Where Do We Go from Dubai?
The political circus surrounding the ports deal has left town, so now the media are starting to key in on protectionist economics and its consequences for the U.S. economy.

By Amy Menefee
Business & Media Institute
March 15, 2006

Now that the Dubai ports deal has been sidelined, some in the media are beginning to wake up and smell the protectionism.      “The Bush administration is making another argument that a lot of economists are also echoing,” ABC’s Elizabeth Vargas said on the March 10 “World News Tonight.” “The U.S. is hurting itself economically by scuttling this deal.”      But just a day earlier, the domestic political nuances and the president’s image were of more interest to “World News Tonight.” Vargas opened the March 9 report, “A high-stakes political battle between the president and the U.S. Congress is over tonight.” She added that “this comes after a furious protest among lawmakers who vowed to block the deal and an indignant defense of it by the president himself.” Correspondent Martha Raddatz rejoined, “Dubai Ports has basically thrown in the towel, giving opponents of the deal a victory and the White House some political cover.”

     Raddatz’s story followed, highlighting “a day of high political drama, closed White House meetings and deal-making.”

     It wasn’t until the dust had begun to settle the next day that the ABC team paused to consider the possible economic implications of rejecting foreign investment in the United States. David Muir kicked off his March 10 story saying, “The question economists are now asking after this doomed deal, what message has been sent to foreign investors who spend an enormous amount of money here in the U.S.?”

     Economists had been asking that question all along – but many in the media didn’t pay attention until after Dubai Ports World announced it would sell its port-running services to an American company.

     Some reports leading up to the Dubai pullout aired national security concerns, which were a vital part of the story. However, journalists were often too enthralled with the political workings of the debate to explore the trade issues at hand.

     On March 9, the day the deal died, the “CBS Evening News” looked into every nook and cranny of the politics, as anchor Bob Schieffer described how Republicans “howled in open rebellion,” President Bush “vowed to veto” and that “backstage maneuvering” followed. Schieffer later said, “regardless of the security aspect of this, there were red flags all over this thing. Why didn’t the White House see this coming?”

     The next day, the newscast answered that question – when it showed that foreign investment in the United States has been an everyday occurrence. Bob Orr told “Evening News” viewers on March 10 that “foreign firms now own more than 70 percent of U.S. [port] terminals and control the overwhelming majority of the cargo that arrives here.” That fact hadn’t been leading stories in the weeks of Dubai hoopla. Bianca Solorzano also delivered a report about other foreign holdings, including U.S. highways.

     In fact, foreign ownership of U.S. businesses is so common that another buyout took place during the same time frame, unnoticed by the broadcast media. A British company, National Grid, bought New York-based KeySpan and became America’s third-largest energy distributor. Print outlets including USA Today reported on the transaction, noting on February 28 that the foreign-owned company would distribute electricity and natural gas to KeySpan’s 2.6 million customers in the Northeast. The coverage did not raise questions about energy security.


Politics, not Economics, Reigns
     On February 22, NBC’s David Gregory focused his story on what the president knew and when he knew it. He led with: “The White House revealed today that the president only learned of the port deal after the fact from news reports, leaving him flatfooted as the rebellion within his own party grew.” It wasn’t until the end of his story that Gregory included the fact that “experts added today blocking this deal would hurt the U.S. financially” because foreign investors could choose not to buy from the United States in retaliation.

     ABC’s Raddatz was at it on February 21, concerning herself chiefly with journalists’ placement in the president’s agenda. She began her story by telling Charles Gibson that “the president made a highly unusual move today. He called reporters to the front of Air Force One to talk about this. He later spoke to cameras. It shows you how concerned the White House is about this growing opposition.” She went on to showcase politicians who disagreed with the president.

     And on CBS February 27 “Early Show,” Bill Plante described the 45-day security review encouraged by Dubai “a face-saving compromise for the president worked out with leaders in Congress.” When a “Republican-controlled House panel” voted against the deal, CBS anchor Susan McGinnis called it “a stinging election-year revolt against the White House” on the March 9 “CBS Morning News.”


Free Trade Benefits U.S. Economy
     There was the occasional story that included U.S. trade interests, such as ABC’s “World News Tonight” on February 24. Liz Marlantes’ story didn’t explain foreign investment in America, but it did allude to the fact that Dubai is a business center interested in doing business with the States.

     But the more serious economic consideration – whether rebuffing foreign investors is good policy – was outnumbered by stories about national security and political concerns. Or perhaps more accurately, politicians pontificating about national security.

     And that could lead the United States down a dangerous economic road, said Business & Media Institute Adviser Dr. Walter Williams. “People are going to rush to say, ‘This is security, too,’” to excuse protectionist policies, said Williams, a professor of economics at George Mason University. “And we’ll be poorer as a result.”

     Williams said Congress “should not be making the regulations more onerous than they already are, because we’ve done okay” with the existing processes for security screening. He said the media tend to “inflame passions among Americans.”

     “You would think by listening to the news that we’d have all Arabs running our ports,” Williams said. Fear of foreigners operating in the States isn’t anything new, he said. In the ’80s it was the Japanese who inspired economic fears when they bought an interest in Rockefeller Center. Williams said then he asked people what the Japanese would do – “they going to get mad and take it back to their country?”

     The Cato Institute’s Daniel Griswold called the congressional “stampede” against the ports deal “thoughtless and self-damaging.” “We’re going to be paying for this for some time to come,” said Griswold, director of trade policy studies.

     He said foreign investment is “a no-brainer for the U.S. economy” and that uncertainty about foreign companies’ standing in America could be damaging.

     U.S. subsidiaries of foreign-owned companies employ 5.3 million Americans, according to the Organization for International Investment (OFII). OFII is a business association representing many of these subsidiaries. Its membership includes Bayer Corporation, DaimlerChrysler, Fuji photo film, Sony, and Shell Oil.

     And as ABC’s David Muir reported on March 10, “Americans who work at U.S. subsidiaries of foreign companies make, on average, $60,500 a year. That’s 34 percent higher than what the average employee makes at U.S. companies.”