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LOU DOBBS TONIGHT

Coast Guard Warned White House of Security Risks in Port Deal

Aired February 27, 2006 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Monday, February 27.
Live in New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

Tonight, the congressional Republican leadership which one week ago was defying the White House on the Dubai ports deal is tonight apparently falling in line with the Bush administration. Is the congressional leadership like the White House now putting commerce ahead of national security? We'll have complete coverage tonight.

Also, troubling new information from the U.S. Coast Guard about possible links between Dubai Ports World and terrorists. We'll have a special report on the Coast Guard's efforts to depend our ports and coastlines despite chronic understaffing and what could well be political interference.

My guest tonight, one of the Senate's leading critics of this port's deal, the ranking member of the Armed Services Committee, Senator Carl Levin. Senator Levin will be joining us to tell us whether the ports deal can and should be stopped.

I'll also be talking with two leading security analysts with opposing views on the implications of this deal for national security.

All of that, much more coming up here tonight.

We begin with the congressional leadership's surrender to the Bush White House on the Dubai ports deal, or at least an apparent surrender. The White House ended a rebellion by top Republicans by saying that the Dubai Ports World had asked for a new 45-day investigation of the deal. Senate Majority Leader Bill Frist, who a week ago tried to delay the deal and defy the White House, today says lawmakers should stop trying to block the sale.

But tonight, there is new information that contradicts much of what the administration had said on its approval of this deal. It turns out the U.S. Coast Guard was seriously concerned about the security implications of this deal despite repeated assertions that there were no objections.

Ed Henry is on Capitol Hill. He reports now on the new intelligence information from the Coast Guard.

Lisa Sylvester, in Washington, reports on the additional view of the ports deal, whether it will make a difference or whether it is simply a political maneuver by the Bush White House and the congressional Republican leadership.

Dana Bash, from the White House, reports on the administration's determination to put commerce before national security in this case.

We begin with Ed Henry -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Lou, Republican Senator Susan Collins today released this unclassified document, a Coast Guard document revealing that that agency felt there were serious intelligence gaps with this port deal. In fact, so many intelligence gaps that, in fact, they could not conduct a full security threat assessment of the deal.

The document which was prepared in December cited concerns about the company's personnel, their operations, potential foreign influence, as well, that could hamper security.

(BEGIN VIDEOTAPE)

SEN. SUSAN COLLINS (R), MAINE: On the face of it, these unclassified questions and the use of the word "intelligence gaps" that preclude an overall threat assessment of the potential merger and that it involves potential unknown threats against a large number of potential vulnerabilities, that language is very troubling to me.

HENRY (voice over): Bush officials said they were aware of the concerns but negotiated assurances over security from the company, Dubai Ports World.

ADMIRAL THOMAS GILMOUR, U.S. COAST GUARD: I think to answer any of these questions I'd have to get myself into revealing classified information which I would not like to do in this open forum. But I think as Assistant Secretary Lowery has said, any concerns we had were addressed in the assurances letter.

HENRY: The development came as Democrats said the new 45-day review is a positive step forward but they are still concerned the port deal with be rubberstamped.

SEN. CHARLES SCHUMER (D), NEW YORK: You can't do the report in secret. You can't just give it to the president, who has already said he supported this deal. You have to show the Congress the full report. And you have to make public every part of that report that is not classified.

HENRY: Rallying with Teamsters workers at the Port of Newark, Democrat Chuck Schumer formally introduced legislation mandating Congress, not just the president, get final approval over the port deal. But Senate Republican Leader Bill Frist says he does not want the Schumer bill or any port legislation to move forward until the 45- day investigation is completed.

Frist, who stunned the White House last week by calling for a temporary halt to the port deal, told reporters over the weekend that intelligence briefings have significantly alleviated his concerns.

SEN. BILL FRIST (R), MAJORITY LEADER: We all trust the president. We are behind the president 100 percent and believe his decision is, in all likelihood, absolutely the right one. But until we have the opportunity to ask the same questions so that we can go back to our constituents and have that same comfort level, we're just asking for a pause.

(END VIDEOTAPE)

HENRY: Democrats charged today that Senator Frist is flip- flopping after being taken, in their words, to the White House woodshed last week. Frist's office says that's nonsense. They say he will hold the White House's feet to the fire.

In fact, one senior Republican telling CNN, in reference to legislation that they are ready to pass, the gun is locked and loaded. They are ready to fire at any time if they feel the White House is reneging at all in any way on this 45-day review -- Lou.

DOBBS: If he was not taken to the woodshed, just exactly what has happened to Senator Frist?

HENRY: Well, Senator Frist's aides say that basically he feels that some of his concerns were allayed by various intelligence briefings that Bush officials have finally started giving him and other lawmakers. One of his chief concerns last Tuesday, when he first went public with those concerns, was that they were left out of the loop, congressional leaders knew nothing about this deal until it was reported in the media.

He said that frustration has now been met. We pressed them for details, what has the senator, what has his staff learned in those intelligence briefings? And we're told we -- they can't tell us what is going on in those briefings.

