It is possible, in reviewing opinion polls, to pinpoint the incident that swung a divided US electorate firmly and permanently against President George W. Bush. That occurrence was not Hurricane Katrina—two weeks after the storm hit New Orleans, a CBS News poll found the country remained split on “Bush’s response,” with 44 percent approving of Bush’s job performance and 48 percent disapproving. Nor was it his admission in late 2005, after a fall filled with dire news, that the Iraq war was not proceeding according to plan. By the end of that year, nearly all the pollsters had his numbers in the mid-40s (after a dip into the high 30s in October). No, the event that struck the death blow to the president’s popularity—especially among Republicans—caused no one to die or lose a home. It was the approval of the sale of management rights at six US port facilities to DP World (formerly Dubai Ports World), a company backed by the government of the United Arab Emirate of Dubai.

This decision, in February 2006, sent Bush’s approval rating in the CBS poll tumbling from 42 percent earlier in January to 34 percent the ensuing March, from which point it never again edged above 40 percent, and indeed continued to fall, until the words “Nixonian levels” became common currency. And while February 2006 was also the month of the bombing of the ‘Askariyya shrine in Samarra’, which threw the Iraqi civil war into sharp relief, the event that stuck in Americans’ minds was the ports deal. A CBS poll showed 70 percent of the country against it. The deal dominated the news and editorial pages for a full week, crowding out contemporaneous events.

One can easily surmise that Bush lost the support of that last 10 percent because they bought the idea that Iraq, a country, was a threat because the majority of its population shares a religion with Osama bin Laden, a person. When these Americans were told that US ports were being “sold” to Arab Muslims, who they had come to know as the enemy, they were predictably alarmed. As Paul Krugman put it in the New York Times, “But more to the point, after years of systematically suggesting that Arabs who didn’t attack us are the same as Arabs who did, the administration can’t suddenly turn around and say, ‘But these are good Arabs.’”  It did not matter that a foreign company, the British firm Peninsular and Oriental Holdings, had previously managed the six US ports, or that DP World’s acquisitions were part of a worldwide management buyout of Peninsular and Oriental. Amidst the public frenzy, Congress threatened to block the entire sale, and DP World relented, eventually selling operations at the ports to the American International Group in December 2006. Not surprisingly, this move received a small fraction of the coverage of the initial sale. It is safe to say that many Americans are unsure if the port management rights were ever resold, and that many assume they were not.

Yet, and perhaps more importantly, the furious response to the DP World deal in the United States is also notable for showing that the world is not flat, even for places like Dubai, whose rulers very much wish it to be. If liberals justifiably complained of the geographic sleight of hand with which the Bush administration marketed the Iraq war, many liberals used the same device to disparage the ports deal. This sleight of hand draws upon an old perception of Arabs, particularly Gulf Arabs, as the “other” of international business culture.

From Darling to Pariah

Dubai was supposed to have made it. For years, indeed, Dubai was nearly the only place the Western media went for a positive, or at least an amusing, story about the Arab world. The Economist and Thomas Friedman raved about its courtship of international business, its accommodation of beach- and beer-consuming tourists (not to mention high-end shoppers) and its openness to global cosmopolitans (like Friedman). Wrote the New York Times columnist in 2001: “Dubai’s combo of low taxes and good governance is so much better than the old power centers of Damascus, Cairo or Baghdad.”  Added The Economist a year later, “The key to Dubai’s success is being what its neighbors are not: open-minded, openhearted and wide open for business.”

Ex-President Bill Clinton spoke in Dubai twice between 2001-2005, earning $300,000 for just one appearance in 2002—and joining business tycoons Jack Welch, Richard Branson, Donald Trump and Meg Whitman as superstars who have traveled there to preach the capitalist gospel. Microsoft, Canon, Dell and Siemens place enough trust in Dubai’s free trade zones, seaports, airports, tourist resorts and office developments that they have located their Middle Eastern headquarters, in several cases their only offices in the region, in the city-state. Renowned for an indoor ski slope, a manmade, palm tree-shaped archipelago and the world’s tallest building, Dubai was hard at work fashioning the ultimate neo-liberal market in the desert. Its rulers, with equal parts cleverness and tenacity, have willed their tiny principality into the status of high roller in the global casino, notwithstanding the nightmares of ecology, urban planning and labor exploitation emanating from rapid development. Dubai seemed to have escaped the otherness of its neighbors—or at least staked a claim to being the best translator of that otherness for the international business world.

