Should Corporations Handle the Ports?

| Wed Feb. 22, 2006 6:25 PM EST

Kevin Drum says he doesn't see why the sale of operations of six American ports to Dubai Ports World, a shipping company owned by the United Arab Emirates, is such a scandal. After all, the company wouldn't even be handling port security in those ports; the Coast Guard and U.S. Customs and Border Security would. Plus, over 30 percent of this country's port terminals are already operated by foreign companies anyway. And DPW already does this sort of thing in ports all over the world, and other countries seem okay with that. Okay, I'll buy all that.

But The Nation's John Nichols, meanwhile, asks an interesting question: Why are ports run by corporations at all? Shouldn't this sort of vital national infrastructure be operated and run by the government? Well, my understanding here is that ports are run by the government, mostly: port operations (i.e., moving ships in and out of terminals) are handled by corporations, true, but the regulatory apparatus (i.e., security, customs, licensing, etc.) is handled by the state, and all major U.S. ports are owned by public port authorities, which oversee development, construction, port policies, etc.

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Occasionally there's a move afoot to completely privatize the ports, but the current model remains. It's also the model in 90 percent of the world's major ports. There's one major exception, though: In 1983 the United Kingdom under Margaret Thatcher completely privatized the Associated British Ports. According to a World Bank report, the results were mixed, and "sale of either port land or regulatory duties and responsibilities to the private sector has a particularly dubious connection with improved port efficiency." It's also true that the fire sale decimated union representation in the docks (every port in Britain today is non-union), although the Bank seemed to see that as a good thing, naturally.

The World Bank study argues that partial privatization of ports—that is, the current U.S. model—is the way to go, with regulatory functions staying in the hands of the state and operations handled by private companies. (The land itself can be sold to corporations, but it doesn't seem like this has as big an effect on investment and development as one might think.)

According to the World Bank, in 1999 only 7 of the world's top 100 ports were completely state-owned anyway, mainly in Israel, Singapore, and South Africa, and these ports are all going to start partially privatizing soon enough. It's not clear that there's any significance one way or the other; privately-run ports aren't always that much more efficient, but it's also not clear that they're that much more unsafe. (They are almost certainly worse for unions, which in my mind is a major downside.) Still, I'm not sure Nichols has spotted the scandal he thinks he has. I'd be happy to hear otherwise, though.

Back to the UAE scandal. It also seems like the administration has broken the law by not doing a mandatory 45-day review of the DPW deal. It would be nice if we lived in an age where illegal activities on the part of the president actually mattered, but it doesn't seem so. Admittedly it's not entirely unpleasant watching the president get attacked by Republicans hopped up on the very war-on-terror hysteria he helped create. Although I'd rather we didn't have the hysteria in the first place, I guess.

I'd also be curious to know if there's anything to David Sirota's suggestion that the DPW deal was the Bush administration's way of buttering up the UAE for further free trade talks. And why is the president ready to use the first veto of his administration to protect the UAE? It seems shady enough that he doesn't really warrant a pass here.

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