That is one of the concerns that is out there, too much of this information behind closed doors. So the public doesn't know what exactly these senators are being told. We're trying to get those answers. We haven't gotten them so far -- Lou.

DOBBS: But we are learning more and more of the facts, including, as it turns out, the Department of Homeland Security concerns that were expressed in the Committee on Foreign Investment to the United States, U.S. Coast Guard concerns, after being told that no objections or concerns had been raised, being told by this administration, which Senator Bill Frist now says he trusts.

Ed Henry, thank you very much.

HENRY: Thank you.

DOBBS: There are concerns tonight that the committee charged with reviewing the Dubai Ports World deal will fail to adequately address major national security concerns. That committee, CFIUS, has already approved the deal once without reservation, said the administration. It turns out there were reservations. And the committee's chairman is none other than Treasury Secretary John Snow, who strongly defended the sale last week.

Lisa Sylvester has the report.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice over): Dubai Ports World says it will delay taking over operational control of six U.S. port facilities. But if you read the fine print, once the company closes the deal it will be the new owner.

SEN. CARL LEVIN (D), MICHIGAN: I don't think we ought to fool the American people on what's going on here. This -- if this closing takes place, Dubai owns these facilities.

SYLVESTER: The company is scheduled to complete the sale this Thursday, even though the more extensive investigation will not be completed until 45 days from now.

Critics say it's backward. The deal closes first and then the investigation?

PATRICK MULLOY, INTERNATIONAL TRADE EXPERT: That just a kabuki if that's what they're going to do. That isn't a real investigation. They got to enter this as if this is an open -- and they are going into it with a very open mind to look at all these very important issues that have been raised.

SYLVESTER: There are questions as to how thorough this review will be. The administration has repeatedly said of the first review...

UNIDENTIFIED MALE: There was not a national security concern.

UNIDENTIFIED MALE: No issues raised by any agency.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The deal wouldn't go forward if we were concerned about the security for the United States of America.

SYLVESTER: Can we expect a different conclusion on the port sale after the 45-days? How will this process be different? Will the 9/11 Commission be consulted this time? The White House insists it will hear from new voices, but it sounds like the administration has already made up its mind.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: We believe the Congress will be more comfortable and will not object to this transaction moving forward once this review and investigation have come to a conclusion.

SYLVESTER: Once the 45-day review is over the final decision rests with the White House.

(END VIDEOTAPE) SYLVESTER: And I think we already know which side the president is going to come down on, which is why many are asking, is this really a full investigation or just a kabuki dance -- Lou.

DOBBS: Well, there's, I think, some straightforward answer to the question you pose, Lisa, but it's striking to hear members of the administration say point blank, no objections were raised, no concerns were raised. If there are any concerns about national security, the deal wouldn't be approved. Then we find out today, thanks to Senator Susan Collins, the head of the Senate Homeland Security Committee, that indeed the U.S. Coast Guard and the Department of Homeland Security did raise objections, which is supposed to under the law, as Patrick Mulloy just pointed out, trigger the 45-day review.

SYLVESTER: That's indeed correct. And now what they are trying to do is go back and pick up this 45-day review, which is why people say this is backward. This company is scheduled to close on Thursday, and now they are talking about doing this 45-day review that in many people's opinion, quite frankly, should have been done initially -- Lou.

DOBBS: Thank you very much, Lisa. Appreciate it.

The White House today trying to portray that 45-day review of the port deal as a victory for common sense. Press Secretary Scott McClellan, however, didn't mention another very important aspect of this review. It may be intended as a political maneuver to remove the president from a damaging conflict with the leadership of his own party in Congress.

Dana Bash reports from the White House.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT (voice over): Fine by us is the White House response to a Dubai Ports World request for another security review.

MCCLELLAN: We think that a reasonable middle ground has been reached.

BASH: But that carefully-calibrated statement belies what one source involved calls a desperate behind-the-scenes White House effort to engineer this new review, a face-saving way to try to salvage the controversial deal and avert a damaging showdown with GOP leaders.

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: There's nothing to reopen.

BASH: On Friday, the president's national security adviser echoed other Bush officials, insisting the approval process thoroughly dealt with security questions opposing a new review. But even as he spoke, efforts were under way to do just that.

Bush economic adviser Al Hubbard worked with a Bush ally and UAE lobbyist Vin Weber and Senate Majority Leader Bill Frist. GOP senators John McCain and John Warner were key middlemen in talks that finally produced agreement over the weekend.

The unspoken reality, Senator Frist was too quick to challenge the president with legislation blocking the deal and Mr. Bush had gone too far in defiantly promising to veto any such effort. A second Republican source involved in the talks put it this way: "They were all playing chicken in public but being chicken behind the scenes."

An open question still is, how did senior White House aides let it come to this, allowing a major internal Republican feud and Democrats to score points against Mr. Bush and top political adviser Karl Rove on their signature issue, security?

JOHN PODESTA, CENTER FOR AMERICAN PROGRESS: And I think they should have seen this coming. They should have known this was controversial.

BASH: Top Bush aides say they were not informed by assistant secretaries on the panel until it was too late. But media accounts of the deal started as far back as the end of November.

