Post by ferryfast admin on Feb 26, 2006 12:09:41 GMT -5
TRIBUNE PROFILE: SHEIK MOHAMMED BIN RASHID AL-MAKTOUM
The sheik behind the port deal
Economists, international experts say the backlash is rooted in anxiety that the U.S. is losing its top spot in the global economy, not in fear of terrorism.
By Susan Chandler and Stephen Franklin, Tribune staff reporters. Tribune reporters Ameet Sachdev, Thomas A. Corfman, Becky Yerak, James P. Miller and Mike Hughlett, and The Associated Press contribute
CHICAGO TRIBUNE
www.chicagotribune.com/
February 26, 2006
He is an acclaimed poet. He is a world-class equestrian who favors endurance racing. He is an ardent believer in economic development from a country with close U.S. ties, a man who has built amazing hotels, shopping centers and office towers, transforming his tiny city-state into an international finance center and playground for jet-setters.
With his existing investments in U.S. hotels, Sun Belt apartments and health-care facilities, Dubai ruler Sheik Mohammed bin Rashid al-Maktoum doesn't seem like the kind of foreign investor who would create a political uproar on Capitol Hill. But a proposed $6.8 billion deal by a state-owned Dubai company to take over operations at six U.S. ports has done exactly that.
Those who oppose the deal say they are concerned about U.S. security.
In fact, the Homeland Security Department objected at first to the deal and relented only when the company, Dubai Ports World, later agreed to security restrictions.
And on Saturday, congressional leaders, the company and Bush administration officials appeared to move closer to a compromise intended to derail plans by Republicans and Democrats for legislation this week that would force a new investigation of security issues relating to the deal.
But the backlash can be connected to a deeper fear that extends far beyond terrorism, economists and international experts say.
The anxiety is that America is losing its place at the forefront of the global economy. We're suffering, experts say, from a bad case of economic insecurity that is rooted in America's long-standing inclination toward isolationism.
"It's a reaction to globalization. It's almost the fear that foreigners in general are going to take over the American economy," said Carl Steidtmann, chief economist with Deloitte Research. "You see the same kind of reaction to outsourcing, the same visceral response that we are losing jobs to foreign countries and overseas companies."
The same anxieties were at work when members of Congress, security experts and others became alarmed last year when a Chinese firm attempted to acquire oil refiner Unocal, hardly one of the country's strategic assets. A similar backlash occurred when another Chinese company tried to acquire struggling Maytag Corp. Neither deal went through.
In the 1980s, it was Japan that seemed to be beating the U.S. at its own capitalist game. Back then, Japanese investors were snapping up trophy skyscrapers, while Japanese carmakers were grabbing big chunks of market share from the Big Three.
Despite the recurrent anxiety attacks over foreign investment, the U.S. economy is increasingly intertwined with the rest of the globe, economists say, and there is no going back.
"A lot is said about the offshoring of American jobs, but there are almost an equal number of Americans working for foreign companies here as there are foreigners working for American companies overseas," said Carl Tannenbaum, chief economist with LaSalle Bank. "The Saudis invest a lot in U.S. Treasury securities. Without them, our interest rates would be a lot higher."
The controversy
At the center of the current controversy is the takeover by Dubai Ports World of Peninsular & Oriental Steam Navigation Co., the British company that operates terminals at major U.S. ports, including Baltimore, New York and Miami.
The deal has been attacked on Capitol Hill as a security risk and an outsourcing of American infrastructure, but it has been defended by President Bush, who says the administration has thoroughly vetted the prospective new owners.
On Thursday, Dubai Ports World said it was willing to delay the U.S. portion of the acquisition.
No matter the outcome, the flap is likely to tarnish this country's reputation in the Muslim world as a safe place to invest, one international expert says.
"Muslim investment is bigger than Arab investment. If you're Muslim, you start getting the message that this is not a place that welcomes my investment," said Adil Najam, an associate professor of international negotiation and diplomacy at the Fletcher School at Tufts University in Massachusetts.
