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Protecting U.S. Strategic Assets By: Dr. Rachel Ehrenfeld and Alyssa A. Lappen
FrontPageMagazine.com | Friday, March 24, 2006

While different port security bills have been proposed after the Dubai’s retreat from the U.S. deal, few, if any tackle the issue of foreign ownership.

Yet, as U.S. Rep Christopher Shays noted, “We should want to pay particular attention to this because after 9/11 we're not just fighting terrorism we are fighting radical Islamic terrorists."


The failed DP World deal drew attention to the fact that most U.S. ports are managed by foreigners. Yet, while the American public was concerned about a deal with the Untied Arab Emirates (UAE), which assists the U.S. in the war on terror, but also assists HAMAS, few noticed that the Saudis have long owned a fifty percent stake in the Houston-headquartered Motiva Enterprises LLC. Saudi Arabia, of course, continues to fund the spread of radical Islam around the world.


Motiva is a joint venture of the Shell Oil Company and Saudi Refining, a subsidiary of Aramco, the Saudi government-owned company. Motiva ships petroleum products, including gasoline and aviation fuel, into Connecticut where it owns and operates portions of the New Haven and Bridgeport ports.


Additionally, Motiva operates portions of 15 other ports nationwide, in Tampa; Fort Lauderdale; Dania, Fl.; Hollywood, Fl.; Baltimore; Lawrence and New York, N.Y.; Newark and Sewaren, NJ; Convent and Norco, La.; South Portland, Me.; Providence; Port Arthur and Port Nechas in Texas; Since 2002, Motiva received in one year alone,  at least 14 port security grants totaling at least $4 million from the U.S. Department of Homeland Security, according to undated DHS documents. The grants were awarded for “surveillance” and “physical enhancement.”  Finally, Motiva owns two Louisiana refineries and full or partial interests in 47 product terminals. Motiva also owns above-ground storage tanks in the port of Baltimore, as in the other ports. Motiva and its partner Shell Oil, “collectively account for about 10 percent of total U.S. refining capacity and a 13 percent share of U.S. gasoline sales.”


Motiva began operating in Connecticut eight years ago. In the New Haven port, Motiva owns storage tanks containing a portion of the U.S. Strategic Petroleum Reserve—the part set aside as the Northeast Heating Oil Reserve – the second largest heating oil reserve in the Northeast. And according to a December 2004 letter from Senator Christopher Dodd to then Homeland Security Secretary, Tom Ridge, New Haven harbor is also the starting point for “the jet fuel pipeline that provides 2.7 million gallons of petroleum liquids per year to Westover Air Force Base in Massachusetts and Bradley Airport.” Bridgeport serves as a major import hub for perishable goods, and as a passenger ferry terminal. Motiva, like other companies operating in Bridgeport and New Haven, manages its own security.


In Delaware, where until last year Motiva owned a facility, the company pleaded guiltyto negligently endangering workers at its former refinery in Delaware City, Delaware, discharging pollutants into the Delaware River and negligently releasing sulfuric acid into the air .” Motiva was fined “$10 million and to serve a three-year term of probation.”


Upon learning of the Saudi ownership of port operations in Connecticut,  U.S. Rep Christopher Shays told the Connecticut Post in Bridgeport, “The fact that I wouldn't know about this ownership is troubling.”


No less troubling is the 10 North American shipping terminals managed by the Riyadh based National Shipping Company of Saudi Arabia (NSCSA). Established  in 1979, it operates eight of these terminals in the U.S.: Newark, NJ; Brooklyn, N.Y.; Wilmington, NC; Savannah, GA: Baltimore, MD; Newport News, VA; Houston, TX, and New Orleans, LA.


Despite these substantial properties in strategic locations, the Saudi holdings sailed below the radar when the controversy arose over the DP World debacle. Moreover, little complaint was heard regarding the 2004, DP World acquisition of several U.S. port terminals in its $1.1 billion purchase of the international terminal business from U.S. railroad and shipping giant, CSX Corp.


However, on March 21, Democratic Georgia Congressman John Barrow demanded a tour of Doncasters' Georgia facility, which reportedly produces turbine engine parts critical to the manufacture of tanks and military aircraft.  Rep. Barrow’s demand raised concerns among Arab and US officials about another U.S. public outcry. 


They have a reason to be concerned; Dubai International Capital plans a £700m ($1.2m) purchase of Doncasters, a privately held British aerospace manufacturer working on sensitive US weapons programs. Dubai International, a private equity investment company, is a wholly owned subsidiary of Dubai Holding, a government owned investment company with positions in: healthcare; technology; finance; real estate; research; education; tourism; energy and communications. DH Executive Chairman is Mohammed Al Gergawi, the Secretary General of Dubai’s government-controlled Executive Council.


To better monitor the sale of strategic U.S. assets to any foreign government or person, members of the House Financial Services Committee, led by Rep. Carolyn Maloney [D-NY], introduced H.R. 4915 on March 9, 2006. This new bipartisan initiative is intended to strengthen the national security considerations when the Council on Foreign Investment reviews potential foreign acquisitions.


Foreign ownership and management of U.S. ports deserves more rigorous attention. As Rep. Shays noted, “we're not just fighting terrorism, we are fighting radical Islamic terrorists."


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Dr. Rachel Ehrenfeld is author of Funding Evil; How Terrorism is Financed and How to Stop It. She is director of the American Center for Democracy and member of the Committee on the Present Danger. Alyssa A. Lappen, Senior Fellow at the ACD, is a former editor for Forbes, Corporate Finance, Working Woman and Institutional Investor.

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