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Lou Dobbs Tonight

Republicans Deeply Split Over Dubai Ports Deal; Suing for Security; Senator Collins Interview; Zogby Says Ports Deal Shows Anti- Arab Racism

Aired February 28, 2006 - 18:00   ET


ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Tuesday, February 28.
Live in New York, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening, everybody.

Tonight, a showdown in Congress over the Dubai ports deal. Democrats are blasting the Bush administration on the issue of national security. The Republicans are deeply split.

My guest tonight, a leading Republican critic of this transaction. She is the chairman of the powerful Senate Homeland Security Committee, Senator Susan Collins.

Then, President Bush strongly defending the ports deal before flying to India and Pakistan for what some say will be a welcome diversion from his domestic political troubles. We'll have that special report.

I'll also be joined tonight by three of the country's top political analysts, Ed Rollins, Joe Klein and Michael Goodwin.

Also, another troubling example of our dependence on foreigners for our national security. Why the United States is subsidizing foreign shipping lines to transport vital U.S. military equipment. We will have the startling numbers of U.S. ships at sea in a global force of some 10,000.

And are critics of the Dubai ports deal allowing racial prejudice to influence their opinions? My guest tonight, James Zogby, president of the Arab American Institute. He says smearing Arabs is the last acceptable form of ethnic bigotry in America.

Are critics of the Dubai ports deal racists? We'll be talking with Zogby about that and a great deal more.

We begin tonight with a showdown on Capitol Hill over the Dubai ports deal. Republicans tonight remain deeply divided on the sale despite the Bush administration's efforts to quell what is nothing less than a rebellion by Republican critics.

Meanwhile, congressional Democrats raising new questions about the deal, trying to exploit Republican division and win political advantage on the issue of national security. Ed Henry on Capitol Hill with our report -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Lou, a huge day here on the Hill. A full court press from the Bush administration, as well as the company here, DP World. In fact, a Senate hearing just wrapped up where the chief operating officer of that company, Edward Bilkey, as well as Bush officials testified that this deal is in fact sound, and they repeated what we heard earlier from Michael Chertoff at a separate hearing.

The Homeland Security secretary dismissing concerns about security raised in this Coast Guard document we learned about yesterday, that Coast Guard document back in December talking about alleged intelligence gaps in this port deal. But I can tell you this pushback from the administration has once again resulted in a real split among Republicans here on the Hill.

In one camp, you have the Senate majority leader, Bill Frist, who just last week was one of the leading skeptics of this port deal. Now, after getting a series of briefings from the Bush administration, he is slowly becoming one of the biggest fans of this deal, whereas in a second camp you have Republicans like Olympia Snowe today joining her fellow Maine senator, Susan Collins, in raising keep concerns about this deal.

Take a listen to Frist and Snowe.


SEN. BILL FRIST (R,-TN), MAJORITY LEADER: Then I began to do last year what some of the other members of the Senate can't do quite as easily, started having classified intelligence briefings, started talking to the Department of Homeland Security. Starting asking each of the cabinet members one by one through phone calls over the last several days what exactly went on in the process. Now, based on what I've heard today, it's made me much more comfortable.



SEN. OLYMPIA SNOWE (R), MAINE: What is troubling, Mr. Chairman, is the way in which this decision was arrived at. Both the Department of Homeland Security, as well as the director of National Intelligence undertook threat assessments simultaneously, including a Coast Guard report that was part of the DHS report. But it never rose to the highest levels of decision-making and leadership.


HENRY: And a bit of a crack tonight in the administration's line of defense about the significance of that Coast Guard document. In fact, we've heard from various Bush officials dismissing the significance of this document, saying they knew about concerns that had been raised in the process, but they insist that in fact they dealt with those concerns. But tonight, at this hearing, under questioning from Republican Senator Ted Stevens, the deputy secretary of Homeland Security, Michael Jackson, acknowledged he had not seen this Coast Guard document before okaying the deal.

Take a listen to this exchange between Stevens and Jackson.


REP. TED STEVENS (R), ALASKA: Of your part of the Department of Homeland Security, we're told the Coast Guard had a classified document, it was going through the Department of Homeland Security, concerning DP World. Were you aware of that?

MICHAEL JACKSON, DEP. HOMELAND SECURITY SECRETARY: The Coast Guard did an internal assessment of this transaction. The document that they created was for their internal review so that they could render a judgment...

STEVENS: That's not the question I asked you. Were you aware of it?

JACKSON: At the time it was written I was not. No, sir.

STEVENS: Were you aware of it at the time you passed on the approval of DP World?

JACKSON: No, sir, I was not.

STEVENS: Do you think you should have been?

JACKSON: In this transaction, in retrospect, I wish I had learned more.

STEVENS: Were you cleared for that access?

JACKSON: Yes, sir.


HENRY: Now, Democratic Senator Chuck Schumer today also claiming he has anonymous sources saying that in fact the Customs and Border Protection Service, that agency, in addition to the Coast Guard, also had concerns about this deal before it was okayed, but that those concerns were not listened to by the Department of Homeland Security.

