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As President Bush confronts congressional leaders this week over the operation of U.S. port terminals by a Middle Eastern company, industry leaders are also asking if the deal puts port security technology at risk.
The operation of terminals at six major ports are at issue. They would be operated by DP World, the Dubai, United Arab Emirates-headquartered company buying Peninsular & Oriental Steam Navigation Co. for $6.8 billion. Terminals include New York and New Jersey ports, which participate in Department of Homeland Security (DHS) initiatives to secure maritime ports against terrorist attacks.
The debate has put the Bush administration squarely are on the defensive.
"The change of ownership at a terminal will not impact or affect the security of our nation's ports," said Leah Yoon, spokeswoman for the Customs and Border Protection, said. "Port employees go through extensive background and security checks."
But calls to block the sale raise questions about port security, experts said. And some industry watchers worry that high-tech devices and strategies, such as biometrics, radio frequency identification ((RFID) and radiation sensor technology, being installed at ports could fall into the wrong hands.
"We can't tell all Arab countries they can't invest in U.S. ports," said Didier Chenneveau, vice president of operations, Imaging & Printing Group in the Americas at Hewlett-Packard & Co. "All rules must apply to all terminal owners, even if that means installing technology to secure ports."
The highest threat for a terrorist attack being initiated lies on foreign soil, such as a port worker in China stuffing a container with a biological weapon, said Adrian Gonzalez, director, Logistics Executive Council and ARC Advisory Group.
"If there's to be a call-to-action by Congress, from a technology standpoint, it should be focused on making sure detection technology being used overseas is up to the task," Gonzalez said. "This would make global trade much more secure than blocking a business transaction here in the U.S."
Last April, the Government Accountability Office (GAO) published a report on the status of the Container Security Initiative (CSI), a program launched by U.S. Customs and Border Protection (CBP) in January 2002 to target and inspect high-risk cargo from foreign seaports before they depart to the U.S. The GAO reported about 35 percent of the shipments from CSI ports were not targeted or subjected to inspections due to staffing issues. The report also noted that CPB has limited assurance that inspections conducted are effective at detecting and identifying terrorist weapons of mass destruction because minimum technical requirements for detection equipment do not exist.
Still, less than 5 percent of cargo entering the U.S. today is inspected. Yet, funding for port security has increased by 700 percent since 9/11, said Customs and Border Protection's Yoon. "In fiscal year 2005, DHS spent about $1.6 billion on port security," she said. "Now, if that's not a commitment to securing our ports I don't know what is."
No one disputes the government's plans to increase spending to tighten U.S. borders. Homeland Security Secretary Michael Chertoff on Feb. 6 released President BushSMQ-8217-SMQs fiscal year 2007 budget request for the Department of Homeland (DHS) Security. It represents $42.7 billion in funding, up 6 percent from the previous year.
The budget requests $139 million for the Container Security Initiative (CSI) to pre-screen inbound cargo at more than 40 foreign ports and $55 million for Customs Trade Partnership Against Terrorism (C-TPAT), an international partnership with more than 7,000 businesses. This projects aims to enhance the security of organizations throughout the cargo supply-chain. "CSI and C-TPAT are critical in the prevention and deterrence of weapons of mass destruction and other dangerous or illegal materials," according to the report.
The budget also calls for enhanced maritime and transportation security that includes $30.3 million to fund the Cargo Advanced Automated Radiography Systems (CAARS) development initiative. The budget reports the Domestic Nuclear Detection Office will execute a program developing advanced active-imaging radiography systems for cargo inspection at the nationSMQ-8217-SMQs ports.
The decision should improve imaging systems designed to identify concealed nuclear materials. The report states the technology will eliminate the need for operator interpretation of radiographic images, and reduce overall inspection time of five minutes to approximately thirty seconds.
Today, the U.S. DHS funds and organizes projects involving shipments into the three major U.S. ports: Seattle-Tacoma, Los Angeles/Long Beach and New York/New Jersey.
Other ports are rolling out technology, too, to secure entry ways into the U.S. Although Customs and Border Patrol uses large-scale x-ray and gamma ray machines and radiation detection devices to pre-screen cargo coming into this country, experts wonder if selling terminals to the United Arab Emeritus will put port security is at risk.
The Committee on Foreign Investment (CIFIUS), made up of several U.S. agencies approved the deal. It's chaired by the Department of Treasury and includes USTR, and the Departments of Commerce, State, Defense, Justice and Homeland Security. "Technology has moved so fast that the law needs brushing up," said Helen Bentley, a former Maryland congresswoman and port consultant. "CIFIUS was created approximately 18 years ago. How can you follow procedures that old?"
When CIFIUS receives notice of a proposed acquisition, it has 30 days to decide whether to undertake an investigation. If an investigation is undertaken, CIFIUS must make its formal report to the President within 45 days. The President then has 15 days to render a decision.
Chinese, Singapore and United Kingdom companies own U.S. port terminals. So, is the growing criticism about the deal to transfer control of several major U.S. port terminals from a British company to one owned by the Dubai government warranted?
"I don't have an answer, but it raises several questions that should be investigated further," said Erik Michielsen, director of RFID and M2M at ABI Research. "For people to red flag this sale and make a split yes or no decision is inappropriate. We need to look more closely at the international company to better understand how they will manage and regulate security domestically."