Then came DP World’s takeover of Peninsular and Oriental. The bidding war between DP World and PSA International, which is backed by the government of Singapore, had been big news in Dubai for much of the latter half of 2005—though it went unmentioned in the US outside the shipping trade press. Locally, the acquisition was hailed as a move by the Dubai government to shift gears in its quest to invest its way into a post-oil future. As Mousa Murad, general manager of the DP World-managed port of Fujayra, put it, “This is a very strategic move underpinned by Dubai’s far-sighted vision. Dubai is looking at long-term economic growth because oil is finite, but trading will go on forever.”  No longer was it adequate to run Dubai like a business (the ruler, Sheikh Muhammad bin Rashid Al Maktoum, likes to refer to himself as chief executive officer); after the acquisition, Dubai would also use its managerial expertise to run businesses elsewhere.

But two days after the deal was signed, the uproar began—an uproar that is hard to imagine had PSA International won the bidding war. Democratic politicians, especially Sens. Hillary Clinton and Charles Schumer of New York and Robert Menendez of New Jersey, whose ports would be affected, hammered away at the Bush administration. The outcry was bipartisan. On February 17, Clinton, one eye on the White House and another on polls showing two thirds of Americans opposed to the deal, said she would introduce a bill to stop it; four days later, Senate Majority Leader Bill Frist (R-TN) promised to place the deal “on hold.” Appearing February 26 on FOX News Sunday, Democratic Sen. Evan Bayh of Indiana, decried “a choice between profits and protecting the American people,” while Sen. Lindsey Graham (R-SC) noted, “It’s unbelievably tone-deaf politically at this point in our history, four years after 9/11, to entertain the idea of turning port security over to a company based in the UAE, who avows to destroy Israel…. Most Americans are scratching their heads, wondering why this company, from this region, now.”

In the blogosphere, there was rare agreement between liberals and the right, with Darksyde, a front-page poster on Daily Kos, the most popular Democratic-leaning blog, saying, “the average American loses nothing if a bunch of mega-wealthy oil-rich theocratic thugs have to put their money into a golf course or condos, instead of our ports” and hawkish conservative Michelle Malkin pleading, “STOP THE PORT SELLOUT.” Despite the takeover’s broad unpopularity, Bush stood by Dubai, threatening to veto legislation for the first time during his presidency. In a weird twist, as noted in the New York Times, “Mr. Bush found himself burdened with the more nuanced argument,” that US allies in the Arab world would react poorly if DP World were blocked from managing US ports because it is owned by Arabs.  Overnight, Dubai had gone from the darling of the world business elite to a pariah in Middle America.

Racism and Geographic Sleight of Hand

This reputational about-face represents an instance of geographic sleight of hand, by which proximity comes to equal association, so that an all-encompassing culpability emerges, in which nothing is too distant to be irrelevant and nothing too close to be dismissed. The overall picture comes to conform to prior prejudices, even if that picture, on closer inspection, turns out to be from everywhere and nowhere in particular. Since the publication of Edward Said’s Orientalism (1978), it has become almost banal to note that that the entire Middle East is coded as being equally exotic and uniformly other. Nonetheless, the DP World case so clearly illustrates the creation and manipulation of a field of culpability that it bears close examination. Americans who “knew” something about someplace in the Middle East transposed their “knowledge” upon Dubai, and, over time, their half-connected utterances came to represent the truth, as popularly understood.

An oft-deployed tactic in the unfolding fracas was to bring well-known bogeyman Saudi Arabia into the discussion through the back door, establishing that Dubai is a wealthy country and then dropping allegations of spreading extremist Islam abroad and repressing personal freedom at home, until the emirate of Al Maktoum and the Saudi kingdom become the same place. Witness this passage from a New York Post editorial:

Dubai Ports, after all, is owned by the United Arab Emirates, whose banking system—considered the commercial center of the Arab world—provided most of the cash for the 9/11 hijackers. Indeed, much of the operational planning for the World Trade Center attacks took place inside the UAE. And while the Bush folks now consider the UAE a major ally in the war against terror, the Treasury Department has been stonewalled by the emirates, and other Arab countries, in trying to track Osama bin Laden’s bank accounts. The new leader of Dubai, one of the seven small countries that make up the UAE, has said all the right things about fighting radical Islam since 9/11. But this remains very much an Islamist nation, where preaching any religion other than Islam is prohibited.

This passage is misleading at best, and frequently downright wrong. DP World is owned by the government of the emirate of Dubai, not the loose federal government of the United Arab Emirates. In fact, the federal government’s impact on Dubai’s dealings is limited—to the degree that, even though the federal government does not recognize Israel, the largest Israeli shipping firm, Zim Integrated Shipping Services, penned a letter to Sen. Clinton declaring itself “proud to be associated with DP World.”  Dubai is not an “Islamist nation,” but a monarchical city-state where, unlike Saudi Arabia, there are Catholic churches—one of which accommodates 10,000 people—and Hindu temples, the land for which was donated by the ruling family as a gift to the emirate’s South Asian guest workers who are not Muslim. (In total, guest workers make up at least 80 percent of the population.) Hamburg, Germany was the site of the planning of the September 11, 2001 attacks. Several of the hijackers did pass through Dubai, but as the city is a regional hub, that is hardly surprising. It is also a banking hub, like London and Zurich, through which al-Qaeda money also flowed.