I can tell you, though, an official at the agency insisting they have found no such memo, they have not found any officials to corroborate Senator Schumer's story -- Lou.

DOBBS: Ed Henry from Capitol Hill.

Thank you.

Later here, I'll be talking with Senator Susan Collins, the chairman of the Homeland Security Committee, about what she calls this flawed process and her own deep reservations about the deal.

The chief operating officer of Dubai Ports World, Ted Bilkey, today told senators that it's impossible to stop the ports deal from going ahead. One senator, Mark Pryor, immediately demanded answers from the Homeland Security Department about this so-called review process.


SEN. MARK PRYOR (D), ARKANSAS: My understanding is that DP World has volunteered to undergo I guess a voluntary additional review of the port terminal acquisition. But as I understand the way that would work is, the review would take place after the transaction is completed. Is that right?

JACKSON: That's my understanding.

PRYOR: What purpose does that additional review serve if the port has already changed hands?

JACKSON: Well, I would defer to the owners and the potential owners to talk about the structure of that transaction.


DOBBS: Remarkable. This deal, in fact, will close Thursday of this week, and Dubai Ports World will send checks for nearly $7 billion to the shareholders of P&O by the 15th of March.

President Bush today strongly reaffirmed his support for the Dubai ports deal. In doing so, President Bush apparently prejudged the outcome of this new 45-day review of the deal which goes to the president for his final approval. The president's strong defense of the sale comes as his approval rating has plummeted to the lowest level of his presidency.

Dana Bash reports from the White House -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Lou, the president's exact words on that port deal in the Oval Office today were, "My position hasn't changed." That, despite the fact that, as you mentioned, the second more intense review has not yet started. But as to the vocal concerns that really is still coming from Republicans on Capitol Hill, here's what the president had to say.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Let me just make something clear to the American people. If there was any doubt in my mind or people in my administration's mind that our ports would be less secure and the American people endangered, this deal wouldn't go forward.


BASH: Now, that statement angered some Republicans, particularly in the leadership on Capitol Hill. One calling it -- a senior Republican aide in the Senate calling it inflexible and even counterproductive to those trying to swim across the anger, the ocean of anger about this deal.

Here at the White House, though, Lou, a senior aide said that the bottom line is the president felt that the first review was sufficient and he is simply going through with the second review because he understands that members of Congress need more information and need to have their concerns allayed. But there is new evidence that is going to be an uphill battle, particularly when it comes to the American public.

Look at this new poll from CBS News. It asks, "Should Arab companies operate U.S. ports?" Seventy percent say no, and just 21 percent say yes.

And also in this poll, a new alarming number about the president's overall approval rating. You see there it is now down to 34 percent. It was just at about 42 last month, which was already quite anemic.

These particular issues, Lou, the White House understands are problems when it comes to ports. That is one of the issues that perhaps is dragging down Mr. Bush's numbers now. But they recognize it's not just that. They are also looking at Iraq and other issues that are simply making the American people feel bad, and that is reflected in the president's poll numbers.

DOBBS: Is there any concern there, Dana, at the White House that this obvious political maneuver, that some might call outright deceit -- that is, calling for a 45-day review, as Senator Pryor pointed out today in the hearing -- really amounts to nothing in terms of the transaction itself?

BASH: Well, they don't obviously, as you can imagine, look at it as deceit because the president was very clear today in the Oval Office about why they are doing this and what their goal is. And that is to try to convince Congress what he says he believes is true in the first place, that he -- I checked about this again -- what about did the president know about this particular deal once he started getting information?

Senior aides insist that he looked into it, looked into the process, and that he feels comfortable with the national security of this country if this deal goes through.

DOBBS: Indeed. And is there any concern in the White House tonight that a number of very powerful members, Republican members of the U.S. Congress, believe that this president and this administration is now acting with condescension, with a patronizing attitude? I'll tell you point blank, the chairman of the House Homeland Security Committee, Congressman Pete King, said to me point blank that he is resentful as he can be about suggesting that the White House would be educating the United States Congress.

BASH: Well, here's what they say about that, Lou. They simply say that the president had made his position clear, and that his -- they don't -- we shouldn't expect his position to change on this.

DOBBS: No, I asked you, Dana, if there was any reaction to the fact that there are members of the president's party that are infuriated by the tone taken by this White House.

BASH: They're well aware of that, and they are insisting that this is a tone that they are going to continue to take because this is what the president believes is the best for the country. But in terms of the anger coming from Capitol Hill, they are very aware of that.

DOBBS: Thank you very much.

Dana Bash from the White House.

The secretive Committee on Foreign Investments in the United States, CFIUS, approved the sale of key U.S. port operations to the Dubai-owned Dubai Ports World. The United Arab Emirates certainly a part of the equation.

CFIUS, by the way, created in the 1970s out of concerns that those rising oil prices at that time were helping foreign companies and investors buy critical American assets.

In 1975, President Ford issued an executive order that created CFIUS to monitor and evaluate foreign investments in the United States.

In 1988, Congress passed a law allowing the president to bar a foreign acquisition if it threatens national security.

Then in 1993, Congress specifically amended the law to require a full investigation if a foreign government-owned company is to acquire assets that could affect national security.