DOBBS: The Bush administration has OK'd a deal that will allow a company based in the Emirates to take charge of ports.

BASH: And LOU DOBBS TONIGHT reported concerns over the port deal days before the White House says the president even knew about it.

Bush allies say it's another glaring symptom of mounting second- term fatigue, a White House seemingly flat-footed whether by Katrina, handling the vice president's hunting accident, or realizing early on the political power the ports deal could carry.

An incredibly challenging environment, administration veterans concede, but also a lesson: senior White House aides get no excuses.

UNIDENTIFIED FEMALE: Still, you've got to bring your A game ever single day and you've got to perform at a very high level.

(END VIDEOTAPE)

BASH: Now, under the law, because there is this new review, the president himself will have to sign off on this deal. Since the president has made clear that he trusts that his aides made sure that this deal is safe, Bush aides tonight say that it would take something quite dramatic to change his mind -- Lou.

DOBBS: Something quite dramatic. And it does appear that -- certainly on the Senate side -- that the Republican leadership is rolling over into line with the White House on this, specifically Senator Bill Frist.

But isn't there any sense of embarrassment at the White House? Not only on the political mishandling of all of this, not only on the national interest being brought into question here, but the fact that this administration, which wants to look so tough, is looking at it deal which Dubai Ports World requests a review, there isn't even the mettle in our national leadership to demand a review of this? We are resolving this stage of it apparently by the likes of this administration by allowing a nation of 2.5 million people to request a review that this administration doesn't have the courage to demand as is its responsibility under law?

BASH: Let me tell you what they say here at the White House. The answer to that question is, they, as I mentioned, had been looking into just exactly how it would be possible to reopen this. What they say is that the law is very clear and that once the 30-day review goes through, and that the CFIUS panel approves it, what they said here is they determined that it would be impossible legally for the president to reopen this.

And that is why they worked very closely with the company and they decided that the way to get around that is for them to put in the request. That is why they said they took this route in order to do that.

They said perhaps the process needs to be changed, that the CFIUS law needs to be changed altogether. They've said for a number of different reasons.

But on that specific point, Lou, they said it was impossible for them legally to do that here at the White House. It had to be done by the company.

DOBBS: Including their interpretation of the law, which did not automatically trigger the 45-day national security review...

BASH: That's true.

DOBBS: ... despite, as it turns out, today objections and concerns by the U.S. Coast Guard and the Department of Homeland Security, as well, after we were told by the very same people that there had been no objections and no concerns raised.

BASH: And just one point on that, Lou. It's interesting that administration officials certainly did say that in the end there were no concerns raised, but last week the administration did tell us that inside the review process there were some concerns raised by the Department of Homeland Security.

We didn't know what specifically they were. Perhaps it is this information we're getting tonight by the Coast Guard. But what the White House is telling us tonight is that the president knew that there were concerns raised by the Department of Homeland Security and that he also knew that they got this letter from DPW to the Department of Homeland Security apparently allaying those concerns, and that is why they allowed this to go through.

Now, the specifics, again, we don't know a lot of.

DOBBS: This, by the way, we should point out -- we should also point out this committee which is preserving the national interest has with 1,500 deals only turned down one. One in its entire existence. And that, of course, was during the presidency of George H. W. Bush. BASH: Right.

DOBBS: We thank you very much.

Dana Bash from the White House.

That brings us to our poll tonight. Do you believe the 45-day national security review of the Dubai Ports World deal which the United Arab Emirates and Dubai Ports World requested will result in a vigorous examination of national security interests, or is it merely a White House Republican leadership effort to facilitate the deal?

Cast your vote at LouDobbs.com. We'll have the results here later in the broadcast.

Much more on this ports deal ahead. The Coast Guard is overworked, it's over-funded, it's charged with a critical national security role. Does it have any chance of stopping terrorist attacks against our ports?

We'll have that special report.

And one of Dubai port deals strongest critics is Senator Carl Levin. He's a ranking member of the Armed Services Committee. He'll be my guest here.

I'll also be talking with two of the country's leading port security analysts who have opposite views on this deal.

And Dubai Ports World tries a new tactic to silence me specifically. Our coverage of the ports deal they want to eliminate, and our reporting of legitimate national security concerns about this deal altogether they want to eliminate. We'll tell you how they are going about it.

We'll have that story and a great deal more coming right up.

(COMMERCIAL BREAK)

DOBBS: Today's new developments, new information that the Coast Guard had concerns about possible links between terrorists and Dubai Ports World, demonstrates the vital role that the Coast Guard plays in defending this nation's seaports, of course. But critics say the Coast Guard is under-funded and it's overworked and incapable of adequately fulfilling its mission as a result.

Casey Wian has the report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice over): On a typical day, the United States Coast Guard will board and inspect more than 100 ships, capture 30 illegal aliens, seize $21 million worth of illegal drugs, conduct 90 search and rescue missions, save 15 lives. And that's just a partial list.

UNIDENTIFIED MALE: We're just looking for anything out of the ordinary.

