President Bush Concerned About Broader Message On Port Deal

President Bush said Friday he was concerned about the "broader message" that the failed port operation deal with a United Arab Emirates company sends to other Arab allies in the U.S. war on terrorism.

"In order to win the war on terror, we've got to strengthen our relationships and friendships with moderate Arab countries in the Middle East," Bush told a meeting of the National Newspaper Association in Washington.

"The UAE is a committed ally in the war on terror. They are a key partner for our military in a critical region."

After weeks of political debate, the UAE-owned DP World said Thursday it would transfer its operations of American ports to a U.S. "entity."

The proposal to have an Arab state-owned company manage operations at six U.S. ports opened a rift between Bush and GOP allies that touched on issues such as national security, the president's plunging approval ratings and upcoming congressional elections.

The president said Friday that he would not pull back from relations with the UAE.

"Outside of our own country, Dubai [the emirate where DP World is based] services more of our military ships than any country in the world," Bush said.

"We're sharing intelligence so we can hunt down the terrorists. ... I'm committed to strengthening our relationship with the UAE and explaining why it's important to Congress and the American people."

Bush made brief remarks and then took questions from the newspaper editors' group, commenting on a range of domestic issues, including education, federal health care and government aid to victims of Hurricane Katrina.

"It's very important for Congress to make sure that the $4.2 billion, I think it was, request in the supplemental go to Louisiana, as I said down in New Orleans the other day," Bush said, reapplying pressure on lawmakers to limit access to the money to Louisiana homeowners who lost homes in the storm.

Deal dies on Capitol Hill

Republicans in Congress said they had received overwhelmingly negative comments from constituents about the DP World ports deal, while Bush had said any effort to stall or kill it would strain ties with a vital Arab ally.

On Wednesday, the House Appropriations Committee voted 62-2 to thwart the deal by inserting an amendment into a $68 billion emergency supplemental funding bill for military actions in Iraq and Afghanistan.

The controversy came to a head Thursday when congressional leaders reportedly told Bush that the ports deal was dead on Capitol Hill.

House and Senate leaders told the president they would pass measures to block the deal by veto-proof majorities, sources said. Bush had threatened to veto any legislation that stopped the deal.

Details of transaction not worked out

DP World's announcement did not specify which U.S. "entity" would be involved in its handover of the ports, but a source told CNN that the White House believes the firm's American assets would be sold to a U.S. company.

A source involved in talks between the White House, Congress and DP World said the exact meaning of the UAE firm's statement is unclear, in part because details of the transaction have not been worked out.

"The next steps are very hard to predict at this point, either in terms of who they'll actually sell to and in terms of what it means for U.S. relations in the region," the source said.

White House spokesman Scott McClellan said Thursday that the move was solely the company's decision, adding that it "reflects their understanding of the importance of the broader relationship and of continuing to work to strengthen it."

Treasury Department spokesman Tony Fratto said DP World's willingness to work with Congress and address its concerns was appreciated.

"We expect DPW to provide further specific details on the company's decision and its intentions going forward," Fratto said. "Treasury staff are communicating with the company on these details."

Treasury Secretary John Snow is chairman of the Committee on Financial Investment in the United States, which initially approved the transfer of British-owned P&O assets to DP World.

Democrats cautious

Because of sparse information about the transaction, Senate Democrats reacted cautiously to the company's announcement and continued to press for a Senate vote that would kill the deal.

"If the U.S. operations are fully independent in every way, that could indeed be promising," said Sen. Charles Schumer, D-New York. "If, on the other hand, there is still ultimate control exercised by DP World, I don't think our goals would be accomplished, and obviously, we'll need to study this agreement carefully."