Since 1975, by the way, CFIUS has reviewed 1,500 deals. Over the course of the past 21 years it has rejected exactly one deal.

The battle to block Dubai Ports World from taking over major port operations in this country extends far beyond Congress. The sale is also being challenged in the court system in this country and overseas.

Lisa Sylvester reports.


LISA SYLVESTER, CNN CORRESPONDENT (voice over): A British judge will decide Thursday whether to allow DP World to buy the U.K.-based P&O company. The British high court has to sign off on the deal for it to go forward.

Eller & Company, a U.S. cargo firm and partner of P&O, has filed a lawsuit challenging the sale. Their lawyers are not able to talk about the specifics of the London case but voice their general concerns. MICHAEL KREITZER, ATTORNEY, BILZIN SUMBERG: We don't want to be the involuntary partner of an entity which is in a sense a foreign government. We think that that's bad for business, and we think it's bad for the national security of the country.

SYLVESTER: The state of New Jersey has also filed a lawsuit based on state sovereignty. Governor Jon Corzine has said on this broadcast that DPW control of the New Jersey port terminals would restrict the state's ability to protect its citizens.

GOV. JON CORZINE (D), NEW JERSEY: We don't know why the decision was taken to allow the UAE to take ownership through a state- controlled company of this -- of our ports.

SYLVESTER: Yet another lawsuit has been filed by the Port Authority of New York and New Jersey in state court contending breach of contract. The port authority says it was not consulted on the pending sale.

ANTHONY COSCIA, CHAIRMAN, PORT AUTHORITY OF NY & NJ: We have no ability to impede that transaction at its highest level. The only ability we have is as a landlord to terminate our lease because consent has not been requested from us in the proper form and we have not been made comfortable to provide that consent.

SYLVESTER: Any one of the legal avenues could stop the deal, but as of now, Dubai Ports is scheduled to close on the purchase of P&O this Thursday.


SYLVESTER: The London case may have the best chance of halting this deal. The judge has held three days of hearings and is now weighing the legal challenge. And the other case that is steam- rolling along is the lawsuit followed by Governor Corzine. A U.S. district court judge will hear arguments tomorrow morning -- Lou.

DOBBS: Lisa, thank you very much.

Lisa Sylvester from Washington.

Still ahead here, what "The New York Times" and "The Wall Street Journal" editorial pages left out, two articles on the ports deal. We'll tell you all about that.

And tens of thousands of longshoremen all across the country are protesting the Dubai takeover of port operations. We'll be going live to Long Beach, California, for that story.

And why the U.S. government pays foreign ship owners to fly the American flag. We'll have that special report.

And I'll be talking tonight with a leading Republican critic of this deal, Senator Susan Collins, chairman of the Homeland Security Committee.


DOBBS: The hard-working men and women at our nation's ports know better than anyone about the dangerous gaps in our nation's port security. And these workers say unquestionably that the Dubai Ports World deal will leave our ports more vulnerable to terrorist attack.

Casey Wian reports.


CASEY WIAN, CNN CORRESPONDENT (voice over): More than 100,000 union members work at the nation's ports. Another 55,000 drive trucks that haul sea-borne freight across the country. They're inherently dangerous jobs, now with added risks: gaping holes in port security and the proposed deal to turn over management at several ports to a nation with terrorist ties.

Union leaders are outraged.

JOHN BOWER, PRESIDENT, INTERNATIONAL LONGSHOREMEN'S ASSOCIATION: The president of the United States tells us to watch out for terrorists every night. How the hell could he sell these six ports to a foreign country, especially a foreign country that flew the planes into the World Trade and killed 3,000 people?

WIAN: Longshoremen are holding rallies from coast to coast to protests the deal.

UNIDENTIFIED MALE: Don't let them tell you that it's a just transfer of title. Baloney. We wouldn't transfer the title to the devil, and we're not going to transfer it to Dubai.

Take care, everybody. Fight on.

WIAN: West Coast union leaders have been complaining about port security problems since 9/11, concerns they repeated to a Senate committee Tuesday.

MICHAEL MITRE, ILWU PORT SECURITY DIRECTOR: As the current case over the Dubai contract has shown, the problem of system-wide noncompliance with existing port security regulations arises from allowing commercial interests in many times to override security interests.

WIAN: They say hazardous material is sometimes intermingled with other cargo and is not properly documented. Vehicle drivers and passengers are often not screened before entering port terminal gates. And container seals are not checked for tampering.

The shipping industry denies the claim that port security is being sacrificed for commerce.

CHRISTOPHER KOCH, PRES. & CEO, WORLD SHIPPING COUNCIL: There is no evidence that terminal facilities operations conducted by foreign controlled companies are any less secure or in any way less compliant with security regulations, or in any way less cooperative with U.S. government security authorities than U.S.-controlled companies.

WIAN: And in a written statement, the shipping executive downplayed the threat of a terrorist attack, saying the Department of Homeland Security has stated there are no known credible threats that indicate terrorists are planning to infiltrate or attack the United States through maritime shipping containers. That's little comfort to the men and women who work and live near the nation's ports.


