U.S. business, UAE on mend in wake of DPW-ports fiasco

The United Arab Emirates and U.S. business groups are taking significant steps to repair their respective images a little more than a year after controversy erupted over a Dubai company’s attempted purchase of several U.S. ports.

Both sides aim to increase bilateral trade and investment, which came under threat after pressure from Congress led the UAE’s Dubai Ports World (DPW) to withdraw from a deal that would have allowed it to operate several U.S. ports.

U.S. Chamber of Commerce President Tom Donohue told reporters last week that he discussed the ports controversy recently in Dubai and underscored the importance of strengthening bilateral business ties.

“I was talking to a bunch of companies that are interested in the United States, and I was encouraging them to bring their money here,” Dohonue said.

Last year’s fight led to the suspension of free-trade talks between the two countries, and it continues to make waves in this year’s Congress. This week House Democrats announced a trade policy that seeks to alter a pending deal with Peru. If enacted, those changes would prevent DPW from gaining a U.S. presence through Peru, where the company has already invested.

The UAE also has received some negative attention in Congress after reports disclosed that a Dubai company has used U.S. components in its manufacture of improvised explosive devices. The Department of Commerce has instituted new license requirements for the export of items to entities linked to the UAE company, and Commerce officials and some members of Congress have criticized the UAE for allowing such items to be exported to Syria and Iran.

Donohue defended Dubai as an emirate committed to a close working relationship with the U.S. on trade and the fight against terrorism. As for preventing the wrong tools from falling into the wrong hands, he noted, the UAE faces a unique problem because of its neighborhood.

 “This is like trying to stop all movement of goods from Washington, D.C., to [Maryland’s] Montgomery County,” he said.
Partly in response to the DPW controversy, Abu Dhabi, the largest emirate, has created the U.S. Emirates Alliance to improve its image in Washington. It has allocated $15 million in funding over the next three years to the project, which is managed by former Clinton administration official Richard Mintz, a principal at the Harbour Group public-relations firm.
“After Dubai Ports World, it was important that some of the misunderstandings be corrected,” Mintz said in an interview with The Hill. “Up until last year, the Emirates did not feel that they needed to make an investment in public diplomacy because they felt their relationship with America was understood.”

The contract’s size dwarfs the UAE’s most recent budget for lobbying and public relations. For the past three years, entities from the Middle Eastern country have spent only around $3.7 million on more than a half-dozen contracts.

The contract’s scope of services includes polling, counseling the UAE’s Washington embassy, organizing visits to the country and developing websites, white papers and press releases promoting the UAE. In addition, the alliance will coordinate several advisory groups to work on business, cultural and security relations between America and the Gulf state.
“Abu Dhabi, as being the leader of the UAE, has traditionally taken a low profile in terms of diplomacy,” said Simon Henderson, director of Gulf and Energy Policy at the Washington Institute for Near East Policy. “This suggests that profile is changing.”

Mintz said the alliance will not engage in direct lobbying, although two top Washington firms represent the UAE. Alston & Bird LLP advises the UAE’s Ministry of Finance & Industry on trade issues, while Clark & Weinstock represents the UAE itself.

Separately, the U.S. Chamber of Commerce is launching a new U.S.-UAE business council in the next two months as a vehicle to promote bilateral trade and investment, according to Daeman Harris, director of Middle East and African affairs for the Chamber.

The is only the second council that the Chamber has formed with a Middle Eastern state, and Harris said this reflects the importance of the UAE as a Middle East trading partner for the U.S.

In 2006, U.S. exports to the UAE totaled nearly $12 billion, far exceeding the $1.5 billion in UAE imports to the U.S. “It’s our most significant export market in the Middle East,” Harris said.

Harris said the council will focus in particular on responding to the backlash in Washington over DPW. U.S. businesses want to ensure that UAE business groups still perceive the U.S. to be a good place to invest after last year’s debate, he noted.
Mintz said the new alliance backed by Abu Dhabi has already set up a website to tell its story, at www.uae-us.org.

He said the alliance plans to coordinate visits for several American interest groups, such as think tanks and trade associations, to the UAE over the next few months. In addition, Mintz’s group is working with the State Department on a breast cancer initiative in the UAE.

“The first thing to do is to do a better job of describing the breadth and depth of the relationship. The second point is to facilitate visits between the two,” said Mintz.