March 10, 2006
Rich Galen has a theory that makes a heck of a lot of sense:
Yesterday the company issued a press release in which it said (according to an AP piece by Dave Espo and Andrew Taylor): "DP World will transfer fully the U.S. operations Â… to a United States entity."Here's where Galen is going with all this: he believes that, at the end of the day, there will be a "U.S. entity" running the ports in question but that entity will be a new U.S. subsidiary of DPW that "would only be connected to Dubai via a checking account into which the profits would be put."
Let us assume that the folks in Dubai didn't sit around drafting this language during morning coffee, waiting for the latest price of oil futures on the New York Mercantile Exchange.
Let us assume, rather, that hundreds of thousands (perhaps millions) of dollars worth of lawyers, lobbyists, former Senators and their former staffers, PR types, and the head guys from Dubai thought very, very carefully about this language.
Do you see the word "sell" in there?
Why use the term "transfer" instead of "sell," unless the drafters were being paid by the letter?
And to whom will they "sell" these assets? If there were an American firm interested in operating these terminals why didn't they join Dubai and Singapore in the bidding contest which had been going on since late September 2005?
Although Rep. Peter King insists that such an entity have "no links to DP World", there are plenty of high-powered lawyers who can craft something that the deal's opponents could probably live with. So everybody wins, eh?
Not exactly. While DPW will be seen as the loser in this situation, the reality is that from an investment point of view what they would have is comparable to what they were going to have.
No, there are only two losers in the situation. The first is the relationship between the U.S. and the UAE. Hopefully, in the long run, this relationship won't be so adversely affected that we can still count on assistance from Dubai and other Arab States in the GWOT.
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