WIAN: One shipping industry executive says he thinks union leaders are trying to capitalize on port security concerns to enhance their bargaining position. Union leaders, meanwhile, say they just want the federal government to fully fund and enforce its own port security regulations -- Lou.

DOBBS: The suggestion being that the unions and the longshoremen that they represent are putting commercial interests ahead of national security? Is that the charge?

WIAN: That's the charge. They're saying they want union members to do some of these port security jobs, inspecting containers inspecting manifest, that kind of thing. And they're accusing the union of doing the very same thing that the union is accusing the shipping lines of doing -- Lou.

DOBBS: Casey, thank you very much.

Casey Wian.

Appreciate it.

As Congress battles over the Dubai Ports World deal, there are serious questions about a key presidential appointment. President Bush, as we've reported here, nominated David Sanborn to head the Maritime Administration of the Department of Transportation. Sanborn was on the senior management team of Dubai Ports world when the president nominated him.

Coincidentally, the White House announced Sanborn's nomination on the 17th of January. The very same day that CFIUS approved the Dubai Ports World purchase of U.S. port operations. If confirmed, Sanborn will have oversight of his former employer.

Today, Senator Bill Nelson of Florida called upon the Senate Commerce Committee to bring Sanborn back to answer further questions.

Both "The New York Times" and "The Wall Street Journal" today printed op-eds co-written by the very same person in support of the Dubai ports deal. And both "The New York Times" and "The Wall Street Journal" failed to identify the individual, Admiral James Loy, by his current title and position.

Loy, a former U.S. Homeland Security deputy secretary, is now senior counselor at the strategic global consulting firm The Cohen Group. The article in "The Wall Street Journal" is entitled "Fact, Not Fear," written by former Defense secretary William Cohen and James Loy, calling the opposition to the port deal "a firestorm fueled by fear and misinformation."

The op-ed piece is "The New York Times" is entitled "A Port in the Storm Over Dubai," saying the Dubai port deal is merely "a political distraction." It is also co-authored coincidentally by James Loy. And again, his current employer is not identified.

Still ahead here, another maritime security giveaway. U.S. taxpayers paying foreign shipping companies millions of dollars a year so that our flag can fly. We'll tell you all about that next.

And charges tonight that critics of the port deal are racist. My guest tonight is James Zogby. He's president of the American Arab Institute. He says Arabs are victims of what he calls ethnic bigotry.

Stay with us.


DOBBS: There is no question that the United States has a serious, serious national security issue in port security. There are also serious, serious critical issues of national security in the number of ships the United States actually owns.

Kitty Pilgrim has the report.


KITTY PILGRIM, CNN CORRESPONDENT (voice over): Of the 10,000 cargo ships now in the world, there are only about 230 ships left that fly the American flag, and many are not American owned.

After World War II, the United States had the largest shipping fleet in the world. Half of all privately-owned ships were American. But now, the U.S. government has to pay foreign-owned ships to fly the U.S. flag to make them available in time of war.

JOHN PIKE, GLOBALSECURITY.ORG: If it wasn't for that subsidy program, the United States, I don't think, wouldn't -- we wouldn't have any flag ships at all for cargo trade because the American crews are simply too expensive relative to a crew that you could put together from, say, the Philippines.

PILGRIM: In exchange for $2.6 million per ship every year, the ship must sail with an American crew and fly an American flag. But they don't have to be American-owned ships. U.S. taxpayers currently subsidize some 60 ships, many of them foreign-owned.

Eleven percent are owned by a Norwegian parent company. Fifteen percent by a company majority owned by the Singapore government. Forty percent are ships with a Danish parent company, 8 percent have German ownership. Only about 13 percent are U.S.-owned.

REP. WALTER JONES (R), NORTH CAROLINA: As a government, we need to make more of an investment in our merchant marine fleet because this is obviously a world that we live in that is a world that is unsettled. We don't know what tomorrow is going to bring. We're dependent on these other countries, and it could be one day one of these countries could possibly be our enemy. Then where are we going to be then?

PILGRIM: The merchant marine Web site sums up of the emergency. "The United States imports approximately 85 percent of some 77 strategic commodities critical to industry and defense."


PILGRIM: Now, these ships are vital to U.S. security. During Operation Desert Shield and Desert Storm, about 80 percent of military equipment and supplies moved on the U.S. flag fleet -- Lou.

DOBBS: Two percent of the entire world shipping fleet.

PILGRIM: Yes, that's it.

DOBBS: Incredible.

PILGRIM: We're almost out of the business, basically.

DOBBS: We are out of the business, and we're in deep, deep trouble as well.

Thank you very much.

Kitty Pilgrim.

Let's take a look now at your thoughts.

Bill in Oklahoma wrote to say, "American citizens should not be required to plead with elected politicians to enforce our Constitution and laws. The politicians should be pleading not to be ridden out of office on a rail."

Jerry in Wyoming, "Lou, I hope the intelligence agency that assured Bush that selling our ports to Dubai wouldn't pose a security threat isn't the same one that assured him that Iraq was a slam dunk and that Iraq had WMD."

