A Dubai-owned company abruptly abandoned its plan for managing operations at six US ports, defusing an election-year showdown between US President George W. Bush and the Republican-controlled Congress over an issue that had become a political landmine for Republicans.
"DP World will transfer fully the US operations ... to a United States entity," Edward Bilkey, the company's top executive, said in the surprise announcement on Thursday that seemed to spread relief throughout the Capitol and the White House. It was unclear which US business might get the port operations.
Just hours earlier, Republican House and Senate leaders privately told the president that Congress was all but certain to block DP World's plan. Under pressure from a disapproving public, a House committee overwhelmingly voted against it on Wednesday. The leaders told Bush the Senate would inevitably do the same, despite his threats to veto any legislation killing the deal.
The company's announcement gave Bush an out. He now does not have to back down from his staunch support of the United Arab Emirates-based company or further divide his party on a terrorism-related issue with a veto.
The White House expressed satisfaction with the company's decision.
"It does provide a way forward and resolve the matter," said Scott McClellan, the White House press secretary. "We have a strong relationship with the UAE and a good partnership in the global war on terrorism, and I think their decision reflects the importance of our broader relationship."
Administration officials expressed surprise at the outcome. White House officials said that the decision was the result of conversations between Congress and the company, and that senior administration officials were not directly involved in the talks.
Senator John Warner, a Virginia Republican, said that "upper levels of both governments" worked toward the result, including Sheik Mohammed Bin Rashid Al Maktoum, prime minister of the United Arab Emirates and emir of Dubai, who "advised the company ... that this action is the appropriate course to take."
The end came unexpectedly and quickly after weeks of controversy. Hours after congressional leaders delivered their warning, Warner, chairman of the Senate Armed Services Committee, read the company's announcement on the Senate floor.
It was unclear how the company would manage its planned divestiture, and Bilkey's statement said its announcement was "based on an understanding that DP World will not suffer economic loss."
Even critics of the deal expressed cautious optimism that DP World's move would quell the controversy surrounding that company's plan to take over some terminal leases at six major US ports held by the London-based company it was purchasing.
Congress moved at lightning speed to try to block the deal, underscoring the deep concern over it and the anger about the White House's unwillingness to listen.
"This should make the issue go away," said Senate Majority Leader Bill Frist, a Republican. Added Warner: "To me, that statement put an end to all of this."
The two senior senators backed the Bush administration on the issue and they had been privately urging the company to give up its quest, Republican officials said on condition of anonymity.
The company on Thursday finalized its US$6.8 billion purchase of Peninsular & Oriental Steam Navigation Co, the British firm that through a US subsidiary runs important port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. It also plays a lesser role in dockside activities at 16 other US ports.
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