Why No Outrage From Washington

To fend off fiascos like last year's failed Dubai Ports World deal, the emirate called in the big guns: The lobbyists

When the Dubai Group and NASDAQ announced the complex deal on Sept. 20 that would give Borse Dubai a 20% stake in the U.S. exchange, the Washington reaction was surprisingly calm. No one denounced the deal, and most lawmakers took a "wait-and-see" attitude in judging whether it posed a national security risk.

It was a far cry from the firestorm that greeted Dubai Ports World when it tried to buy a handful of U.S. ports in 2006. That deal fell apart amid vehement criticism that key ports would end up in the hands of a state-owned company from a country with links to the September 11 hijackers.

The more measured reaction was no accident. In part, that's because a stake in NASDAQ doesn't stir up the same visceral fears of terrorism that the ports did. But Dubai and the United Arab Emirates—the loose federation of states to which Dubai belongs—also learned a hard lesson from the collapse of the earlier bid. And over the past 18 months they've launched a multimillion-dollar lobbying push to boost their image in the states and prevent another fiasco.

Those efforts went into overdrive in the days leading up to the NASDAQ deal, as a handful of Washington lobbyists led by George Salem, a senior adviser to the law firm DLA Piper and a past president of the National Association of Arab Americans, scrambled to ensure a smoother reception. Dubai executives believe that a big reason the ports deal ran aground was that they didn't give lawmakers advance warning or explain their perspective on the deal early enough. So this time, they made sure they got to key members of the Administration and Congress before the news broke and attitudes hardened.

In the days before the deal was disclosed, for example, a high-ranking Dubai official flew to Washington for a series of confidential briefings. And as soon as the markets closed on Sept. 19, Salem and his team hit the phones. According to a Capitol Hill source, NASDAQ Chief Executive Robert Greifeld personally called Senator Chuck Schumer (D-N.Y.), who had been a ringleader in the fight over the ports deal. The basic message, says one Dubai lobbyist: This deal is good for U.S. financial markets because it will give NASDAQ access to rich Mideast pockets. To counter terrorism fears, the lobbyists argue that the UAE and Dubai are among America's strongest allies in the region. All told, they rang up some 120 Beltway power players in the first 24 hours.

The rapid-fire round of diplomacy came against a backdrop of intense effort to bolster ties to Washington. Dubai alone has paid more than $3 million to three different lobbying firms, which have spent much of the past year talking up the tiny nation in meetings with aides to everyone from Barack Obama (D-Ill.) to Vice-President Dick Cheney. And earlier this year, the UAE budgeted an additional $5 million to lobbying firm Harbour Group to launch a new body, the U.S.-Emirates Alliance, to help shape public opinion. The alliance has quietly contributed more than $100,000 to the Center for Strategic & International Studies, a foreign policy think tank, to support Mideast programs—though Jon B. Alterman, who heads the center's Middle East research, says its programs aren't influenced by funding. The alliance has also sent Reem Al-Hashimy, the UAE's Boston University-educated deputy chief of mission, to a dozen U.S. cities since July to meet with civic and business leaders.

Such moves appear to be working. Hill staffers say the NASDAQ briefings were clearly effective. A senior aide at the Senate Banking Committee says the talks kept people from "jumping to conclusions about the nature of the investment." While Schumer has raised questions, the betting is that the deal will pass national security review. "The fact that people haven't rushed in behind [Schumer] suggests that the proposal hasn't created the instinctive negative reaction" that the ports deal did, says Joseph Dennin, a trade attorney at McKenna Long & Aldridge.

By Eamon Javers and Dawn Kopecki

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