint Strike Fighter program is intended to create a next-generation stealth fighter that would replace several current strike fighters. While the majority of the jets will be used by the United States, other states such as the United Kingdom, Italy, Australia, Canada, Denmark, Turkey and Norway also intend to purchase the aircraft. The J.S.F. is scheduled to be operational by 2009.
As was the case with the ports deal, Democrats will surely capitalize on another opportunity to paint Republicans as being weak on national security issues as the 2006 elections draw near. Republicans, despite controlling both the U.S. House and Senate, are increasingly finding themselves on the defensive as they are positioned between a White House mired in political scandal and poor approval numbers, and emboldened Democrats looking to regain control of Congress.
The Doncasters deal will certainly fall under increased scrutiny in coming weeks. Following the Dubai Ports World debacle, the Bush administration will find itself at the center of another complicated national security debate that will go beyond party lines and standard economic discourse. However, an expensive, experimental weapons project will likely elicit a less visceral public reaction than did the issue of port security.
U.S. lawmakers must decide whether to embrace economic nationalism or uphold the free trade principles that they typically champion. While Dubai has ostensibly looked past the criticisms raised in the failed ports deal, a similar outcome in the current matter could very well scare away foreign investors, Arab and otherwise, and signal that the United States is not necessarily open for business.