"If you're an Arab with $10million of disposable income, maybe you think, `Let me go to India, a place where I'm welcome, where I don't feel this bigoted sense of hostility.'"
Henry Paulson Jr., chief executive of investment banking giant Goldman Sachs, agreed. "This latest flap is very regrettable. There's a protectionist sentiment in Washington," he said Thursday at an Executives' Club of Chicago lunch panel.
Free trade and open markets have benefited the U.S. more than any country in the world, Paulson said.
The oil boom of the last few years has been a money gusher for oil-rich Arab nations. That money has been invested in real estate and equity markets worldwide, which also have soared. Estimates of private wealth in the gulf alone have exceeded $1 trillion.
A large percentage of that is invested outside the United States, with Europe and Asia being favorite spots. The common thinking is that a lot of Arab capital left the U.S. after the Sept. 11 attacks, as Arab investors worried about having their assets frozen or were turned off by negative connections drawn between Islam and terrorism.
In the last decade, some Arab investors have turned to hedge funds or private equities funds, which afford them privacy, says Saed Saffari, a California investment adviser. "For large multibillion-dollar investors, the boundaries of the countries are not important. It's the investment possibilities."
Direct investment in the U.S. by Arab countries is easier to pin down because the government tracks it. The Middle East represents a small percentage of the overall inflow of capital.
Of the nearly $96 billion invested by other countries here in 2004, only one-half of 1 percent -- or $508 million -- came from the Middle East. Of that, Israel invested $316 million and Saudi Arabia only $30 million.
In contrast, the United Arab Emirates, which includes Dubai, showed a U.S. capital outflow of $21 million. That means that UAE companies based here loaned their parent firms more money than they received, said Thomas Anderson, a Bureau of Economic Analysis spokesman.
The biggest investor in the U.S., by far, was Europe with $41.4 billion in capital inflows, followed by Canada with $31.8billion.
The most popular U.S. industries for foreign investment continue to be finance, insurance and banking, the government reported. Manufacturing investments rebounded to $17.2billion in 2004, up from $10.8 billion in 2003.
In Chicago, the impact of foreign investment is extensive but not very controversial--so far. Chicago-based LaSalle Bank Corp. has been a unit of Netherlands-based ABN AMRO Bank N.V. since the 1970s. Harris Bank is owned by Canadians.
German and Australian investors have been active in Chicago's real estate market, purchasing everything from high-profile office towers on Wacker Drive to the Gap flagship store site on the Magnificent Mile.
Middle Eastern investors are harder to find, but they are here. The largest shareholder in Chicago-based Hartmarx Corp. is Abdullah Taha Bakhsh, a member of the Saudi royal family who came to the rescue of the struggling apparel-maker in the early 1990s.
Last summer, the investment arm of a Bahrain bank made a $60 million investment in the Elysian, a Gold Coast condominium and hotel project now under construction at 11 E. Walton St.
Earlier this month, a member of the Dubai Investment Group purchased the Best Western Inn of Chicago, a vintage hotel in Streeterville, for $40 million.
It's ironic, say those who know him, that al-Maktoum should be at the center of national debate over the advisability of Arab ownership of U.S. assets.
Although the sheik often appears in public dressed in the most regal of long, flowing robes, "he is as Westernized as they come. He is a businessman," said DePaul University law school professor M. Cherif Bassiouni, who has met with him several times.
Bassiouni was struck by al-Maktoum's inclination to launch immediately into a discussion about one of the many giant projects under way in Dubai. "You almost get the feeling you are dealing with an entrepreneur," Bassiouni said.
In Kentucky, Dubai's royal family is known for reshaping the thoroughbred racing industry. The family started going to Lexington in 1980. At his first yearling auction, al-Maktoum spent $3.6 million on racehorses, a spree that was greeted with suspicion.
But skepticism quickly turned to jubilation as the Maktoums drove the thoroughbred market to unprecedented heights in the 1980s. In the last 25 years, the family has reportedly spent more than $1 billion on Kentucky thoroughbred sales.