Martin in Oregon, "Lou, it's real big of the UAE to voluntarily allow a 45-day review of the ports deal. It makes me wonder who is really running our country."

Carl, in Michigan, "Is it going to take 45 days for the lobbyists to get all the money together to buy off Congress?"

Joseph, in California, "What they now call Senate leadership is what the average American calls prostitution."

We'll have more of your thoughts, your e-mails later here.

Coming up next, Senator Susan Collins, Republican, a fierce critic of the ports deal, chairman of the Homeland Security Committee in the Senate. She'll be our guest.

And I'll be talking with the president of the Arab American Institute who says racism is driving opposition to the Dubai ports deal. Really? We'll find out.

And President Bush's poll numbers have hit rock bottom. Three of this country's leading political commentators and analysts join me here next.

Stay with us.


DOBBS: Senator Susan Collins is the chairman of the Homeland Security Committee. She continues to stand strongly in opposition to the Dubai Ports deal, even as some other Republican leaders have softened their opposition. Senator Collins joins us tonight.

Senator, it is good to have you with us. You've said after the closed meeting that you held in a hearing yesterday coming out of that closed session, you seemed more than a little annoyed. You said the deal was, in your judgment, deeply flawed, the process. Tell us where you are tonight.

SEN. SUSAN COLLINS (R-ME), HOMELAND SEC. CHMN.: Well, I'm exactly at the same place. I'm convinced that the administration failed to do the kind of in-depth review of the national security implications of this proposed transaction, that is clearly required by law to be done.

We also know, as a result of some documents that we got yesterday and released yesterday, that the Coast Guard's intelligence assessment raised some significant concerns about this proposed transaction, concerns about personnel, operations, foreign influence, and perhaps most troubling, the Coast Guard said that there were significant intelligence gaps that prevented those questions from being answered.

DOBBS: The director of national intelligence, John Negroponte, today said he's confident there's a low risk in the hearing led by Senator Stevens -- the opportunity to give homeland -- he gave Homeland Security the opportunity to say that they had no problem. This looks like a juggernaut of a campaign by this administration to move ahead.

Interestingly, your colleague, Senator Pryor, asked point blank, if this deal is going to close, the Dubai Ports World deal, with P&O, the British firm, is going to close Thursday, what is this review process about? Now, I ask you, Senator, the same thing.

COLLINS: Well, Treasury Department officials have assured me that this is going to be a real review this time, and that the Dubai company is going to abide by whatever conclusion is reached. In addition, the administration does have the authority under the law to go to court and force a divestiture of the assets, if needed.

DOBBS: With the president of the United States saying categorically even though he said he didn't know about any of this until a matter of days before it exploded on Capitol Hill, how could one assume that he would go anywhere near a court to enforce that kind of decision and result when he's saying categorically right now -- and threatening a veto and saying categorically he supports this deal?

COLLINS: Well, I must say that I'm surprised at the president's reaction. He has been a stalwart in the war against terrorists, has led our country in that regard, and he clearly was not served well by his cabinet and his staff, because he didn't know about the transaction until he learned about it the same way the rest of us did, by watching television.

DOBBS: Well, Senator, I must say you're being kind, you're being generous, as well as critical of this deal. The president is not reciprocating. He's threatening to veto and his administration, and I will tell -- as I've reported here tonight, Congressman Pete King, your counterpart in the House, the chairman of the House Homeland Security Committee, he's more than a little resentful of the fact that the White House is indulging in patronizing, condescending attitude suggesting that they only need the time to educate you poor ill- informed servants of the people and representatives of the people's will over on Capitol Hill. How do you react?

COLLINS: Well, Peter King and I talked last night again and we share very similar views on this. This is important. This matters to our homeland security. We know that our ports are very vulnerable to a terrorist attack and it just doesn't make sense to rush this deal through without carefully evaluating the national security impact.

DOBBS: You know, Senator, in covering lots of transactions on Wall Street, major corporations, I can think of none that could have -- in what is called due diligence, could have been carried out in 30 days or 90 days or even 45 days.

And it's kind of due diligence that it wouldn't be satisfactory for corporate America, yet it seems to be through the CFIUS law and process to be adequate to preserve national security. I mean that's remarkable.

COLLINS: You know, that's a really good point, and I think it shows that the process is flawed. I'm also troubled by the fact that the chair of the committee is the Secretary of Treasury or his designate rather than the secretary of Homeland Security or Defense. After all, this is supposed to be a national security review.

I also am troubled that there is no representative of the intelligence community, sitting on this committee. You have the director of OMB but not someone from the CIA or the director of national intelligence.

DOBBS: Senator Susan Collins, chairman of the Senate Homeland Security Committee. We thank you very much.

COLLINS: Thank you, Lou.

DOBBS: We'd like to know what your thoughts are. In tonight's poll our question is, do you have confidence that the 45-day review of the Dubai Ports World deal will be intensive and thorough and the outcome based solely on the national security interests of this country? Please cast your vote at We'll have the results later here in the broadcast.

Coming up next, we'll hear from a prominent Arab American who says anti-Arab racism is driving the opposition to the Dubai Ports World deal.

