By DAVID ESPO

Bowing to ferocious opposition in Congress, a Dubai-owned company signaled surrender Thursday in its quest to take over operations at several U.S. ports.

DP World, the firm involved, issued a statement saying it would "transfer fully" the planned operations to a "United States entity," according to Sen. John Warner (news, bio, voting record), who read the announcement aloud on the Senate floor.

Other Republicans said the firm had privately pledged full divestiture.

The announcement appeared to signal an end to a politically-tinged controversy that brought President Bush and Republicans in Congress to the brink of an election-year intraparty veto battle on a terrorism-related issue.

Lawmakers who have been trying to block the deal involving DP World said they were studying the company's announcement to see if it adequately addressed their concerns about an Arab government taking over major operations at six U.S. ports.

Underscoring how much the issue has veered out of the Bush administration's control, the Senate rejected an effort by its own Republican leaders to thwart Democrats who want a vote on derailing the DP World deal. The Senate voted 51-47 to consider the Democratic legislation, falling 16 short of the 67 votes GOP leaders needed to prevail.

Details of the surprise deal were still being worked out. The company said its decision was "based on an understanding that DP World will have time to affect the transfer in an orderly fashion and that DP World will not suffer economic loss."

DP World finalized its $6.8 billion purchase earlier Thursday of Peninsular & Oriental Steam Navigation Co., the British firm that through a U.S. subsidiary runs important operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. It also plays a lesser role in dockside activities at 16 other American ports.

A leading critic, Rep. Peter King (news, bio, voting record), R-N.Y., applauded the decision. He predicted that if the company's announcement were to represent a total divestiture, then lawmakers would be appeased.

"It would have to be an American company with no links to DP World, and that would be a tremendous victory and very gratifying," said King, chairman of the House Homeland Security Committee.

Sen. John Warner, chairman of the Armed Services Committee, announced the company's decision to colleagues on the Senate floor.

"Because of the strong relationship between the United Arab Emirates and the United States and to preserve that relationship, DP World has decided to transfer fully the U.S. operation of P&O Operations North America to a United States entity," DP World's chief operating officer, Edward H. Bilkey, said in the statement that Warner relayed. The announcement did not specify which American company would be involved.

The company's U.S. operations were never the most prized part of the global transaction, which focused primarily on lucrative Asian markets. DP World valued its rival's American operations at less than 10 percent of the nearly $7 billion total purchase.

The move came as the White House, facing a Republican rebellion in Congress, played down President Bush's veto threat and said he was trying to find a compromise to resolve the uproar over the company's plan to take over significant operations at several U.S. sea ports.

DP World said it will transfer all interest in U.S. port operations to an American-based company, but it was unclear immediately how DP World would manage the divestiture. The company indicated that details of the surprise deal were still being worked out.

Warner said that Sheikh Mohammed Al Maktoum, prime minister of the United Arab Emirates, "advised the company ... that this action is the appropriate course to take." Dubai is in the emirates.

Just after Warner's announcement, Sen. Charles Schumer (news, bio, voting record), D-N.Y., a chief critic of the deal was cautious.

"This is obviously a promising development, but the devil's in the details," Schumer said. "Those of us who feel strongly about this issue believe that the U.S. part of the British company should have no connection to the United Arab Emirates or DP World."

Republican congressional leaders had told Bush at a White House meeting earlier Thursday that both the House and Senate appear ready to block the takeover, GOP officials said.

"We will maybe have our differences, but we think we're going to continue to do that," House Speaker Dennis Hastert, R-Ill., told reporters.

The fast-moving developments came one day after a GOP-controlled House committee voted 62-2 to block the transfer, which has prompted a GOP revolt — made all the more striking because it is related to the war on terrorism.

Senate Republican GOP leaders had been hoping to prevent any votes until the conclusion of a 45-day review of the deal. At the same time, administration officials were using the time to try and ease the concerns of lawmakers.

That strategy collapsed in dramatic fashion on Wednesday, when the House Appropriations Committee overwhelmingly signaled its opposition to the deal.

Increasingly, it appeared the controversy was headed in one of two directions — a veto confrontation between Bush and Congress, or the decision by the company to shed its plans. The company had arranged to hold the rights as part of its takeover of Peninsular & Oriental Steam Navigation Co., a British company that holds contracts at several U.S. ports.

Bush has defended the deal, on grounds of open, free trade, and, he says, because the United Arab Emirates has been a strong ally in the war on terror.

By a 62-2 margin, the House Appropriations Committee on Wednesday attached the ports legislation to a $91 billion bill providing funds for hurricane recovery and wars in Iraq and Afghanistan.

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ABOUT THE AUTHOR

Russell Wilcox is a retired college professor who spends several months in Florida and several months in Rhode Island each year, and whose interests include boating and sailing, political activism, ballroom dancing and bridge. He has an MBA from Harvard, a Computer Systems CAGS from Bryant and a BS from Northeastern. He has worked in industry for EG&G and Texas Instruments, operated his own business with more than 200 employees, and served as Director of the Computer Information Systems Program for Stonehill College. He is a published author of two technical studies, and is the proud father of four children and the proud grandfather of six grandchildren. A holder of two patents in microchip connections and a true product of the melting pot, his father is the son of a Yankee farmer, and his mother the second generation daughter of Italian immigrants who retained their culture, but strove mightily to become Americans, sending four sons to fight against Hitler and Mussolini.