Each year, their arrival is marked by the rare sight of commercial jets with Arabic script landing at the small airport across the street from the Keeneland Racetrack.
Despite their flashy entrance, the Maktoums keep a low profile, said Phil Scott, a longtime friend and legal counsel to the family's eldest brother, who died in January. "They go to the sales and they look at the horses. That's their holiday."
Along with horses, the Maktoums have accumulated land in central Kentucky. The royal family owns several horse farms totaling nearly 6,000 acres, Scott said.
Rapid advances in the desert
Back home in Dubai, the family has transformed its sandy emirate into a sparkling, high-tech oasis that attracts tourists from around the world.
After al-Maktoum was named Dubai's crown prince in 1995, he stated his philosophy: "I don't know if I am a good leader, but I am a leader. And I have a vision. I look to the future, 20, 30 years. I learned that from my father, Sheik Rashid. ... I follow his example. He would rise early and go alone to watch what was happening on each of his projects. I do the same. I watch. I read faces. I take decisions and I move fast. Full throttle."
Dubai has used its petrodollars to make money because, unlike its fellow sheikdoms, it doesn't have a lot of oil left.
In the late 1990s, Dubai launched an ambitious plan to expand its airport and international carrier, Emirates Air, now the largest airline in the Arab world. Just last week, a consortium of Dubai companies announced plans to launch an aerospace manufacturing and service company that would do everything from building airports to financing aircraft purchases.
Dubai also made a push to construct a world-class high-tech infrastructure that would attract "New Economy" investments. Within a year, more than 100 IT companies had been granted licenses to operate within Dubai Internet City, including Microsoft, Oracle and Compaq.
"People used to say they were walking on water, but it is quite remarkable what's happened there," said Samer Khanachet, the president of United Gulf Management, a Kuwaiti-owned financial advice firm with an office in Boston. "One sector at a time, they are positioning themselves as world leaders."
Dubai is now the home of the world's largest shopping mall, and the world's only seven-star hotel, the Burj al Arab, where a two-room suite with a sea view goes for $3,300 a night. One day soon, it also may boast the world's tallest office building.
For those who want to step out of Dubai's sweltering temperatures, there is an indoor ski resort with a mountain-size downhill ski run. For equestrians, there is the Dubai World Cup, the world's richest horse race.
Earlier this month, golf lovers were treated to a dramatic playoff between Tiger Woods and defending champion Ernie Els at the Dubai Desert Classic, a tournament that attracted more than 47,000 visitors to the Emirates Golf Club. Woods won.
Two things that Dubai is short on are people and land.
The natives of Dubai account for only 10 percent to 30 percent of the emirate's population, according to some estimates. The rest is made up of foreign workers, many of whom toil in the construction industry, and expatriate managers brought in from developed countries.
To solve the second problem, Dubai is building artificial islands offshore.
One such development is Palm Island, a giant resort covering three islands that are divided into the shape of giant fronds and a trunk when viewed from the air. The palm is surrounded by a crescent-shaped barrier reef.
"Their philosophy is only the best of the best," said Ted Karasik, a gulf expert at the RAND Corp. in Santa Monica, Calif.
Another thing Dubai is known for is religious tolerance. Non-Muslims are allowed to practice their religions, and alcohol is available at the hotels that serve foreigners, an accommodation not found in some other gulf countries.
Dubai has its eye on more than travel and resorts.
In the Arab world, its stock exchange is considered one of the most up-to-date and friendly to investors. Its free-trade zones welcome foreign businesses, and its recently created gold and diamond exchanges were launched to compete in world commodity markets.
Al-Maktoum "would like to turn his country into a type of Switzerland, bringing in lots of banks and investors," said DePaul's Bassiouni.
"He knows that the oil resources may last only 20 to 30 years and he is preparing for the aftermath."
