Dubai firm to 'transfer' US ports

The six major ports involved include New York

Dubai Ports World (DPW) is to transfer its US ports business to a "US entity" to end a row over its takeover of P&O.

While DPW has not explicitly said it will sell the subsidiaries responsible for the ports, the White House is suggesting this will be the end result.

Arab-owned DPW made the move as members of both the House of Representatives and the Senate warned they would block the takeover over security concerns.

The White House welcomed DPW's offer saying it should defuse the standoff.

"It does provide a way forward and resolve the matter so we can continue working on other important priorities," White House spokesman Scott McClellan said.

The deal would have made DPW a top-three global port operator, with 51 terminals in 30 countries across five continents and an interest in more than 20 US ports.

'Preserve links'

News of the transfer of the six ports to a US entity was broken to the Senate by Senator John Warner, who read out a press release from DPW outlining its plans.

Those of us who feel strongly about this issue believe that the US part of the British company should have no connection to the United Arab Emirates or DP World Senator Charles Schumer Bush damaged by political iceberg Q&A: US row over ports Send us your reaction

"Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship, DP World has decided to transfer fully the US operation of P&O Operations North America to a United States entity," the statement said.

Justin Webb, the BBC's Washington correspondent, said it was unclear whether the deal would result in DPW forfeiting ownership of the ports in question, but if that was the case, the issue would be settled.

DPW's statement added that the decision was "based on an understanding that DP World will have time to affect the transfer in an orderly fashion and that DP World will not suffer economic loss".

Investment concerns

The move was given a cautious welcome as a "promising development" by Senator Charles Schumer, one of the main critics of the deal.

"But the devil's in the details," he added. "Those of us who feel strongly about this issue believe that the US part of the British company should have no connection to the United Arab Emirates or DP World."

This will send a chilling signal Daniel Griswold, Cato Institute

Fellow critic, Congressman Peter King added that while he welcomed the offer he and others were waiting to see the details of the proposal saying any firm that took over DPW's US interests "would have to be an American company with no links to DPW".

Shipping experts said there was no obvious candidate to buy the ports from DPW.

"All of the other terminals on both coasts are run by foreign-owned companies, so it is not clear who is going to take over," said Sidney Levine, a maritime economist.

And trade experts said the outcome will set a damaging precedent for other Middle Eastern companies planning to invest in the US.

"This will send a chilling signal," said Daniel Griswold, director of the Cato Institute's Centre for Trade Policy Studies.

"It is just assuming that if a company is from the Middle East it is de facto disqualified from investing in the United States, and I think that is a terrible message to send."