MANAGING U.S. PORTS BY ARABS 

By Haskel (Ben) Benishay*

          All of a sudden a report of what appears to be a new event enter the consciousness of Americans’ mind. The major outline of the newly reported event in the average American’s mind: Arabs will manage the main seaports of the U.S. This news comes at a time when the U.S. is fighting global terrorism perpetrated by extreme Islamists, many of them Arabs. It seems to American voters, Republican or Democrat alike, that allowing Arabs to manage American ports makes no security sense within the framework of fighting Islamic terrorism. Whether this point of view is logical within the context of expert opinion is not a major determinant of typical American response. The political fact is: the response is highly negative, and politicians must take it into account if they wish to survive.

          There are three ways to view what happened. The first is to view it on purely economic-financial grounds. The second is to view it on grounds of national security. The third is to view it on political grounds and principle of insurance.

The press reports that heads of various departments in the Bush administration told president Bush that under the deal, a United Arab Emirates Dubai firm, will manage several key American ports. The deal is judged good on economic and financial grounds and riskless on grounds of national security. The U.S. press reports that some “experts,” (unnamed), also agree that it is a good deal on both counts. However, opinions of various heads of department in the Bush administration and those of so-called “experts” are not sufficient to render the deal wholly riskless. Both groups can say, based on auditing and analysis, that the deal is economically-financially a good deal, i.e., cheaper than other potential deals. But to conclude that it is wholly riskless is only opinion not based on deep and searching analysis. There is no wholly riskless future event. Some risk, however small, always exists. These department heads and “experts” express their assessments, which are not conclusion based on searching and thorough analysis. Their assessments are essentially subjective opinions.

The third way is to judge the deal on insurance and political grounds. It is interesting to note that judging the deal on insurance grounds can be buttressed by logic. Thus “political” does not necessarily mean devoid of logic.

          The majority of Americans will judge the Dubai news as equivalent to entrusting the management of U.S. ports to Arabs. Consequently they will react to it negatively. Riskless? In reality they will view it as risky. But judging it as risky is not only an emotional reaction. Americans can also buttress their negative reaction on logical grounds. They may argue that there is a small probability, however small, say 1 or 2 percent, that an Arab terrorist from Dubai or another Arab country, by hook, crook, or trick, will get access to the Dubai management team, or the Dubai management system of ports. Gaining such access will wreak havoc on one or more of U.S. ports and port cities. The insurance against such a possibility is to reject the deal altogether. The insurance principle makes sense in general and in this case in particular. Reject the deal! It is a logical thing to do.

It has been said that the average American does not like the Dubai management of U.S. ports because of purely emotional non-rational reasons. However, the rejection is indeed based in rationality. Two of the hijackers of the 2001 9/11 successful attack of the New York City towers and the Pentagon were Arabs from Dubai. The average American perceives the yielding of port management to Arabs as bad. But, in fact, implicit in what has been judged to be emotional resistance is a logical insurance-based reason.

Most Americans usually insure against damaging events which have very low probability of occurring, and which when they do occur inflict an unusually large amount of damage. Objecting to the ports being run by Arabs is a form of an insurance against catastrophic damaging events.

There should be also a purely political element involved in rejecting the port management by Arabs. Congressmen, senators, and the president must pay heed to the sentiments of their constituents, right or wrong, or else congressmen and senators may not be reelected. And if the president does not pay heed to voters’ sentiments, the president or the president’s party may be rejected in the next national election. Thus, it is a good idea to reject the Dubai deal.

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          *H. Benishay is professor emeritus at the Kellogg Graduate School of Management of Northwestern University and president of ABEMINFO.