WIAN: Since 9/11, that mission has expanded, putting the Coast Guard on the front lines of homeland security, including the nation's most glaring vulnerability, our ports. In addition to patrolling the seas, the Coast Guard is also in charge of reviewing and approving the security plans of all port terminal operators.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: In California, we have the largest port in the nation, L.A. Long Beach. It has, let's see, 80 different shipping lines. It has 50 different terminal operators. You have 11,000 truckers coming in and out a day with only a driver's license as identification.

What's my point? My point is that the security at American ports is still not what it should be.

WIAN: For example, the Port of New Orleans says the federal government has allocated just 14 percent of the money it has requested to comply with Coast Guard-enforced security measures.

GARY LAGRANGE, CEO, PORT OF NEW ORLEANS: We're getting by, we're making do with the best we can. Do we have a long way to go? You bet you we do.

WIAN: The Coast Guard's budget has more than doubled from $3.5 billion in 2001 to $7.8 billion this year. Much of that money has been spent upgrading and expanding an aging fleet of vessels. But the number of active duty Coast Guard personnel has not kept pace, growing just 2 percent a year to about 41,000 today.

To put it another way, there's about one Coast Guard member for each 83 square miles of U.S. Marine territory.

The Coast Guard, which declined to be interviewed for this report, was praised for its response to Hurricane Katrina. It rescued more than 33,000 people.

(END VIDEOTAPE)

WIAN: But stopping a terrorist attack may be another matter. Port directors, longshoremen, union leaders and many others say the Coast Guard is in desperate need of more manpower -- Lou.

DOBBS: Casey, those are astounding figures. It is an incredible mission to put on these terrific young men and women who are our first line of defense, as you say, not only at our seaports, but our entire coastline.

Is there any plan under way to expand the number of people serving in the Coast Guard?

WIAN: Very modestly. The current budget calls for an increase of just under 500,000 -- excuse me, 500 Coast Guard personnel. It seems like the White House is adopting a similar strategy to the strategy it's adopted along our borders. And that's by relying on new technology, new weapons, instead of more manpower -- Lou. DOBBS: And in that regard, that approach is resulting now in congressional investigations as to why the technology that has been deployed along our borders is simply not working.

Casey Wian.

Thank you very much.

Dubai Ports World tonight is making what I consider to be a rather astonishing new attempt to silence me and our coverage of this ports deal and our reporting of what at least I consider to be legitimate national security concerns about this transaction. Dubai Ports World has actually refused to grant CNN anymore interviews from Washington or London, and it's refused to allow CNN to videotape its operations in the United Arab Emirates and Hong Kong if we were to show you the video on this broadcast.

This is not the first time that Dubai Ports World has tried to silence me. Last week, a spokesman for the public relations firm that represents the company, Mark Dennis, declared, "CNN won't shut up Lou Dobbs." And as a result, they weren't going to cooperate.

Well, let me assure you that this latest attempt to silence our reporting and to explore the national security interests just like their last effort won't succeed. CNN's management, to its great credit, says it won't comply with any of Dubai Port World's demands, and I'll guarantee you that we're going to continue to report on the facts of this deal, we're going to continue to analyze it, we're going to continue to absolutely scrutinize our elected officials and administration officials who, in some cases, are not being straightforward about the national security interests and the reasons motivating this deal.

That's my opinion. And that's part of the reason I'm here.

Still ahead, how years of failed U.S. trade policies help set the stage for this deal. And a key national security giveaway. That special report is coming up.

And will that 45-day review change requested by the company in question, is it really a political maneuver? We'll have a debate from both sides of the Dubai ports deal. We'll find out what your Congress and mine is doing about it all.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Americans shocked to learn that foreign governments could be running parts of major U.S. ports. But the Dubai Ports World deal is simply the latest example of what is amounting to nothing less than a sell-off of critical American assets. It's the inevitable result of decades of failed trade policies that has made -- has put billions of U.S. dollars in the hands of our trading partners.

Christine Romans has the report. (BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): America's broken trade policies, brokered by successive administrations and passed by Congress, come with a price.

KEVIN KEARNS, U.S. BUSINESS & INDUSTRY COUNCIL: We hemorrhaged $725 billion last year in our goods and services deficit. All this money is going overseas and the foreigners are spending -- taking it and spending it back here.

ROMANS: And he says those in Congress now calling the Dubai deal a security giveaway, well, they created the problem in the first place.

KEARNS: Let's not let them off the hook and let them reform CFIUS and then walk away from the much larger problem of what's going on in this economy, how it's being hollowed out, how foreigners are awash with dollars that they can only spend one place here. And they are spending them by gobbling up U.S. assets.

ROMANS: Our government promotes fiscal policies that mean we import more than we produce. The Treasury Department must finance that deficit by issuing debt to foreign governments and by selling off hard U.S. assets.

So Treasury Secretary John Snow has to keep America's international bankers happy.

JOHN SNOW, TREASURY SECRETARY: The implications of failing to approve this would be to tell -- tell the world that investments in the United States from certain parts of the world aren't welcome.

ROMANS: But critics say those investments aren't only welcome, the Treasury Department can't function without them. We are so deep in debt to our foreign bankers that there's nothing left but to sell off American assets.