----------
schandler@tribune.com
sfranklin@tribune.com
@@@@@@@@@@@@
FERRYFAST RESEARCH:
DUBAI GOVERNMENT
www.dubai.ae/index.en.htm
The sheik behind the port deal
Economists, international experts say the backlash is rooted in anxiety that the U.S. is losing its top spot in the global economy, not in fear of terrorism.
By Susan Chandler and Stephen Franklin, Tribune staff reporters. Tribune reporters Ameet Sachdev, Thomas A. Corfman, Becky Yerak, James P. Miller and Mike Hughlett, and The Associated Press contribute
CHICAGO TRIBUNE
www.chicagotribune.com/
February 26, 2006
He is an acclaimed poet. He is a world-class equestrian who favors endurance racing. He is an ardent believer in economic development from a country with close U.S. ties, a man who has built amazing hotels, shopping centers and office towers, transforming his tiny city-state into an international finance center and playground for jet-setters.
With his existing investments in U.S. hotels, Sun Belt apartments and health-care facilities, Dubai ruler Sheik Mohammed bin Rashid al-Maktoum doesn't seem like the kind of foreign investor who would create a political uproar on Capitol Hill. But a proposed $6.8 billion deal by a state-owned Dubai company to take over operations at six U.S. ports has done exactly that.
Those who oppose the deal say they are concerned about U.S. security.
In fact, the Homeland Security Department objected at first to the deal and relented only when the company, Dubai Ports World, later agreed to security restrictions.
And on Saturday, congressional leaders, the company and Bush administration officials appeared to move closer to a compromise intended to derail plans by Republicans and Democrats for legislation this week that would force a new investigation of security issues relating to the deal.
But the backlash can be connected to a deeper fear that extends far beyond terrorism, economists and international experts say.
The anxiety is that America is losing its place at the forefront of the global economy. We're suffering, experts say, from a bad case of economic insecurity that is rooted in America's long-standing inclination toward isolationism.
"It's a reaction to globalization. It's almost the fear that foreigners in general are going to take over the American economy," said Carl Steidtmann, chief economist with Deloitte Research. "You see the same kind of reaction to outsourcing, the same visceral response that we are losing jobs to foreign countries and overseas companies."
The same anxieties were at work when members of Congress, security experts and others became alarmed last year when a Chinese firm attempted to acquire oil refiner Unocal, hardly one of the country's strategic assets. A similar backlash occurred when another Chinese company tried to acquire struggling Maytag Corp. Neither deal went through.
In the 1980s, it was Japan that seemed to be beating the U.S. at its own capitalist game. Back then, Japanese investors were snapping up trophy skyscrapers, while Japanese carmakers were grabbing big chunks of market share from the Big Three.
Despite the recurrent anxiety attacks over foreign investment, the U.S. economy is increasingly intertwined with the rest of the globe, economists say, and there is no going back.
"A lot is said about the offshoring of American jobs, but there are almost an equal number of Americans working for foreign companies here as there are foreigners working for American companies overseas," said Carl Tannenbaum, chief economist with LaSalle Bank. "The Saudis invest a lot in U.S. Treasury securities. Without them, our interest rates would be a lot higher."
The controversy
At the center of the current controversy is the takeover by Dubai Ports World of Peninsular & Oriental Steam Navigation Co., the British company that operates terminals at major U.S. ports, including Baltimore, New York and Miami.
The deal has been attacked on Capitol Hill as a security risk and an outsourcing of American infrastructure, but it has been defended by President Bush, who says the administration has thoroughly vetted the prospective new owners.
On Thursday, Dubai Ports World said it was willing to delay the U.S. portion of the acquisition.
No matter the outcome, the flap is likely to tarnish this country's reputation in the Muslim world as a safe place to invest, one international expert says.
"Muslim investment is bigger than Arab investment. If you're Muslim, you start getting the message that this is not a place that welcomes my investment," said Adil Najam, an associate professor of international negotiation and diplomacy at the Fletcher School at Tufts University in Massachusetts.
