Ports saga 'could hurt US firms'

More than five million US workers are employed by foreign firms

A senior US government official has warned of serious economic consequences if the US sends the wrong signals about foreign investment in the country.

Treasury Secretary John Snow said US firms risked being excluded from other markets if the US gave the impression that foreign investment was unwelcome.

His comments follow the fierce row over a deal which would have given Dubai Ports World control over top US ports.

The firm agreed to cede control of the ports after huge political opposition.

Not in conflict

Mr Snow promised to work with Congress to more effectively scrutinise foreign investment deals, emphasising that national security concerns would remain paramount when considering such deals.

Clearly the US people stand to lose a great deal if investment stops flowing into the US from willing investors John Snow, US Treasury Secretary

However, he stressed that US security and economic interests should not be seen as being in conflict.

"Clearly the US people stand to lose a great deal if investment stops flowing into the US from willing investors," he said.

Some trade experts have warned that Dubai Ports World's decision to sell key US assets in the face of political opposition could deter other Middle Eastern firms from setting up operations in the US.

A senior banking official in the United Arab Emirates said on Monday that the outcome of Dubai Ports World saga could damage free trade.

The UAE and the US are currently trying to conclude a broad trade agreement, although talks have been put on hold.

If security concerns were allowed to stifle foreign investment in the US, Mr Snow warned, US firms could suffer elsewhere.

Closed doors

"It is vital that we avoid taking steps in the name of national security that instead are isolationist, having the effect of choking off vital investments in America," he said.

"We need to keep our doors open or risk having the doors of the world closed to us," he added.

The Bush administration originally supported the Dubai Ports World deal and threatened to veto any attempt by Congress to block it.

However, the White House has backed the firm's decision to hand the ports over to a "US entity" as a solution to what was seen as a growing political crisis.