Motherboard Manufacturing has been sold wholesale. American Computer R&D transferred to China. Even U.S. airlines are up for grabs.

And ports, the majority already are owned by foreign companies.

(END VIDEOTAPE)

ROMANS: This ideology of free trade many say has spawned a trade crisis that is anything but free, anything but fair for the United States. Foreign countries and companies are allowed to buy key U.S. assets, but the U.S. is rebuff from similar investments in their countries. And the ultimate price, Lou, American jobs.

According to the Economic Policy Institute, over a 10-year period, all of this investment, this buying out wholesale of U.S. assets, it's caused a loss of 3 million American jobs. DOBBS: Three million manufacturing jobs. Those jobs replaced, of course, over time at some level, but with jobs that pay approximately a third less.

But going to the issue of the literally trillions of dollars that are now held by foreign governments and foreign businesses. That money has only one place to go, and that is now, because there is a question as to whether one, if you're holding all those dollars, puts it in a U.S. securities market, supports our bonds, our stocks, or you buy hard assets. It's pretty clear that this administration is facilitating the sale of hard assets.

ROMANS: And a lot of countries have real strategies about what to do with that money, those American dollars. We don't seem to have a real strategy about what to do. We look at these deals on a case by case basis, when you've really got to look at the bigger picture. What are the strategies that people are employing?

DOBBS: The strategy that this government is employing is -- is -- well, if it is -- if there is one, it has not been articulated, and the problem is frankly not with our trading partners and those foreign governments or those foreign corporations. The problem starts right here, in the United States, with this government and these trade policies, and a lack of a national strategy.

ROMANS: There's nothing wrong with a national strategy. We just don't seem to have one.

DOBBS: Christine, thank you very much. Christine Romans.

Taking a look now at some of your thoughts.

Ira in Arizona wrote in to say: "Not a single veto in five years, and his first veto would be one with the potential to place our national security at risk? Incredible."

And Jerry in Ohio: "Lou, why does this administration have a hard time saying the Dubai Ports World is owned by the UAE government?"

And Marilyn in Maine: "Lou, we've been reassured by President Bush that the sale of our ports to a foreign country has been cleared, by his government, as he put it. So we can all rest easy. Of course, I thought we needed to follow the laws of our government before we clear this deal. Silly me." And me as well.

Mike in Kentucky: "Lou, President Bush must have close ties to Barnum & Bailey. How else could he possibly assemble such a large number of clowns?"

And Jesse in Oklahoma: "Lou, is the security of the ports going to be as good as it is our southern border?"

Send us your thoughts at loudobbs.com. We'll have many more of your thoughts later here on the broadcast.

Joining me now, two people who have decidedly opposite views of this Ports World view. Kim Petersen is the president of SeaSecure. It's the largest port security consulting firm in the country. He sees no problem whatsoever with this deal. And Michael Kreitzer. He's attorney for Eller & Company, a U.S. port operator, suing to stop the Dubai Ports World takeover.

Gentlemen, thanks for being here.

Let me begin, if I may, with you, Kim. We have just heard under CFIUS that two concerns were raised, homeland security, we were told, and by Susan Collins, Senator Collins today, that the U.S. Coast Guard raised great concerns. Shouldn't that have triggered a CFIUS review, and doesn't it -- even though you approve the deal -- give you some pause?

KIM PETERSEN, PRESIDENT, SEASECURE: No, I don't think so, because as Coast Guard later testified, they actually had reservations because of lack of information that they had been provided -- that had been provided to the committee that they had not read. My assumption is that this may have been information that was classified and was not provided in their review of the materials. Later, they were provided a read in on that material, and they came away satisfied with the concerns that they had originally raised.

So I don't think that's an issue.

DOBBS: And Michael Kreitzer, your client, Eller & Company, working in Miami, would be a partner with Dubai Ports World. What's the basis of concern? And we should point out, Eller Company has sued to block the deal.

MICHAEL KREITZER, BILZIN SUMBERG: That's right. We've sued to block the deal here in Florida. We have filed objections in the U.K. and asked the high court to overturn the entire purchase. Our objection is simply this: We choose not to be an involuntary business partner with a foreign government, a foreign government that has a spotty record with respect to terrorism. And we think it is bad for the country and bad for national security.

DOBBS: What do you say to that, Kim Petersen?

PETERSEN: Well, I disagree. I think that we have to be very careful here in who we allot in categories of being enemies or potential terrorist governments. If you look in a post-9/11 world, we have a number of allies in the Middle East -- UAE, Kuwait, Jordan -- that should never be lotted in the same category as the Syrias, Irans or Libyas of the world.

If you look at Dubai's record since 9/11, this was the first country to agree in the Middle East to join in the United States container security initiative. This was the first country in the Middle East to agree to an agreement with the Department of Energy to install radiation detection systems at all their ports. Something we haven't even done in all of the United States ports. And this is...

KREITZER: And I would also say, this is the same government that recognizes the Taliban as a legitimate government. PETERSEN: That was pre-9/11. So we really have to look at the Middle East in a pre-9/11 and a post-9/11 focus.

