Spy chief calls threat from port deal low

Coast Guard initially raised issue of 'intelligence gaps' in review

WASHINGTON (CNN) -- The intelligence community assessed the threat posed by the takeover of some U.S. shipping terminals by a United Arab Emirates company as low, the top U.S. intelligence official told a Senate panel Tuesday.

John Negroponte, national director of intelligence, told the Senate Armed Services Committee that the assessment was provided to a government review board after a one-month inquiry on DP World's impending purchase of P&O, the British-based operator of cargo terminals.

"We didn't see any red flags come up in the course of our inquiry," Negroponte said.

However, a Senate hearing revealed Monday that the Coast Guard initially warned that "intelligence gaps" prevented a broad assessment of any security risks posed by the takeover of some U.S. shipping terminals by the UAE company.

U.S. Sen. Susan Collins, chairwoman of the Senate Homeland Security and Governmental Affairs Committee, disclosed the Coast Guard report on the impending purchase.

"There are many intelligence gaps concerning the potential for DPW or P&O assets to support terrorist operations that precludes an overall threat assessment of the potential merger," the Coast Guard report on the potential deal stated. (Read the Coast Guard memoexternal link)

"The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities."

At a press appearance Tuesday with Italian Prime Minister Silvio Berlusconi, President Bush reiterated his support for the deal, saying, "My position hasn't changed." Neverthless, Bush did say he understood why people were concerned.

"If there was any doubt in my mind, or people in my administration's mind that our ports would be less secure and the American people endangered, this deal wouldn't go forward."

Critics have argued that the deal raises security concerns and requires further scrutiny since DP World is a state-run venture of the UAE. The country was the home of two of the al Qaeda hijackers involved in the September 11, 2001, attacks, and money to fund the plot was passed through banks in Dubai.

Collins, a Maine Republican, questioned whether the Coast Guard's concerns had been addressed before an administration committee approved the DP World-P&O transaction.

She said Monday's briefings left her "more convinced than ever that the process was truly flawed." (Watch the senator express her concern -- 2:09)

The senator, who took her committee into a closed session to discuss the Coast Guard report, said security concerns should have triggered a broader, 45-day security review of the merger.

"I know the administration disagrees, but I can only conclude that there was a rush to judgment -- that there wasn't the kind of painstaking, thorough analysis that needed to be done despite serious questions being raised and despite the wide variety of involvement by agencies," she said.

Sen. Joseph Lieberman of Connecticut, the ranking Democrat on the committee, said DP World "deserves a fair hearing."

"That doesn't mean they deserve a free pass when they buy terminals at ports in the U.S.," he said. "But they deserve a fair hearing, and I believe now they're going to get one."

The Coast Guard intelligence document, prepared in December, said the service was unable to answer questions about the security environment at the terminals affected; the backgrounds of workers at those terminals; and whether DP World or P&O were vulnerable to "foreign influence" on security matters.
Treasury: Concerns addressed

Clay Lowery, a Treasury Department official involved in approving the sale, told senators the Coast Guard's concerns "were addressed and resolved." He said they had become the basis for special "assurances" that DP World provided the U.S. government as part of the deal.

Rear Adm. Thomas Gilmore, the Coast Guard officer in charge of marine safety and security, said he would have to disclose classified information to respond to questioning.

"Any concerns we had were addressed in the assurances letter," Gilmore said before the committee went into a closed session.

The $6.85 billion acquisition of P&O's parent company would place DP World in charge of cargo handling at some terminals in five large U.S. ports -- Baltimore, Maryland; Newark, New Jersey; Philadelphia, Pennsylvania; Miami, Florida; and New Orleans, Louisiana -- and a New York cruise-ship terminal.

The deal, scheduled to close Thursday, was approved in January by the Committee on Foreign Investment in the United States, an administration group led by the Treasury Department.

But criticism of the agreement escalated last week when Republican leaders in both houses of Congress and numerous Democratic lawmakers called for the merger to be delayed for further review.

DP World announced over the weekend that it would seek an additional 45-day review of the plan because of the outcry and that it would not take control of P&O's port operations until the review is complete.

Lawsuits in New Jersey and Florida have challenged the merger, and Democratic senators from New York and New Jersey have introduced a bill that would bar overseas companies from controlling American port operations.
Schumer: Take report to Congress

Some expressed concern that the deal would be rubber-stamped.

At a rally with Teamsters at Newark's port Monday, Sen. Charles Schumer, D-New York, advocated legislation mandating that Congress, and not just the White House, get final approval over the port deal.

"You can't do the report in secret. You can't just give it to the president, who has already said he supported this deal. You have to show the Congress the full report," Schumer said.

But Senate Majority Leader Bill Frist, R-Tennessee, said he does not want any port legislation to move forward until the 45-day investigation is completed.

Critics have questioned why the Bush administration signed off on the merger without a more extensive review of its national security implications. The White House has tried to reassure lawmakers and the public that the Coast Guard and customs officers would retain control of security.

The president has threatened to veto any legislation that blocks the transaction and has accused critics of subjecting an Arab-owned company to a higher standard than other international firms. The UAE is a key American ally in the Persian Gulf, and Bush warned that rejecting the deal could undercut Arab cooperation on antiterrorist efforts.

But Rep. John Murtha, D-Pennsylvania, said Monday that critics of the deal have taken years of administration warnings about the threat of terrorism to heart.

"They try to scare people and they've been scaring them with these terrorist tactics, and then all at once they're surprised at the public reaction to something that was secretly handled," said Murtha, an outspoken critic of the administration's handling of the war in Iraq.

"My initial reaction would be against it since what I heard about the Coast Guard, but we have to take a good look at it."