Gulf investors, feeling scorched by what they see as an anti-Arab backlash in the U.S. Congress, will likely be wary of high-profile investments in the United States after the ports controversy with a Dubai company.
In a possible early sign of trouble, free trade talks between the United States and the United Arab Emirates due to start Monday were postponed.
The decision came a day after DP World announced that it would give up its management of six U.S. ports, which it received as part of a buyout of a British firm that previously administered the facility. The firm backed down after an uproar in Congress, where legislators said Dubai's administration could undermine security at the ports.
Neena Moorjani, a spokeswoman for the U.S. Trade Representative said Friday in Washington that both sides in the free trade talks needed more time to prepare and she refused to say whether the postponement was related to the ports issue.
UAE government officials could not immediately be reached for comment on Friday, a weekend day in the Mideast. But UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi was quoted Friday as saying the move by U.S. lawmakers to block DP World's port takeover could harm chances of resolving final issues holding up the pact.
"It is something that doesn't reflect well," Al Suwaidi said of the controversy, according to the local paper Gulf Today.
In Dubai and elsewhere in the Gulf, the controversy was largely seen as reflecting an anti-Arab bias. DP World's concession was likely to solidify that belief.
The outcome could leave Arab businessmen wary that their investments in the United States could come under similar scrutiny and could prompt them to look elsewhere to put their money.
But, with Gulf nations awash in cash from oil profits, the United States remains a tempting market to invest. So instead of retreating, over the longer term, Arab investors and governments may campaign to shore up their image among Americans to ensure their money is welcome.
"It's a sobering moment," said Eddie O'Sullivan, Dubai-based editorial director of the Middle East Economic Digest. "People are going to have to be much more careful. There's a fear they (members of Congress) may move on to other targets in the Arab world. If it happened once it can happen again."
Investors and businesses in the United Arab Emirates, Kuwait, Qatar and Saudi Arabia will be reviewing portfolios for U.S. holdings that could spark a similar uproar in Congress, O'Sullivan said.
"Most of (the holdings) are in dollar-denominated assets. They'll want to see how vulnerable it is to the U.S. Congress," O'Sullivan said. "It'll be more difficult to finalize an investment proposal that involves an American bank or an American asset."
Few observers believe it will torpedo giant recent orders by two UAE airlines of Boeing passenger jets. But Chicago-based Boeing Co. may have to look outside the Gulf for future deals, said Youssef M. Ibrahim, managing director of Dubai-based risk consultancy Strategic Energy Investment Group.
"The next deal they will do with Airbus," the European aircraft consortium, Ibrahim said. "Dubai's ability to react is constrained. You can't punish America much if you are so small."
Last year, Dubai companies invested $5.5 billion in the West, much of that in the United States. In the next five years, the six Gulf countries will have a half-trillion dollars in assets to invest.
They may be more disposed to look to Europe or Asia for investment now _ but in the end, the amount of cash is so huge that only U.S. assets can soak it up, O'Sullivan said.
"The United States represents 50 percent of the world's economic market, 50 percent of the world's consumption and 50 percent of the assets in which you can put money," Ibrahim said. "At the end of the day, there aren't too many places where you can invest that kind of cash overflow."
The Emirates is unlikely to retaliate strongly for the slight, for instance by blocking the U.S. Navy and Air Force access to critical bases here, a prospect that has worried U.S. military leaders.
Governments of other cash-rich Gulf countries like Kuwait, Qatar and Saudi Arabia will be loath to ruffle relations with the United States, analysts said.
Shehab Gergash, chief executive of Al-Daman, a Dubai-based investment bank, said he had seen no drop in investor interest in American products or securities.
"Time will tell whether it has any effect" on Arab investment in the States or Arab purchases of U.S. goods, Gergash said.
Many here blame the controversy on American politicians for playing to a deepening anti-Arab bias in the United States. Dubai-based Gulf News said U.S. Democrats were trying to "score political points" against the Bush administration on national security by ignoring the facts of the case.
"It is deemed better to jump on the bandwagon of anti-Arab, anti- Middle East, anti-Muslim tirade that has been popular since the 9/11 attacks," the paper's editorial page said Friday.
Ibrahim said the UAE may move to boost its image among Americans who fear closer ties with the Middle East. It may embark on opinion- shaping ventures that mimic Israel's deft public relations maneuvers: hosting visits by members of Congress, business leaders and chiefs of unions like the Teamsters, which opposed the deal, Ibrahim said.
"They should've invited these people here and shown them around, so they had friends who would defend them instead of attacking them without knowing anything about Dubai," Ibrahim said.
__________________ Commen Sense and Critical Thinking are an absolute joke in today's society. Yes I am talking to you!
Going back to the content of the article, I don't know why the heck we would be giving free trade to UAE. NAFTA and CAFTA are wrong enough. We need more tarriffs and lower taxes. That's how it was supposed to be from the start.
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Trust is earned, not... GIVEN away. - Worf
:guitar: let them take thier filthy stinking camels and thier business outa here. we don't need dogs that will bite the hand that feeds them.:gangster:
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"They cannot be trusted.....The Romulans (our politicos) are without honor." Worf