KREITZER: Exactly. And I was only going to say that here in a post-9/11 setting, we are in a war against terrorism. And it makes no sense whatsoever to take a foreign government that is deeply involved in a region in the world where that terrorism is originating and give them a free key to our ports. That just defies logic.

DOBBS: Let me ask you this, Michael Kreitzer, would you want to be in business involuntarily with the Israeli government?

KREITZER: Well, I think a debate has to be held with respect to any time that a foreign government is going to be given access to our ports. Our ports are extremely vulnerable. They are very difficult to secure.

DOBBS: I understand that. But my question is, you were talking about a foreign government.

KREITZER: Yes.

DOBBS: Would you want to be in business involuntarily with Israel?

KREITZER: I think we wouldn't want to be in business involuntarily with anyone. And I think the question ...

DOBBS: OK. So we got that out of the way.

KREITZER: Yes.

DOBBS: Now let's move to the issue, should there be, Kim Petersen, should there be ownership of these terminals and effective control -- and by the way, so much misinformation has been put out in the media by the administration, by the Republican leadership, by Dubai Ports World, by everybody working to drive this deal ahead. And let's remember, this is a commercial transaction everyone is involved in here. And pushing aside national security, the fact is they are saying there's no issue. Should we have foreign government-owned companies running our port facilities, as you would put it, in a post- 9/11 world?

PETERSEN: Well, there's been misinformation on both sides of this issue. And quite frankly, I think that if you were to look at whether it's a government-owned company or a pure corporation such as P&O, the potential of having somebody subvert the process is the same.

DOBBS: That's not my question, Kim. Kim, wait a minute. Now, I told you very specifically what I thought. One, I said to you that this administration and those trying to push this deal forward had put forward misinformation. They said there had been no concerns raised in CFIUS. They said point blank the terminal operators have no responsibility for security, which is -- personally, I don't call it misinformation, I call that lying. PETERSEN: Well, most of the security that we're mostly concerned with here is container security. Who is responsible for selecting which containers are going to be inspected, and how are those inspections going to be taking place? That is in fact the responsibility of the federal government. It's not the responsibility of the terminal operator.

DOBBS: Excuse me. Kim, you're the expert, you tell me. Who is responsible for containers, for the logistics within that terminal?

PETERSEN: Well, in the case of Eller, it's going to be the American employees that are working there. It's going to be...

DOBBS: Excuse me. Excuse me. What corporate entity, what corporate entity is responsible if this deal were to go through in Miami with Eller?

PETERSEN: Well, that would be DP World.

DOBBS: Thank you, sir. That's all -- you know, we don't have to deflect here. The American people are pretty smart. And all of the maneuvering, all of the nonsense, why don't we just be honest with each other? I personally would like to say to you straightforwardly, I don't want to see any foreign government, irrespective, own a port terminal in this country. I think it's idiotic. It doesn't make any sense. So it doesn't matter to me whether it's United Arab Emirates -- and frankly, it doesn't matter to me if it's Great Britain. I don't think it makes any sense to have foreign government own key U.S. assets or have control of them. Do you, Kim?

PETERSEN: Actually, I don't think that it's the issue that you're making it out to be. If you look at P&O Ports, which is the company that Dubai Ports World...

DOBBS: Excuse me. P&O -- Kim, please, let's not fence. P&O is a public company, for crying out loud. It's not a government-owned company.

PETERSEN: No, but it's a company that nevertheless could be subverted in the same way that DP World could be subverted. There is no evidence whatsoever to show that DP World or the UAE in any way is going to be a risk to security in any of the ports that they would be taking over in the United States.

DOBBS: Let me ask you this. I'm going to -- and I apologize for not giving you more time, Michael. In point of fact, the 45-day delay -- and I do want to ask you to answer this as well, Kim -- this 45-day delay that through its magnificence, Dubai Ports World has asked the United States government, which didn't have the character apparently or the strength or the sense that we have the authority is a sovereign nation, they've asked for a review that we didn't proceed with. What is the effect of that? Because it's my understanding -- and gentlemen, I would like you to straighten me out -- irrespective of this review, this deal happens on March 2nd and closes?

KREITZER: Well, that's exactly right. It's catastrophic, what has occurred. The White House is pulling the wool over the eyes of the American people, because the reality is, come three days from now, a foreign government is going to own 22 ports, or at least have control over 22 ports in North America. And while it is true that there is now this extended alleged 45-day period, the reality is that the president is going to be in charge of that review, and he's already articulated his desire to veto it.

DOBBS: Kim Petersen, you get the last word.

PETERSEN: Well, it's not about a country that's going to take over U.S. ports. We're talking about terminal operations that are oftentimes a small part of these ports. Nobody has identified a risk associated with the UAE or Dubai Ports World.

I think this is really a way to divert attention away from the real problems we have in maritime security such as the patrolling the waters outside of our ports, about information sharing with our allies, about looking at foreign ports of origin and providing, especially those ports in the developing world the necessary security so that we don't have weapons of mass destruction actually embark on their way to the United States because it's too late once they arrive in a U.S. port.

DOBBS: Kim Petersen, Michael Kreitzer, gentlemen, we thank you very much for being here.

