http://www.khaleejtimes.com/Display...arch/opinion_March86.xml§ion=opinion&col= From Baghdad to Dubai BY PAUL KENNEDY 26 March 2006 WHEN the gods see fit to punish a powerful leader, they can do so in many a cruel and unexpected way. Until about a month ago, one suspects that President George W. Bush had never even heard of the Peninsular and Oriental Steam Navigation Company and wouldnt have had a clue what DP World stood for (nor, honestly, would most of us). But the political tempest that has blown up across the United States at the news that the first of these shipping and port-handling enterprises which already operated a number of American ports had sold out to the other has truly shaken a White House already battered by many a storm in recent months. The nativist backlash at the charge that "Arabs would be running our ports" has caused rationality to flee out the window. All sensible arguments that Dubai is a friend and its own ports are very secure; that it is actually various American agencies and port authorities who supervise the traffic coming through the countrys many harbours; that there are already many foreign-owned, though non-Arab, multinationals that run our port-handling operations have been swept away by the massive tides of ignorance and political calculation. The irony that the original business deal was cleared by a very conservative "national security" administration seems lost upon most congressmen. It may be little consolation to Bush in his present troubles, but this unforeseen setback with many commentators in America calling it much more than that bears an uncanny resemblance to a humiliation inflicted upon another imperial, conservative national-security government about a hundred years ago. For it was in the spring of 1903 that the Tory government of British prime minister Arthur Balfour was given a severe blow by an event known as the Baghdad Railway crisis. This, too, shocked an administration that believed all it had done was sign off on a sensible business deal. Instead, senior ministers found themselves in a political sandstorm. The "deal" in question involved British (and French) bankers coming in to join a German project to construct a railway that would run from Istanbul to Baghdad. The German venture had insufficient capital to make this work, whereas the investment houses of London and Paris had plenty of cash. Within the British government, the majority opinion at an interdepartmental meeting (somewhat like the interagency committee that advised the White House on the Dubai Ports World deal) concluded that this business arrangement posed no problems. In fact, it was a rather nifty deal since it would prevent Berlin from "going it alone," while, on the other hand, a German presence in the area would be a check to the much more worrying prospect of growing Russian influence in the Near East. It was seen as a win-win situation. But what Balfours government had not taken into account was the increasingly visceral dislike of Imperial Germany manifested within British public opinion, especially by the patriotic Right, but also by what one termed in those days Liberal Imperialists (rather like hawkish Democrats). The adjective "German" was as anathema to them as it seems "Arab" or "Muslim" is to certain Americans today. These circles resented German trade and tariff policies. They worried about the growth of the High Seas Fleet. They noted the Anglophobia in Germany itself and concluded that the Anglo-German relationship was incurably hostile. They read scary novels and magazine articles about future German attempts to invade England, or strike her with some wonder weapon from the air. How on earth could their own government trust Berlin an inch? The explosion of anger by these patriots at the news of the impending business deal was extreme, and politically ominous. The administration was variously accused of being naive, of not having checked the facts properly, and of limply agreeing to a measure that would weaken Britains national security. In vain, the Balfour government, especially its foreign secretary, Lord Lansdowne, protested that there was nothing to be alarmed about and that the agitation was mistaken and unnecessary. But the noise in the patriotic Press was too great. When a senior and arch-imperialist minister, Joseph Chamberlain (the colonial secretary), broke with the leadership on the matter, Lansdownes "sensible" policy collapsed and the somewhat bewildered bankers abandoned their negotiations. As the foreign secretary described it in his private letters, the whole thing was ridiculous and humiliating. But no matter. It had turned out not to be good politics. Marxist scholars might note that when allegedly powerful business interests bump into nationalist passions, it is the former who so frequently lose the fight. More importantly, this rift over the Baghdad Railway reflected the differences of a worldview that were growing within the Conservative Party, and presaged its split a short while later a split that would keep it out of office until after the First World War, and give the hitherto confused and divided Liberals their chance to regain control of the parliament and, thus, of legislation. Of equal importance were its effects upon the delicate relationship between Britain and Germany, perhaps as delicate as those between the US and the Arab world today. If British chauvinist opinion was to oppose anything that had the word "German" attached to it, then policymakers in Germany would draw their own conclusions. And if the patriotic Right was so powerful as to unhinge a policy of the national-security government because it was too "soft," then how on earth could one do reliable business with such a country? This latter worry is, of course, the question posed by the contemporary banking community not just in the US but in London, Frankfurt and Arab financial centres following the humiliating defeat of the White House on the ports issue. Will this not deter overseas investment in America? Will it hurt American credit-worthiness in international markets? What conclusions will be drawn in China, whose massive trade surpluses give it a mountain of US dollars to invest somewhere? Perhaps this will not do such great damage as is feared to money flows into America, even from Arab investment houses. There are all sorts of "lower-profile" financial devices, so that the capital could still move westward via holding companies and banks in Britain and Canada. No investment adviser would tell cash-rich Arab clients not to include a considerable proportion of their portfolios in the enormous US market. And if port-handling companies are nowadays too sensitive a target because of inflated security fears, there are many other investment targets. Thus, the larger fallout from this unintended debacle may not so much be economic as political, and in two ways. In the first place, it may be a warning to the Bush administration that you cannot devote four years to warning the American people that it confronts an unrelenting, multidimensional "war on terrorism" every day of their lives, and not occasionally be embarrassed by the various ways in which that propaganda is taken up. Simply put, the White House does not have the power, even among Republican voters, to say certain acts like the DP World bid are just fine but other things (like overseas Muslim scientists applying to research at US universities) are cause for suspicion and scrutiny, or that grassroots Palestinian political organisations are bad, though conservative shaikhdoms are acceptable and useful. The world is not so simple. Secondly, and finally, this sorry episode must cause concerned students of foreign affairs to wonder whether America will ever be able to develop an easier relationship with "the Arabs." This cannot be a one-sided question, of course; we are also entitled to ask how, if at all, the Arab-Muslim world can come to an easier relationship with the West, especially its neuralgic superpower. If the answer to those questions is negative, then the planet not just the US and the Arab peoples is in for a rough time ahead. Some will see this, perhaps, as further evidence of Professor Samuel Huntingtons controversial thesis about "the coming clash of civilisations." But Huntingtons conclusion was that the main culture groups of the world should recognise their differences and act accordingly, maintaining a certain distance from each other. In the present fracas, the message America has sent out is not so clear-cut. The US wishes to embrace the Arab world, with investments, oil exploration, democracy campaigns, and troops and air bases. But it appears that, if this is a two- way flow, with Arab interests seeking to move into the US, then the drawbridges go up. It is all very confusing. No wonder the shaikhs and government of Dubai have been shaking their heads in bemusement as they sip their afternoon tea. They are not the only ones. Paul Kennedy is the J. Richardson Professor of History and Director of International Security Studies at Yale University. He is the author/editor of 16 books and is working on one on the UN, entitled The Parliament of Man.