AN ARAB takeover of a British shipping company is laying bare the growing political vulnerability of President Bush.

Mr Bush is threatening to wield the presidential veto for the first time since he entered the White House if Congress blocks the deal between P&O and Dubai Ports World.

The £3.9 billion sale would hand control of six US ports over to a company based in the United Arab Emirates. This has provoked mutiny among Republican leaders.

The mood in Congress was not improved yesterday by the admission from the White House that Mr Bush did not know about the takeover until it was a “done deal”.

Mr Bush said that the US would be sending “mixed signals” by refusing to let an Arab company run ports which have long been foreign-owned and operated. He said that congressional critics needed to explain why a Middle Eastern company is held to a different standard” from one based in Britain.

The Bush Administration is painfully aware that it cannot afford to alienate one of a diminishing band of Middle Eastern allies. The UAE has captured senior al-Qaeda leaders, including the mastermind behind the attack on the USS Cole, and American military aircraft have access to its bases.

But critics point out that two of the terrorists responsible for the attacks on America on September 11 were citizens of the oil-rich country, while the UAE’s banking system was used to transfer money to the hijackers.

The President will be given some solace today when Alan Johnson, the Trade and Industry Secretary, uses his Mansion House speech to attack US protectionist tendencies.

In a passage understood to be aimed at US opponents of the P&O takeover, Mr Johnson will say: “At a time of worldwide tension it’s all the more important that we do not retreat into protectionism.”

But the White House has been taken aback by the intensity of opposition, including from the top two Republicans in Congress, Bill Frist, the Senate Majority Leader, and Dennis Hastert, the House Speaker. The apparent political isolation of Mr Bush on this issue is partly a function of his low poll ratings before this year’s mid-term congressional elections, when many Republicans are keen to put some distance between themselves and the White House.

Although the President’s aides acknowledge that Congress should have been consulted earlier on the sale, they are incredulous that anyone should be questioning his judgment on a national security issue.

Dan Bartlett, the President’s senior adviser, said that government agencies would continue to run security at the ports in New York, New Jersey, Philadelphia, Baltimore, Miami and New Orleans. “It’s important to understand that port security in the US is charged to the US Coast Guard and the United States Customs office. That hasn’t changed by this deal.”

Peter Mandelson, the former Cabinet Minister and now the European trade commissioner, said on a visit to Washington yesterday: “Takeovers should be judged by shareholders on commercial grounds, and it is those considerations which should be paramount in our view.” He gave warning that the spectre of protectionism was “always lurking and always ready to be stirred up by populists”.

AMERICA DIVIDED OVER THE DEAL

THE WASHINGTON POST

“We’d like to remind them (Congress), as they’ve apparently forgotten, that the United Arab Emirates is a US ally that has co-operated extensively with the US security operations in the war on terror”

NEW YORK POST

“Security at the ports is already lax enough”

LOS ANGELES TIMES

“It only provides . . . Congress an opportunity to talk tough and pander to the terrorism-rattled xenophobe in all of us”

THE NEW YORK TIMES

“The United Arab Emirates is an ally, but its record in the war on terror is mixed. It is not irrational for the United States to resist putting port operations, perhaps the most vulnerable part of the security infrastructure, under that country’s control”

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