Still ahead here, Senator Carl Levin, a key opponent of this Dubai Ports takeover. He is the ranking member of the Senate Armed Services Committee and he'll be here to give us his view. Our nation's governors in Washington. They are demanding action on an illegal alien crisis that the federal government has yet to recognize.

Governor Janet Napolitano of Arizona joins me here next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: We have been reporting to you this hour on what appears to be on the part of at least Senator Bill Frist, the Majority Leader in the Senate, other members of the leadership of both the House and the Senate, but principally the Senate, to be an entire change of direction from last week when they were defying the White House to rolling over for this White House and falling in line if you will.

The U.S. Senate has just concluded a closed door briefing on this Dubai Ports World deal. The Chairman of the Homeland Security Committee Senator Susan Collins now says she still has major concerns about the deal. Ed Henry has just talked her. Ed Henry has a report for us. Ed.

HENRY: That's right. This basically was all sparked by the fact that, as you know earlier today, Senator Collins released an unclassified document that revealed the Coast Guard had concerns and raised some questions about what they call intelligence gaps in this port deal. The Bush administration response to this hearing was they knew about the concerns in December. They addressed them. They got assurances from the company involved here. If they went to a classified briefing they would allay the concerns of the senators.

Senator Collins and the top Democrat on that committee, Democrat Joe Lieberman, just went to the classified briefing and came out, and Senator Collins said that she is more convinced than ever, even after this classified briefing, that the process that led to this port deal was flawed.

She also called it a rush to judgment. That's a quote from her and said there was not a quote, painstaking, thorough analysis in the early stages of this actual analysis. She also stress she has confidence now in the new 45-day review moving forward. But said that she thinks it could be a new result that results from that 45-day review.

She also said that the assurances letter that the administration has been pointing to basically is flawed and too weak. Take a listen to what she said.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS, (R) HOMELAND SEC. CMTE. CHMN: At the end of this afternoon of briefings, I am more convinced than ever that the process was truly flawed. That the national security and homeland security implications of this proposed transaction were such that a 45-day formal investigation as called for under the law should have been undertaken.

(END VIDEO CLIP)

HENRY: Now Senator Lieberman also said this cannot be what he called a 45-day review for better P.R., public relations, instead he says that this is review now needs to convince what he called a skeptical Congress that this deal is worth moving forward on.

DOBBS: Remarkable developments, this story itself taking remarkable twists and turns. We appreciate it, Ed Henry. Keep us up to date as always.

Senator Carl Levin, a fierce critic of the Dubai ports deal, is the ranking member of the Senate Armed Service Committee, as I say, joining us from Capitol Hill. He was in today's Senate hearings on the port deal. Good to have you with us, Senator.

SEN. CARL LEVIN (D-MI), RANKING MEMBER, ARMED SERVICES CMTE: Lou, good being with you.

DOBBS: We just heard from Senator Collins, the leader, the Committee Chairman of Homeland Security, she is not rolling over for this administration. She is not falling into line.

LEVIN: Well I admire her if a lot of reasons. This is an additional one. She is apparently going to stake out a position of independence from this administration. I think that's critically important in the fact that apparently the Republican leadership here are accepting a statement that, well, we're going to close the deal on this transfer of ownership but there's going to be a 45-day investigation.

If they close the deal, the way they now say they are going to do, that just completely changes the status quo.

DOBBS: We should be clear, close the deal means that Dubai Ports World would take ownership in this transaction of Peninsular & Oriental Steamship Navigation, the company that has the contract, in 21 or 22 ports, six of the operational terminals in six major U.S. ports, logistics contracts in those other. That makes the 45-day review a farce at best.

LEVIN: It sure looks like it's just papering over the issue until they can go through the motions of this review. If it's a real review, that's fine. But now it's even more unlikely it will be a real investigation because the actual ownership has been transferred.

They would have to unravel that ownership and according to the law they have to go to court to do it. The administration would actually have to go to a federal court to undo what is apparently they are going to allow to be done in the next few days. That seems to me to be totally unacceptable.

DOBBS: Senator Levin, this administration in all fairness to the previous administration, put great emphasis on commerce, on international trade, as we have reported here tonight. The world is awash in American dollars. Our debtors, our creditors, excuse me, are buying up now hard assets instead of investing all of that money in our securities markets, our capital markets. Are we going to see a change here in direction?

It's remarkable I have to ask this question four years after September 11 with our young men and women dying in Iraq and Afghanistan, but are we going to see an awakening, a concern for the national security and the national interest that overwhelms this mad rush to commercial interests?

LEVIN: We can only hope so when the Secretary of the Treasury talks about the importance of investment in the United States.

DOBBS: Was that not incredible?

LEVIN: I tell you I throw up my arms and say wait a minute. How do you in the same breath, in the same room, talk about the need for investment when you're also talking about the security of the United States and some of our most vulnerable assets which are our ports. I am amazed that they'll even discuss it at the same time.

It should have no place in this whole debate. The question is, is there going to be a possibility of a weakening of our security by transferring ports to foreign governments. That's the issue. And we ought to focus on it and abide by our law.

