Under Pressure Case Study
Under Pressure, Dubai Company Drops Port Deal
1. Discuss the role that political factors – both in the U.S. and in Dubai – played in the reversal of the Ports deal.
The transaction was canceled because of political factors in both the U.S. and Dubai; economically speaking DP World was not disadvantaging, the project failed because DP World is an Arab company. The U.S. is very concerned about the security of the country and since “Dubai had been the transfer point starting in the late 90 's for nuclear components” (page 3), Arabic countries feel risky. On the other side, DP World and the prime minister of the United Arab Emirates, who is also the ruler of Dubai, didn’t want to create a political confrontation and “further damage” as a senior administration official said.
2. How did the concerns of the U.S. public result in a business decision by a Dubai company?
When U.S. public got aware that American ports could be held by an Arab company, fear was felt because for a number of Americans, Middle Eastern Countries equals more or less terrorism (Prados 8). Immediately, politicians put their two cents in order to gain popularity by surfing on the wave of fear. As soon as it became political, DP World and Dubai, in an intelligent way, withdrawn from the deal in order to avoid future conflicts and keep good terms with the U.S.
4. What are the implications of DP World’s withdrawal for global business and investment?
This event was managed in a way to prevent problems for the future but since it got political, it highlighted the fact that the U.S. doesn’t want contact (as in business and investment) with Arab countries even though Dubai is a modern, developed and western-like country (Lazenby 1), whereas it was OK for British and Singaporean companies to own U.S. ports (page 2). It creates a cold because a gap is being created between Americans and Middle Eastern countries and the other nations do not want to have to choose which side they will be in and the
1. Discuss the role that political factors – both in the U.S. and in Dubai – played in the reversal of the Ports deal.
The transaction was canceled because of political factors in both the U.S. and Dubai; economically speaking DP World was not disadvantaging, the project failed because DP World is an Arab company. The U.S. is very concerned about the security of the country and since “Dubai had been the transfer point starting in the late 90 's for nuclear components” (page 3), Arabic countries feel risky. On the other side, DP World and the prime minister of the United Arab Emirates, who is also the ruler of Dubai, didn’t want to create a political confrontation and “further damage” as a senior administration official said.
2. How did the concerns of the U.S. public result in a business decision by a Dubai company?
When U.S. public got aware that American ports could be held by an Arab company, fear was felt because for a number of Americans, Middle Eastern Countries equals more or less terrorism (Prados 8). Immediately, politicians put their two cents in order to gain popularity by surfing on the wave of fear. As soon as it became political, DP World and Dubai, in an intelligent way, withdrawn from the deal in order to avoid future conflicts and keep good terms with the U.S.
4. What are the implications of DP World’s withdrawal for global business and investment?
This event was managed in a way to prevent problems for the future but since it got political, it highlighted the fact that the U.S. doesn’t want contact (as in business and investment) with Arab countries even though Dubai is a modern, developed and western-like country (Lazenby 1), whereas it was OK for British and Singaporean companies to own U.S. ports (page 2). It creates a cold because a gap is being created between Americans and Middle Eastern countries and the other nations do not want to have to choose which side they will be in and the
Cited: Prados, Alfred. Middle East: Attitudes toward the United State. CRS Report for Congress. December 31, 2001. http://fpc.state.gov/documents/organization/7858.pdf Lazenby, David. Notes on the Middle East. BATTERYMARCH FINANCIAL MANAGEMENT, INC. April 2011. http://www.batterymarch.com/PDF/BFM_MiddleEast.pdf