Did we luck out by avoiding Dubai Ports?
Four years ago there was a political firestorm when a Dubai company proposed to take over a British port operator. That would have put Dubai Ports World in charge of services at 22 US cargo ports, included Boston, New York, Philadelphia, Houston, and New Orleans. Coast Guard officials raised the issue of security risks, and Congress voted to block the deal.
With controversy swirling, Dubai Ports sold American operations to a US company, and proceeded to close the rest of their deal.
Now Dubai is in the midst of an insolvency crisis. At the height of the real-estate boom, Dubai World invested heavily in residential and commercial real-estate, vying to become the main financial center of the Middle East. But the global financial downturn has hit high-end tourism and oil revenues especially hard, and Dubai World is seeking to restructure its debt, testing whether Islamic finance can protect property rights within a global framework.
So did the US dodge a bullet by squelching the Dubai Ports World deal? After all, having a bankrupt company manage our ports could be problematic. Except for one thing: which US company bought those port operations? AIG.
Douglas R. Tengdin, CFA
Chief Investment Officer
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