And sinking poll numbers, a mutiny in the ranks. I'll talk about the administration's political nightmare with three of the country's top political analysts. Stay with us.


DOBBS: My next guest says that anyone opposing the Dubai Ports World deal, he might be suspicious of their racism. He says protests against the deal are racist, anti-Arab, an attack against the United Arab Emirates.

Writing in the "Baltimore Sun," James Zogby declared, quote, "Smearing all things Arab remains the last acceptable form of ethnic bigotry in America," end quote.

James Zogby, president of the Arab American Institute. Good to have you here.

JAMES ZOGBY, PRES., ARAB AMERICAN INSTITUTE: Thanks, Lou. You overstate my case a bit. Actually, you overstate it quite a bit.

DOBBS: OK. Why don't you understate it? I was just quoting this -- the Baltimore ...

ZOGBY: There can be a very legitimate debate about this deal and about national security and about port security in particular. We ought to be having that discussion. Actually, I was on Wolf Blitzer's "LATE EDITION" on Sunday, and the senators who were on right before me, Feinstein and Kay Bailey Hutchison, had an excellent debate about the issues of port security and what we need to do.

But I've listened to Frank Lautenberg and Rick Santorum and Chuck Schumer and Peter King, and I've listened to radio talk show hosts. And they've been using shameful language...

DOBBS: Like what? Like what, Jim?

ZOGBY: Like rogue government, like -- that's language we've used for Iran in the past. Like ties to Islamic fascism. Like I give this deal to the devil, and comparing the devil with Dubai.

DOBBS: Let's take that line alone.

ZOGBY: These are outrageous comments that shouldn't be made.

DOBBS: Well, should it be pointed out...

ZOGBY: Sure.

DOBBS: ... that the United Arab Emirates was a fulcrum and a distribution point, a broker, if you will, in its banking for money that went to terrorists for technology, nuclear technology that ultimately ended up in Iran, in Libya, in North Korea? That they have voted approximately -- I think they've voted against the United States, this great ally, as the administration wants to point out. This ally has not even voted 10 percent of the time with the United States in the United Nations.

ZOGBY: Well, let's start with the money issue. The fact is, is that as much money that came from the UAE and came simply funneled through banks there, also came through American credit card companies here, where a number of these terrorists had credit cards and maxed out.

Banks do not do security checks before they let you open an account and before they let you write money.

DOBBS: Let me back up.

ZOGBY: No, let me finish. Let me finish.

DOBBS: No, let me interrupt, and then I will let you interrupt me.

ZOGBY: Sure.

DOBBS: The point is that that money actually moved from the United Arab Emirates to the United States to support some of those, most of those terrorists.

ZOGBY: And interestingly enough, like I said, many of these guys had credit cards that they maxed out on borrowing money from American banks that they never were able to pay back, and the operational training and recruitment of this group happened in Germany. Is Germany a hub for terrorism? Is Germany a country we want to do business with?

DOBBS: To the degree -- to the degree that it harbors radical Islamist terrorists, the German government, just as the United States government, has to take responsibility.

ZOGBY: And we do. After 9/11, we've put in some security procedures...

DOBBS: Absolutely.

ZOGBY: ... that we were lax on. Germany has done the same. And you know what? The UAE has done the same, which is one of the reasons why they are not only compliant right now, fully compliant, with what we've asked them to do, but Tommy Franks calls them a vital ally, as do many other generals who served there.

DOBBS: Forgive me, I am not interested -- I'll be honest with you -- in this debate right now. ZOGBY: Sure.

DOBBS: This administration and its representatives said that there were no concerns raised about port security by any agency or office in the CFIUS review. Turns out that was not true. This administration says -- this president says he will veto any legislation to block this deal, when he'd only found out about the process a few days before.

So let us move back to the racism issue, the idea that it's acceptable bigotry, Jim, in this country -- and I know that you have a responsibility with the Arab-American Institute -- I don't think that you would find anything more than the lunatic fringe who would think that any kind of bigotry is acceptable in this country. And I want to say to you...


DOBBS: I want to say to you, we've got really serious issues to deal with here.

ZOGBY: We do.

DOBBS: And the suggestion, the suggestion that it's Arab bigotry to try to move forward a discussion on national security -- I mean, my gosh, do you really think that adds anything to the desperate need for a national public debate here?

ZOGBY: Lou, if you'll allow me...

DOBBS: I will.

ZOGBY: The issue here is the comments made by the senators I noted were, in fact, over the top. And because it's an Arab country, there's a sense that everything is fair game and everything is allowable, because there's no accountability. You couldn't say these things about other governments, and that's what I was objecting to.

Let's not overstate my case here. We have to have a debate about national security, and we're going to have a review of this deal. But let us not use language that is shameful, irresponsible and ill- informed in much of the rhetoric, as you would admit...

DOBBS: I'm giving you an opportunity, Jim, to retract what you're saying. I made an overstatement. I'm quoting you. Quote, "smearing all things Arab..."


DOBBS: ... remains the last acceptable form of ethnic bigotry in America." End quote. You don't say the senator said it. You don't say some crazy talk show host said it.

