Politics: Fallout From the Dubai Debacle

Dick Cheney was on the phone. It was almost two weeks after Rep. Peter King of New York first called the White House with his concerns about a Dubai company's taking over some operations at six U.S. ports. Now, after all the veto threats and backroom lobbying, the veep wanted intel about the mood on Capitol Hill. "What are you hearing?" Cheney asked the congressman. "What do we have to do to make this happen?"

Two days later, the deal was dead and the last trace of trust had vanished between the GOP-led Congress and the president on the ports deal. George W. Bush's allies marvel that the White House could have misread them for so long. And they still disagree about the basic facts, including what happened last week when GOP leaders trooped into the White House to tell Bush they couldn't (or wouldn't) stop their own members from blocking the takeover. "It's not going to work," House Speaker Dennis Hastert told Bush, according to one GOP aide. That's not the way the White House saw the meeting. "News flash: it wasn't like that at all," scoffed one senior Bush adviser (who, like the GOP aide, declined to be named while talking about a private session). "The president knows a prairie fire when he sees one." Some Bush allies are renewing their calls for adult supervision in the White House. "There's a need for a Leon Panetta or Howard Baker-type figure in the administration," GOP Rep. Tom Cole told NEWSWEEK. "You need a senior decision maker who understands the Congress and whom people in Congress understand."

D.C. lobbyists now foresee an increased workload--and thus, a bigger payday--in foreign takeovers of all sizes, which will need extra paperwork and path smoothing to avoid the same kind of political firestorm. At least two deals are getting the extended security review that Dubai Ports World avoided. One is an Israeli high-tech company that is paying $225 million to purchase Sourcefire, a Maryland software firm that sells firewall protection. Its customers include the Pentagon. Another Dubai firm, Dubai International Capital, is also under review for its $1.2 billion takeover of Doncasters Group, a British company with plants in the United States that produce engine parts for military planes and tanks. The White House hopes the political debate will soon turn to the technical task of reforming the obscure committee that reviews foreign takeovers in sensitive industries.