This type of conflation was less common, however, than simple traffic in fears of contagion—where being Arab was to have the taint of terrorism. An op-ed by Frank Gaffney, Jr. in the small neo-conservative daily New York Sun provided the choice quote: “At the risk of being politically incorrect, the proposed new management will also complicate the job of assuring that the personnel working in these ports pose no threat to their operations—or to the rest of us. To the extent that we must remain particularly vigilant about young male Arab nationals as potential terrorists, it makes no sense to provide legitimate grounds for such individuals to be in and around some of this country’s most important strategic assets.” He went on to note: “Entrusting information about key US ports—including, presumably, government-approved plans for securing them, to say nothing of the responsibility for controlling physical access to these facilities, to a country known to have been penetrated by terrorists is not just irresponsible. It is recklessly so.”  By that logic, of course, considering that the hijackers lived variously in New Jersey, Florida and California, could American companies be trusted with information about US ports?

Lest one think that only the far right engaged in such theatrics, Markos Moulitsas, founder of Daily Kos, also decried the sale of the ports to the “supremely undemocratic (and terrorist-sympathizing) UAE,” and approvingly cited a Washington Post article based on an interview with Joseph King, the former head of anti-terrorism in the customs unit of the Treasury Department. King claimed that:

…a company the size of Dubai Ports World would be able to get hundreds of visas to relocate managers and other employees to the United States. Using appeals to Muslim solidarity or threats of violence, al-Qaeda operatives could force low-level managers to provide some of those visas to al-Qaeda sympathizers…. Dubai Ports World could also offer a simple conduit for wire transfers to terrorist operatives in the Middle East. Large wire transfers from individuals would quickly attract federal scrutiny, but such transfers, buried in the dozens of wire transfers a day from Dubai Ports World’s operations in the United States to the Middle East would go undetected.

Here the former Treasury official makes several unwarranted assumptions: that the famously well-managed DP World would not audit its own activity; that the US government would not audit the company’s activity; and, most notably, that DP World is staffed by Arabs and/or Muslims at all. At the time of the transaction, all of the company’s department heads had names like Moore, Smith, Dalton and Narayan. And, like most companies in Dubai, the bulk of the company’s laborers hail from South Asia or the Philippines, and thus are not Arab, and likely not Muslim either. The Washington Post and Moulitsas purveyed a classic racist formulation, where the figure of the Arab is ideologically useful, with the result being that real Arabs (or real non-Arabs who work for an Arab company) cannot be trusted.

The Wrong Kind of Businessmen

The DP World saga is only the latest scripting of Arabs, and Gulf Arabs in specific, as the “other” of international business. Ironically, the content of the “otherness” has shifted over the years. In the 1990s, Arab countries received demerits from the likes of Friedman for their lack of engagement with the global economy—indeed it was the Arab world that typified the “slow world” in his 1999 bestseller The Lexus and the Olive Tree. In the mid-1970s and early 1980s, however, Arabs were condemned for their supposed over-engagement therein, to the point that they were portrayed as rash, cold-hearted financial puppet masters whose “oil weapon” had unleashed a worldwide crisis in 1973. This portrayal resonated with the old Orientalist image of the devious Arab trader who preyed without remorse on customers’ lack of knowledge to attain maximum profit.

Tim Jon Semmerling has done an excellent study of the pervasive economic fear of Arabs in his book, “Evil” Arabs in American Popular Film (2006). An example is Semmerling’s treatment of the 1981 movie Rollover, starring Jane Fonda and Kris Kristofferson, in which a financial power couple uncover an Arab conspiracy to move assets out of dollars into gold, causing global depression—because they can. As Semmerling notes, the movie was made at a time when the Gulf states had increased economic clout amidst recession in much of the world, something which “seemed to flout the certainty and feel-good American self-image of liberal developmentalist and benevolent supremacy.”  Semmerling goes on to portray vividly how Arabia is depicted in the film: “The Oriental sounds of a flute, the abutting tents of the market and the types of commodities for sale make economic life in Arabia seem makeshift, ancient, chaotic, unsophisticated and simplistic. There are no scenes of the sophisticated and capital-intensive oil drilling stations, refineries and shipping ports that generate the wealth the Western heroes are wishing to tap. The seemingly simple and immature Arab economy makes the power of Arab wealth appear unfair. The film pictures the Arabs as having done little work or made little effort to deserve such power.”

