Editorial: Reform is unwisely blocked

Thursday, March 16, 2006 | 6:50 a.m.

A Democratic effort to ensure wider scrutiny of proposed foreign investments in the United States failed Wednesday after the Republican-controlled House mustered enough votes to block it. The Democrats' effort stemmed from the manner in which Dubai Ports World was initially approved to control terminal operations at six major U.S. ports and some dockside activities at 16 other ports in this country.

Voting 224-192, the House stopped Rep. Martin Sabo, D-Minn., from offering an amendment to a spending bill that would have revised the way proposed foreign takeovers of American businesses are reviewed by the federal government. We see the blocking of his amendment as foolish partisanship. The Dubai Ports World issue exposed weaknesses in the current review process.

Owned by the United Arab Emirates, Dubai Ports World offered to buy a private British company that owned the aforementioned American port operations. The purchase was reviewed by a federal panel created by presidential executive order in 1975 - the Committee on Foreign Investments in the United States. The committee, chaired by Treasury Secretary John Snow, quietly approved the deal, which then went through.

How did it happen in the post-9/11 world that an Arab country once sympathetic to the Taliban and known as a haven for terrorists was approved to run U.S. port operations? In an overwhelming show of bipartisanship, Congress, belatedly informed of the approval, objected so strenuously that Dubai Ports World agreed to sell the U.S. port operations to an American company.

To ensure that such a fiasco is not repeated, Sabo introduced his amendment. In addition to lengthening the time of a review and requiring earlier congressional notification, it would have required the president to make the final decision on approval or disapproval. Currently, the president gets involved only if the committee disapproves of a transaction.

President Bush did not even know of the Dubai Ports World approval until it made the papers. Yet in 1988 a presidential executive order required the committee to submit a report and recommendation to the president at the conclusion of its reviews, according to the U.S. Treasury Web site. Obviously, something has gone wrong over the years.

The Senate also has proposals for reforming the review process. We hope they meet a better fate. Congress showed strength in standing up to the U.A.E. deal. Now it should show strength in reforming the procedures that led to it.