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Saturday, March 11, 2006

Why the Dubai Ports Issue Missed the Point

Everyone agree that America's ports are vulnerable, but where exactly does the vulnerability begin?

The stakes for not securing the ports are enormous. An attack "could well spawn a global recession -- or worse."

In short the stakes are enormous. But there are four factors associated with the scenario that I just laid out that usefully informs the focus of this hearing. First, the threat is not so much tied to seaports as it is global supply chains that now large operate largely on an honor system because the standards are so nominal and the capacity for agencies like the Coast Guard and customs is negligible. Second, no container terminal operator within the United States or abroad really know what are in the containers that pass through their facilities. They are in the business of receiving and discharging them from and to ships, trucks, and trains that converge at their terminals as quickly, reliably, and at the lowest cost possible. Third, as the engagement of John Meredith and Gary Gilbert of HPH on this issue reflects (HPH has no terminals inside the United States) global terminal operators are deeply concerned about the terrorist threat involving or directed at the supply chain because their billions of dollars of investment tied up in worldwide infrastructure are at risk. Four, the scenario I just laid out involved Vancouver as the offload port in North America, highlighting that the challenge of managing this threat is far greater than bolstering the physical security measures of U.S. seaports.

This story also highlights that there can be no solution unless U.S. authorities work directly with overseas terminal operators in enlisting their help to manage the problem. This is the case I posited in a February 28, 2006 New York Times op-ed article with Admiral James Loy, the former Deputy Secretary of Homeland Security and former Administrator of the Transportation Security Administration, and the former Commandant of the Coast Guard. We point out that ports are the on- and offramps to global markets, and they belong to a worldwide system operated by many different private and public entities. A MAJOR STEP in that direction would be to construct a comprehensive global container inspection system that scans the contents of every single container destined for America’s waterfront before it leaves a loading port—rather than scanning just the tiny percentage we do now, after they have already arrived within a seaport.

Is there a solution? The author proposes the "Hong Kong Model," a program that would scrutinize and assure the security of every container regardless of its destination:

The model for this recommendation is a pilot project that has been underway in the Port of Hong Kong since January 2005. There every container entering the truck gates of two of the world’s busiest container terminals has passed through scanning and radiation detection devices. Images of the containers’ contents are then stored on computers so that they could be scrutinized remotely by American or other customs authorities almost in real time. Customs inspectors can then issue orders not to load a container that worries them. Since this system involves scanning every container and not just those destined for the United States, it would help to support international counter-proliferation efforts as well.

Major companies such as Hutchinson Port Holdings, PSA Singapore Terminals, and, ironically, Dubai World, are either considering or have already implemented Hong-Kong-style container security.

At the end of the day, America’s port security challenge is not about who is operating on our waterfront. The real issue is that we are relying on commercial companies largely to police themselves with nominal standards and very limited oversight. Both Congress and the White House should embrace a framework of "trust but verify," in President Ronald Reagan’s phrase, based on real standards and real oversight. When it comes to the flow of goods around the planet, we need to know what’s in the box more than we need to know who is moving them around a container yard.

The bottom line is that if at the end of this controversy, the only thing that happens is that the Dubai Port World deal is approved or denied, the American people will have been deprived of a real opportunity to have advanced a qualitative improvement in port and container security. Congress and the White House should work together to convert the current political maelstrom into doing something meaningful to bolster our national security and economic security.

A "qualitative improvement in port and container security" is a the top of my priority list. However, I don't think that foreign governments should be operating facilities at our ports.


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