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INSIDE POLITICS

Ports company will delay takeover

Firm says it will work with White House, Congress on issues

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WASHINGTON (CNN) -- Dubai Ports World has agreed to postpone its plans to take over management of six U.S. ports after the proposal ignited harsh bipartisan criticism on Capitol Hill.

"We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure they are addressed to the benefit of all parties," said Ted Bilkey, the company's chief operating officer, in a statement released Thursday night.

According to the statement, DP World will delay taking over management of the U.S. ports "while it engages in further consultations with the Bush administration and, as appropriate, congressional leadership and relevant port authorities to address concerns over future security arrangements."

The announcement came on the heels of comments from the second in command at the Pentagon, who said Thursday that people who publicly oppose allowing a Middle Eastern company to take over management of some U.S. ports could be threatening national security.

Deputy Defense Secretary Gordon England told the Senate Armed Services Committee that blocking the deal could ostracize one of the United States' few Arab allies.

"The terrorists want our nation to become distrustful," England said. "They want us to become paranoid and isolationist, and my view is we cannot allow this to happen. It needs to be just the opposite." (Watch: Can the UAE be trusted?)

England joined several administration officials in defending their approval of a deal in which DP World, which is controlled by the government of the United Arab Emirates, would take over British-based P&O. The transaction reportedly is worth $6.8 billion.

Bipartisan opposition to the deal has been strong, with House and Senate leaders threatening to intervene.

Critics of the deal say they oppose putting management of the ports in the hands of a foreign-government-controlled company, especially a government that has had questionable links to terrorists in the past.

The White House said Thursday that President Bush might accept delaying the deal if it would appease Congress, but that an earlier promise to veto any legislation stalling the deal stands.

The merger -- which involves ports in New York, New Jersey, Pennsylvania, Maryland, Florida and Louisiana -- is scheduled to be completed March 2. (Where are the ports?)

Bush has vehemently defended the deal. But Thursday his top aide, Deputy Chief of Staff Karl Rove, told Fox News Radio that it also was important that Congress be comfortable with the merger before it's made final.

"What is important is that members of Congress have the time to get fully briefed on this," Rove said. "They're going to be coming back next week. We intend to work closely with them in order to give them a comfort level on this."

Rove also said the sale is far from complete.

"There are some hurdles, regulatory hurdles, that this still needs to go through on the British side as well that are going to be concluded next week. There's no requirement that it close, you know, immediately after that," he said.

The merger was given the OK by an administration panel called the Committee on Foreign Investments in the United States.

The committee is led by the Treasury Department but includes representatives of the State, Defense and Commerce departments, England told the committee, adding that intelligence agencies and the Homeland Security and Transportation departments also contributed to the review. (Watch how foreign investment in other industries also raises security concerns -- 1:56)

Also Thursday, Bush reiterated that the deal poses no security risk.

"This deal wouldn't go forward if we were concerned about the security for the United States of America," he told reporters during a Cabinet meeting.

Administration officials have repeatedly said that though DP World would manage the ports, the company would not handle security. U.S. agencies such as the Coast Guard and the Customs and Border Protection service will be in charge of that, as they are at all other ports, Bush said.

The Department of Homeland Security has released a letter saying DP World will maintain current security arrangements, keep as many U.S. managers in place as possible and take all steps to assist American law enforcement. (Watch what some longshoremen have to say about the deal -- 2:11)

DP World COO Bilkey added that U.S. authorities have been given the "sovereign right" to inspect all containers before they're loaded onto ships.

"Security now in our business is a marketing tool," he said. "The shipping companies want to know that you run a secure operation."

The deal raises red flags for some critics because some of the money that funded the September 11, 2001, terror attacks on New York and Washington was funneled through Dubai, which is a major Persian Gulf banking center, and two of the hijackers were from the UAE.

Dubai also was a midway point for the illegal sale of nuclear technology to North Korea, Iran and Libya by Pakistani scientist A.Q. Khan, and the UAE was one of three countries that recognized the Taliban as Afghanistan's legitimate rulers.

However, the UAE also is a key U.S. ally in the region, a frequent stop for U.S. warships and aircraft, and a supply depot for U.S. troops in Iraq.

Robert Joseph, the undersecretary of state for arms control and international security, said the UAE cut its ties to terrorists after September 11 and decided to "deepen and strengthen their relationship with the United States and to join us in fighting the war on terror."

Still, that has not been enough to douse the firestorm of criticism on Capitol Hill.

Republican leaders in both the House and Senate have demanded that Bush delay the deal so it can be scrutinized, and Sen. Carl Levin of Michigan, the ranking Democrat on the Armed Services Committee, accused the White House of taking "a casual approach" to its review.

Levin also said the president's threat to veto legislation that would interfere with the deal demonstrates that the White House is "out of touch" with the public's concerns.

"It also demonstrates presidential disdain for outside views in general and congressional views in particular," Levin said.

Sen. Hillary Clinton of New York, who is backing legislation to force a 45-day review of the deal, concurred with her colleague and questioned whether the committee on foreign investments considered security concerns when it approved the takeover.

Deputy Treasury Secretary Robert Kimmitt defended the committee's process, its deliberation and its consideration of all aspects of the merger, including security concerns.

"They were raised. They were resolved. We moved on," he said.

Congress' skepticism over the deal has elicited cries of bigotry.

"If it was an African country or a European country or an Asian country, it would not have been subjected to this kind of scrutiny," said Abdel Khaleq Abdullah, a political science professor at United Arab Emirates University. "But since this is just purely an Arab country, I think it just stopped some of the lawmakers who are making a big deal out of a purely legitimate business transaction."

At his Cabinet meeting Thursday, Bush also questioned whether a double standard was being applied to DP World and said it was "interesting" that there was no outcry about a British company managing the ports. (Watch Bush attempt to shoot down the deal's naysayers -- 2:27)

"It's really important that we not send mixed messages to allies," he said.

Foreign-owned companies operate many ports in the United States. For example, companies from China, Denmark, Japan, Singapore and Taiwan run docks in Los Angeles, California.

CNN's Jeanne Meserve contributed to this report.

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