"If you're an Arab with $10million of disposable income, maybe you think, `Let me go to India, a place where I'm welcome, where I don't feel this bigoted sense of hostility.'"
Henry Paulson Jr., chief executive of investment banking giant Goldman Sachs, agreed. "This latest flap is very regrettable. There's a protectionist sentiment in Washington," he said Thursday at an Executives' Club of Chicago lunch panel.
Free trade and open markets have benefited the U.S. more than any country in the world, Paulson said.
The oil boom of the last few years has been a money gusher for oil-rich Arab nations. That money has been invested in real estate and equity markets worldwide, which also have soared. Estimates of private wealth in the gulf alone have exceeded $1 trillion.
A large percentage of that is invested outside the United States, with Europe and Asia being favorite spots. The common thinking is that a lot of Arab capital left the U.S. after the Sept. 11 attacks, as Arab investors worried about having their assets frozen or were turned off by negative connections drawn between Islam and terrorism.
In the last decade, some Arab investors have turned to hedge funds or private equities funds, which afford them privacy, says Saed Saffari, a California investment adviser. "For large multibillion-dollar investors, the boundaries of the countries are not important. It's the investment possibilities."
Direct investment in the U.S. by Arab countries is easier to pin down because the government tracks it. The Middle East represents a small percentage of the overall inflow of capital.
Of the nearly $96 billion invested by other countries here in 2004, only one-half of 1 percent -- or $508 million -- came from the Middle East. Of that, Israel invested $316 million and Saudi Arabia only $30 million.
In contrast, the United Arab Emirates, which includes Dubai, showed a U.S. capital outflow of $21 million. That means that UAE companies based here loaned their parent firms more money than they received, said Thomas Anderson, a Bureau of Economic Analysis spokesman.
The biggest investor in the U.S., by far, was Europe with $41.4 billion in capital inflows, followed by Canada with $31.8billion.
The most popular U.S. industries for foreign investment continue to be finance, insurance and banking, the government reported. Manufacturing investments rebounded to $17.2billion in 2004, up from $10.8 billion in 2003.
In Chicago, the impact of foreign investment is extensive but not very controversial--so far. Chicago-based LaSalle Bank Corp. has been a unit of Netherlands-based ABN AMRO Bank N.V. since the 1970s. Harris Bank is owned by Canadians.
German and Australian investors have been active in Chicago's real estate market, purchasing everything from high-profile office towers on Wacker Drive to the Gap flagship store site on the Magnificent Mile.
Middle Eastern investors are harder to find, but they are here. The largest shareholder in Chicago-based Hartmarx Corp. is Abdullah Taha Bakhsh, a member of the Saudi royal family who came to the rescue of the struggling apparel-maker in the early 1990s.
Last summer, the investment arm of a Bahrain bank made a $60 million investment in the Elysian, a Gold Coast condominium and hotel project now under construction at 11 E. Walton St.
Earlier this month, a member of the Dubai Investment Group purchased the Best Western Inn of Chicago, a vintage hotel in Streeterville, for $40 million.
It's ironic, say those who know him, that al-Maktoum should be at the center of national debate over the advisability of Arab ownership of U.S. assets.
Although the sheik often appears in public dressed in the most regal of long, flowing robes, "he is as Westernized as they come. He is a businessman," said DePaul University law school professor M. Cherif Bassiouni, who has met with him several times.
Bassiouni was struck by al-Maktoum's inclination to launch immediately into a discussion about one of the many giant projects under way in Dubai. "You almost get the feeling you are dealing with an entrepreneur," Bassiouni said.
In Kentucky, Dubai's royal family is known for reshaping the thoroughbred racing industry. The family started going to Lexington in 1980. At his first yearling auction, al-Maktoum spent $3.6 million on racehorses, a spree that was greeted with suspicion.
But skepticism quickly turned to jubilation as the Maktoums drove the thoroughbred market to unprecedented heights in the 1980s. In the last 25 years, the family has reportedly spent more than $1 billion on Kentucky thoroughbred sales.
