Protectionism as protection

There is a certain irony in the Bush administration being overwhelmed by the very forces ? and rhetoric ? that it used to shore up homeland security to fight the war on terrorism.

There is a certain irony in the Bush administration being overwhelmed by the very forces — and rhetoric — that it used to shore up homeland security to fight the war on terrorism. The failed Dubai Port World deal not only marks a public split between George Bush and key allies on Capitol Hill, but it is also an embarrassing fiasco involving one of America’s closest allies in the Arab world. The US Congressional intervention against the UAE-owned Dubai Ports World — which got buyer control over terminals in six US ports by acquiring a British shipping company — is not only about being West Asia-phobic. It’s also part of a bigger trend of Western protectionism.

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In the past year, governments in Western countries have used a variety of means to keep out foreign buyers. Mittal Steel’s takeover bid of Arcelor, the political pressure that compelled China’s Cnooc to abandon the acquisiting of Unocal are part of this trend. When Russian government-owned gas major Gazprom expressed interest in the British company Centrica, the government promised ‘robust scrutiny’ of the deal. There are even instances of EU countries raising such nationalistic barriers against each other. To block a bid by Enel of Italy for Suez, the utility company, French politicians are calling for the latter’s merger with Gaz de France. In some cases, concerns relate to loss of jobs. But national security is always the best stick to use and in the Dubai ports case, the US Congress has liberally used it. To its credit, the Bush administration tried to stem this xenophobia. Mr Bush has proven to be surprisingly wiser than his critics this time round, promoting the issue himself and even threatening, at one point, to veto a bill banning the sale.