ZOGBY: Lou, that's one quote out of a larger article in which I made the case, and I made it in the nuanced way that I'm making it right now. Do not put words in my mouth. I won't... DOBBS: I'm not putting words in your mouth. I'm quoting your words.

ZOGBY: ... put them in yours -- yes, and I want you to quote the whole article. Actually, we could sit here and read my article, if you want. I think it was an excellent article, and I'm very proud of it.

DOBBS: I think it's a terrific article.

ZOGBY: And I'm proud of the response that I got.

DOBBS: But you tell me...

ZOGBY: The fact is, is that...

DOBBS: Would you qualify that sentence by saying for some...

ZOGBY: I qualified it in the article, Lou.


ZOGBY: Look, here's the point. This debate is being listened to all over the world, and it's not our finest hour. And it's also being listened to here at home, which is one of the reasons why we have the rage in the street that we have. I just got an e-mail from a member of our organization, who was at dinner with his wife in a restaurant in New York, and people were talking about Arabs.

He went over and he said, look, my wife is an Arab, and this is very hurtful conversation. The woman turned back to him and said, "You killed 3,000 of our people in New York. Why don't you get out of this restaurant?"

The point here is that there is a concern in my community about bigotry. There's a concern in the Arab business community.

DOBBS: Your community -- your community is part of our community, and we're going to look after every community...

ZOGBY: Exactly.

DOBBS: ... every ethnic group in this country.

ZOGBY: And therefore, do not use language over the top. That's all.

DOBBS: Who is? Are you suggesting I am?

ZOGBY: I never said you did. But I did mention the senators...

DOBBS: Let me say one thing on this issue...

ZOGBY: I did mention the senators...

DOBBS: I heard more outrage toward this administration, this government and its failure to dutifully examine the impact of this deal on national security, and I haven't heard a word about, as you put it, Arabs or Arab-Americans. First of all, Arab-Americans are Americans. Right?

ZOGBY: They are, and in fact they're longshoremen too right now. We have got a whole bunch of them working there, and I don't want them being unduly scrutinized.

DOBBS: Oh, my gosh. Well, you know what? The issue here is scrutinizing our national security.

ZOGBY: Exactly, and I agree with you that we ought to.

DOBBS: You got it. And by the way, there isn't Arab bigotry permitted in this country or embraced by anyone that I know of, and I hope that you will continue to qualify that comment, as you did so respectfully in your article.

ZOGBY: Lou, look at the comments made by the senators that I was referring to. Listen to what the radio talk show hosts are doing. They are inflaming passions and preying off of fear, creating a backlash that I think is very dangerous, and is having a consequence in terms of our ability to deal with and do business in the Middle East.

Look, the last best friends we've got in the Middle East are the business community, and they are thinking twice right now about whether capital ought to go where risk and controversy follows. It is not in our national interests...

DOBBS: Hopefully, then, the American investors won't be too concerned about investing in the Middle East, where there is considerably more risk and considerable -- considerably more prejudice.

ZOGBY: I don't want to see isolationism...

DOBBS: We've got to break, we've got to break, Jim...

ZOGBY: ... and I hope you don't either.

DOBBS: I'm sorry, we're out of time. Thank you very much for being here. Come back soon. We'll all -- we'll have you some more.

ZOGBY: Have me and I'll come back, Lou.

DOBBS: You got it.

ZOGBY: Thanks.

DOBBS: Coming up at the top of the hour here on CNN, "THE SITUATION ROOM and Wolf Blitzer -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks, Lou. We're going to have a lot more on the port story as well, and we're also following what's happening in Iraq. Dozens of people killed after a curfew is lifted. Are U.S. troops right now standing in the middle of what could turn out to be a civil war? We'll ask some of the hard questions.

Also, following another story. The former Taliban spokesman, now a student at Yale. How did he get a green card into the United States while others are sitting at Guantanamo Bay? We're on the trail.

Plus, sinking in the polls. President Bush hits a brand new low. Find out what's dragging him into a second term slump.

And CBS versus Howard Stern. We'll find out just why they filed a 43-page lawsuit against him. All that, Lou, coming up in a few moments.

DOBBS: Look forward to it, Wolf. Thank you very much.

Coming up here, the Dubai ports deal, triggering a new political crisis for the president. As President Bush leaves for India, his poll numbers at the lowest level of his presidency. Three of the country's top political analysts join me next. Stay with us.


DOBBS: Joining me now are three of the country's best political analysts, Ed Rollins, former White House political director in the Reagan Administration; Michael Goodwin, columnist for the "New York Daily News; Joe Klein, columnist, "Time" magazine. Gentlemen, thank you.

Joe Klein, you're down there at the epicenter of this. The idea that the president has now seen his approvals rating drop to 34 percent, there's got to be a considerable tremor in the White House.

JOE KLEIN, "TIME" MAGAZINE: Yes, but where are the tourniquets? Who is going to stop the bleeding? I -- you know, you just see absolutely no indication that the Bush administration knows how to handle this situation, which is, you know, if I could describe the mood in this town in a word, it's kaboom!