DOBBS: Do you think the U.S. Senate will?

LEVIN: Not after today's statements by the leadership. I think it's a lot less likely. If we do not insist this sale be put on hold until this investigation is complete, it seems to me it's a done deal.

DOBBS: Senator Carl Levin, good to have you here. Thank you.

LEVIN: Still ahead, the national security failure on the U.S. southern border. Our nation's governor, two of whom have declared an emergency in their state, a state emergency, are saying enough is enough. Governor Janet Napolitano of the state of Arizona who is -- who has declared a state of emergency, will be my guest here next. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up at the top of the hour, "THE SITUATION ROOM" with Wolf Blitzer. Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks very much. We're following all the new developments on the port controversy. There are developments happening even as we speak. Plus, political superstars, Hillary Clinton sounding off on Karl Rove. Find out why she thinks he is obsessed.

Arnold Schwarzenegger's next sequel. Will get a makeover in time for voters to think he's the guy who should be reelected? We're live in California.

My interview with the United States Ambassador to Iraq, Zalmay Khalilzad. He talks about the rash of violence in the country and whether Iraq will spin itself into a civil war. All that, Lou, coming up right at the top of the hour.

DOBBS: Great lineup, Wolf, Looking forward to it.

Governor Janet Napolitano of Arizona joins me tonight from Washington where governors are discussing new initiatives in the illegal immigration crisis. Governor Napolitano, her fellow governors, also meeting with President Bush in private today. Governor, good to have you here. What did you tell the president? What did he tell you?

GOV. JANET NAPOLITANO, (D) ARIZONA: Immigration obviously for Arizona but for the country as a whole is such a key issue. We just plain need more law enforcement on the border, we need more resources. We need Congress to act on whatever legislation is going to get passed and to act this year.

The president reiterated his support for those things as well as for a guest worker program. But these things need to move this year. Arizona, last year alone, had over a half a million apprehensions of illegal immigrants. This is a broken border.

DOBBS: You've got a state of emergency in fact. Governor Bill Richardson of New Mexico declaring one, as well. Let me ask you, you mentioned amnesty. Things have got to happen. Are you suggesting you support an amnesty program, a guest worker program?

NAPOLITANO: No, far from it. Guest worker is not amnesty. Guest worker is visas allowing people who are coming into our labor markets to work. They come through the ports. We know who they are, how long they are entitled to stay. That will help us improve law enforcement for the drug traffickers and human traffickers and potential terrorists that could be crossing that land border as well.

DOBBS: Do you support, obviously stronger border security, yet do you support a fence gaining absolute control, operational control or our border.

NAPOLITANO: I support more technology at the border. A fence or wall has been proposed. For anybody that actually knows the topography of the border, very expensive, very illogical and as I said, all the time, you show me a 50 foot wall, I'll show you a 51- foot ladder. I think that takes us down the wrong road.

DOBBS: I might show you an eight-foot deep tunnel.

NAPOLITANO: The technology exists now if it were put in the area between the ports of entry we could have much greater surveillance on who is crossing.

DOBBS: What is the solution. Frankly, we're witnessing some real nonsense here. Is anything going to happen of any substance about securing our borders or is there going to be more political posturing on the part of both parties?

NAPOLITANO: You know, in my view, from a governor's perspective, who deals with this on a daily basis, Washington, D.C. and Mexico City both need to engage. In my view three things need to happen, one is we need more enforcement in the interior of Mexico so that people don't stage (ph) to our borders. Second, more enforcement at the actual U.S.-Mexico border. And, third, more enforcement in the interior of the United States.

DOBBS: Governor Napolitano, thanks for being here. Good luck.

NAPOLITANO: Thank you.

DOBBS: On all three counts.

Still ahead, the results of our poll tonight. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll. It's overwhelming, 98 percent of you say the 45-day national security review of the Dubai Ports World deal is merely a White House and Republican leadership gambit to facilitate the deal.

It's one of the reasons I say this program has the smartest audience in all of television. Taking a look at some of your thoughts. Greg in Illinois saying, "Hey Lou, now Congress is pulling a scam on the American people by putting a delay on this port deal. They hope after a week people will forget, then they will let it go through. The people need to demand a vote on this now."

Sal in New York. "Lou, I just don't get it. Our government won't deal with Hamas because it doesn't recognize the State of Israel. The UAE doesn't recognize Israel yet we want to let them run our ports."

Barbara in Pennsylvania. "Lou, you shouldn't be so hard on Bush. He thinks the UAE is doing a heck of job."

Isabel in Florida. "I could run this country better from my kitchen table."

You know, that's an interesting statement of confidence. We'll have to check it out.

We love hearing from you. Send us your thoughts at loudobbs.com. Each of you whose email is read here receives a copy of my book, "Exporting America." Thanks for being with us tonight. Please join us here tomorrow.

Congressman Duncan Hunter, the Chairman of the House Armed Services Committee and a leading opponent of the Dubai port deal, joins me.

We thank you for watching. For all of us here, good night from New York. THE SITUATION ROOM starts right now with Wolf Blitzer. Wolf.

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