Each year, their arrival is marked by the rare sight of commercial jets with Arabic script landing at the small airport across the street from the Keeneland Racetrack.
Despite their flashy entrance, the Maktoums keep a low profile, said Phil Scott, a longtime friend and legal counsel to the family's eldest brother, who died in January. "They go to the sales and they look at the horses. That's their holiday."
Along with horses, the Maktoums have accumulated land in central Kentucky. The royal family owns several horse farms totaling nearly 6,000 acres, Scott said.
Rapid advances in the desert
Back home in Dubai, the family has transformed its sandy emirate into a sparkling, high-tech oasis that attracts tourists from around the world.
After al-Maktoum was named Dubai's crown prince in 1995, he stated his philosophy: "I don't know if I am a good leader, but I am a leader. And I have a vision. I look to the future, 20, 30 years. I learned that from my father, Sheik Rashid. ... I follow his example. He would rise early and go alone to watch what was happening on each of his projects. I do the same. I watch. I read faces. I take decisions and I move fast. Full throttle."
Dubai has used its petrodollars to make money because, unlike its fellow sheikdoms, it doesn't have a lot of oil left.
In the late 1990s, Dubai launched an ambitious plan to expand its airport and international carrier, Emirates Air, now the largest airline in the Arab world. Just last week, a consortium of Dubai companies announced plans to launch an aerospace manufacturing and service company that would do everything from building airports to financing aircraft purchases.
Dubai also made a push to construct a world-class high-tech infrastructure that would attract "New Economy" investments. Within a year, more than 100 IT companies had been granted licenses to operate within Dubai Internet City, including Microsoft, Oracle and Compaq.
"People used to say they were walking on water, but it is quite remarkable what's happened there," said Samer Khanachet, the president of United Gulf Management, a Kuwaiti-owned financial advice firm with an office in Boston. "One sector at a time, they are positioning themselves as world leaders."
Dubai is now the home of the world's largest shopping mall, and the world's only seven-star hotel, the Burj al Arab, where a two-room suite with a sea view goes for $3,300 a night. One day soon, it also may boast the world's tallest office building.
For those who want to step out of Dubai's sweltering temperatures, there is an indoor ski resort with a mountain-size downhill ski run. For equestrians, there is the Dubai World Cup, the world's richest horse race.
Earlier this month, golf lovers were treated to a dramatic playoff between Tiger Woods and defending champion Ernie Els at the Dubai Desert Classic, a tournament that attracted more than 47,000 visitors to the Emirates Golf Club. Woods won.
Two things that Dubai is short on are people and land.
The natives of Dubai account for only 10 percent to 30 percent of the emirate's population, according to some estimates. The rest is made up of foreign workers, many of whom toil in the construction industry, and expatriate managers brought in from developed countries.
To solve the second problem, Dubai is building artificial islands offshore.
One such development is Palm Island, a giant resort covering three islands that are divided into the shape of giant fronds and a trunk when viewed from the air. The palm is surrounded by a crescent-shaped barrier reef.
"Their philosophy is only the best of the best," said Ted Karasik, a gulf expert at the RAND Corp. in Santa Monica, Calif.
Another thing Dubai is known for is religious tolerance. Non-Muslims are allowed to practice their religions, and alcohol is available at the hotels that serve foreigners, an accommodation not found in some other gulf countries.
Dubai has its eye on more than travel and resorts.
In the Arab world, its stock exchange is considered one of the most up-to-date and friendly to investors. Its free-trade zones welcome foreign businesses, and its recently created gold and diamond exchanges were launched to compete in world commodity markets.
Al-Maktoum "would like to turn his country into a type of Switzerland, bringing in lots of banks and investors," said DePaul's Bassiouni.
"He knows that the oil resources may last only 20 to 30 years and he is preparing for the aftermath."
----------
schandler@tribune.com
sfranklin@tribune.com
@@@@@@@@@@@@
FERRYFAST RESEARCH:
DUBAI GOVERNMENT
www.dubai.ae/index.en.htm