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Port politics

There is something remarkable about this port deal flap everyone is talking about. Think about it: President Bush, the 9/11 president who says he thinks every day about how to protect the country...  who said he wanted Osama bin Laden "dead or alive"... whose top political adviser Karl Rove said in January, "Republicans have a post-9/11 view of the world and Democrats have a pre-9/11 view of the world"... his administration is now making a much more nuanced argument about why the U.S. cannot block a deal with the UAE just because it's an Arab government with terror links. Two 9/11 hijackers were UAE citizens and money for the plot went through UAE banks.

A top Bush adviser, who preferred to remain anonymous since he was offering more than the White House line, sent me an e-mail yesterday saying: "The President feels strongly that if we're to win this war (on terror) we've got to be adding partners in the ME (Middle East), not subtracting them. We can't pull the rug out from under them." This is an economic hearts-and-minds argument. We can't coax autocratic, anti-western Arab governments to be more modern and to clamp down on jihadists in their countries if we tell them, "We want you to modernize, but you can't do any business in the U.S. because we don't trust Arabs."

Democrats are still playing catch up on the security politics of this White House, so they are happy to run to the right of the president on this. That's what Republicans are so worried about.

At the White House, officials said today it was unfair to hold Dubai Ports World, a state-owned company in the UAE, to a different standard than a British company that had the contract until Dubai Ports acquired them. The real point he was making is that there are good Arab governments and bad ones. The UAE is a solid military partner for us in the Persian Gulf and we don't want to sever that relationship.

There may be a dollars-and-cents argument just as important as the hearts-and-minds appeal. As Steve Liesman from CNBC told me today during an interview, the U.S. is running a $7 billion trade SURPLUS with the UAE, not including a recent $10 billion deal between the Emirates and Boeing to buy airplanes. We don't have many trade surpluses around the world and we don't want to start a trade war with some pretty big markets.

It's not clear how any of this will turn out, but I can't be alone in scratching my head about how the administration let this one catch them off guard.