Semmerling’s analysis points to the highly gendered notion, first noted in Orientalism, that Arabs are to be receivers, not active agents, in global economic processes. Time and again, there are calls for Arabs to be open to American pop culture, religion and investment (and invest their capital in international companies)—but rarely for Arab firms to be multinationals in their own right. This double standard is all too apparent in the US and European jitters about the increasingly publicized investments of sovereign wealth funds, and those in the Gulf, rather than those in Alberta or Norway. Abu Dhabi Investment Authority—the world’s largest sovereign wealth fund—in 2008 alone acquired a major stake in Citibank and the Chrysler Building in New York; in recent years, Dubai government-backed entities have acquired (and sometimes resold at a profit) assets as varied as Swedish exchange manager OMX, the London Eye, the British hotel chain Travelodge, Barney’s department stores and Madame Tussaud’s wax museum. Indeed, fearing a backlash, many of the sovereign wealth funds acquire minority or silent partner stakes. Discretion is particularly urgent for Gulf funds, because for many in the West (and, actually, the Arab world as well) the manner in which the Gulf states got their money is still seen as a kind of original sin that taints all they touch. Investments that would not raise an eyebrow outside the business press if made by a hedge fund or a private equity firm receive tremendous attention if a sovereign wealth fund (especially one controlled by geologically “lucky” Arabs) gets involved.

It is not just the movies like Rollover that give the impression that Arabs are the wrong kind of businessmen. A series of books has appeared to help English speakers do business (and live) in the Gulf. Some of these books, such as Don’t They Know It’s Friday? (1998), authored by Jeremy Williams, founder of the Handshaikh consultancy, are considered by nationals to be sensitive—despite containing lines such as “most Gulf Arabs learn to drive at an early age and the majority develop good physical skills at the controls although the concept of lane discipline still has some room for improvement.”  Others, like Jehad al-Omari’s The Arab Way (2003), even try to provide touchstones of other non-English speaking business cultures with which readers might be familiar:

How Arabs run their meetings is not unique to them. There are certainly parallels with other southern Mediterranean and Latin American cultures. The North European and particular Germanic rush to structure that is also apparent in North America is not necessarily true for the Italians, Spanish, and I dare say, the French. Somebody once called it the “olive oil” factor.

But despite their practicality, including the tips on dealing with hierarchy and differing ideas of timeliness, these manuals reinforce the idea of a culture that does not comprehend business as it is “normally” done.

And this perception of otherness uniformly attached to Arabs is largely why Dubai has consciously made itself into a place of such extremes. Dubai builds the biggest of everything, and has the loosest customs and seemingly the littlest of concern for environmental damage, because its rulers feel, rightly or wrongly, that they have to. Otherwise, no one, from tourists to investors, would give Dubai a second thought. Indeed, Manama, the capital of Bahrain, has been home to the ultimate in finance capital, an offshore banking industry, for decades, yet its existence is little noted in the US media, because unlike Dubai, it has no indoor ski slope. The rulers of Dubai have thoroughly bought into the idea that because hierarchical networks of world cities will dominate the future, to be unnoticed and unconnected would spell disaster. As Sheikh Muhammad notes on his personal website: “During the twentieth century, we have seen the world divided, at one time, between advanced countries and developing countries, and, at another time, between the rich countries of the North and the poor countries of the South. It appears that the twenty-first-century divide will be between communities with access to information and those without.” For Dubai to become part of those networks of information, Dubai needs to reach the networks’ gatekeepers. The titans of capital who locate corporate headquarters and greenlight investment projects are people, after all, people who are swayed not just by numbers on spreadsheets, but by the same images and prejudices that sway us all.  Negative views of Arab business, tales of state-controlled economies and insecure territories, are so deeply rooted that it makes sense grand gestures are necessary to convince people otherwise.

Dubai should in no way be excused for its many (though not especially rare) faults in the areas of environmental and labor rights protection. The point is simply that a country’s history, and the history of its perception by outsiders, cannot be magically swept away by open markets, gleaming infrastructure and lax taxation. As the case of Dubai shows, we live in the opposite of Friedman’s flat world. The profound realignment of good and bad in the global economy has little to do with market fundamentals and much to do with cultural fear. And although other countries, like New Zealand and Sweden, balked at attempts at investments from Dubai, the United States is still leading the way in use of this racist geographic sleight of hand. Nowhere else in the world was one peep raised about DP World taking over port management. On most of the US political spectrum, neither DP World’s management efficiency nor its labor practices mattered—the transgression of being Arab trumped all.

How to cite this article:

Benjamin Smith "The Great Ports Panic of 2006," Middle East Report 248 (Fall 2008).
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