You know, the whole place is blowing up over this ports issue which I think is a stand-in for public concern about a lot of the things you've been concerned about over the past few years, about illegal immigration, about the war in Iraq, and about trade issues.

DOBBS: And border security ...

KLEIN: And border security.

DOBBS: ... inextricably connected to, of course, illegal immigration.

Michael Goodwin your reaction to these numbers? These are lower, I think, than most -- even you savants would have thought possible.

MICHAEL GOODWIN, "NEW YORK DAILY NEWS": Right, and I guess they could go lower but what struck me the most in all the numbers, Lou, was that his approval on how he's handling the war on terror was below 50 percent, I think it was 43 percent. And just a month ago it was at 52, and that's the one number that has kept him afloat, that's the one thing, his one advantage, his one clear level of superiority over everybody else. And I think he's lost that over this issue.

DOBBS: Ed Rollins, your assessment of the president's situation and the political mood of the country? I mean, where are we here?

ED ROLLINS, FMR. W.H. POLITICAL DIRECTOR: First of all, the president is self-inflicting his own wounds but more important to the Congress, he's putting wounds into them, the Republicans. As his numbers are dropping, their numbers are dropping at an equal rate.

And to a certain extent the issues they had high marks on over the Democrats are starting to slip on a rope, particularly the security issue. Even now on taxes Democrats are getting higher marks on who can better handle taxes.

So it's -- they're starting to begin to worry more about this election all the time, and they think the White House clearly does not understand or doesn't care that they're up for reelection.

DOBBS: I know that you haven't been in Washington perhaps long enough to ask this next question Joe Klein, but is it your sense that we're about to see a change in control of the House and the Senate come November?

KLEIN: Well, it's many, many years between now and November, and a lot of it depends on how the Democrats handle this issue themselves. They never miss an opportunity to miss an opportunity, in recent elections.

But, you know, a very, very prominent Democrat I was talking to yesterday said, in his mind, the question is, is this 1994 where his party just fell apart, or is it 1996, where the Republicans got their act together in Congress, passed some stuff and didn't have severe bleeding in a year when Bill Clinton won a major reelection victory?

DOBBS: What's your sense of that, Michael?

GOODWIN: Well, I think Joe's right, it's going to take time but I think the Democrats have not yet shown they can take advantage of it. And I think that's going to be the clear thing for them, and I think right now Republicans are running scared. And I think it will depend ultimately on whether the Republican Party can kind of pull itself back together and present a united front.

ROLLINS: The erosion in these polls, Lou, are among Republicans who are moving away from their president. If Republicans don't turn out, then obviously you end up with a bad election year.

DOBBS: Bill Frist, the majority leader, exercised what appears to be a one week long profile in courage and has now rolled back to conform to the White House.

Susan Collins, the Homeland Security Committee chairman, Pete King, homeland security, House of Representatives, Congressman King, Senator Collins -- they're not happy.

ROLLINS: Well, Bill Frist may back away but he's not as relevant a leader as he was a year and a half ago. And I would argue it doesn't matter to me if you're a leader if there's no followers, and right today, the followers clearly are going in a different direction than Frist and the White House.

GOODWIN: I was struck by Collins in your interview with her. I mean, she just, you know, not going to hide the differences. I mean, she's out there, out front saying no, no, no, this is not well-done, and the president didn't know what was going on. And I was -- she's not pulling any punches.

DOBBS: Joe, the last word.

KLEIN: Yes, first of all, Bill Frist's career has been going downhill ever since he diagnosed Terri Schiavo by videotape, and in addition to that, Karl Rove's plan for this year was to use national security as the issue that Republicans would run on and win on in the fall, as he has in the past. That seems to be falling apart.

DOBBS: Joe Klein, Ed Rollins, Michael Goodwin, thank you, gentlemen.

ROLLINS: Nice to be here.

DOBBS: This is a -- come back soon, maybe a day or so. See how this works out. Thank you.

Still ahead here, we'll have the results of our poll. Please stay with us.


DOBBS: We want to bring you up-to-date on the Intrepid Fallen Heroes Fund constructing a state-of-the-art facility in San Antonio, the center to help our severely wounded members of the military returning from combat in Iraq and Afghanistan. If you'd like to contribute, please go to,

We also would like to tell you tonight that Cher has made a very generous donation. I don't know whether she wants people to know how much she donated, but it was a bundle, and it brings the Intrepid Fallen Heroes Fund much closer to the goal.

It's going to close by the end of this week. We still need your help. We hope you can contribute, Way to go, Cher. Outstanding. And you can get a link to the fund on as well.

The poll results now. Ninety-seven percent of you do not have confidence that the 45-day review of the ports deal will be intensive and thorough, and the outcome based solely on the national security interests of the United States.

Thanks for being with us tonight. Please join us here tomorrow, Congressman Duncan Hunter, the powerful chairman of the House Armed Serviced Committee, is our guest. Senator John Kyl on tomorrow's important Senate hearing. Please be with us.

For all of us here, good night from New York. Thanks for watching. "THE SITUATION ROOM" starts right now with Wolf Blitzer -- Wolf.