US relations back 'on the right track'

ABU DHABI // Relations between the US and the Emirates have moved forward since the DP World controversy, said Richard Olson, America's new ambassador to the UAE. Diplomatic ties came under considerable strain in early 2006, when security fears in the US led to attempts by Congress to stop Dubai-based DP World from taking control of shipping terminals at six American ports. "The reaction caught both sides by surprise, and it was a difficult situation," the ambassador said in an e-mail this week. "The lesson learned was the need for more engagement and more dialogue to ensure that the quality and importance of our relations is correctly understood."

Mr Olson's comments came as Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, concluded a weekend meeting with George W Bush at the US president's Camp David retreat, the Sheikh's second visit there in five months. Fresh from the G20 conference in Washington on the world financial crisis, Mr Bush was expected to use the meeting to urge Sheikh Mohammed to invest more in the US to help fund emergency efforts to stem the international credit crisis.

Two years ago, Gulf money met a far cooler reception. The controversy began when DP World, a port management company, acquired London-based Peninsular and Oriental Steam Navigation Company. The deal would have given Dubai Ports World management of container terminals in six US ports, including those in New York, Miami and Philadelphia. As negotiations proceeded and after security officials and the executive branch approved the deal, several members of Congress from both the Republican and Democratic parties protested that a Middle Eastern firm should not take management responsibility for critical American infrastructure.

The controversy quickly blew up into a row over national security, a highly sensitive issue in post-September 11 America. Mr Olson said the US-UAE relationship had moved on. "Our trade and investment has grown since Dubai Ports World, which suggests to me that we're moving forward on the right track," he said in an e-mail. "As for the current crisis, policymakers in Washington are aware of the important constructive role UAE is playing in the current liquidity crisis. That will, I think, reinforce the positive perceptions of the UAE as a partner."

But as the West begins to look east for financial salvation, will the Gulf states demand a greater political voice in return for financial co-operation? In the short-term, at least, Mr Olson said there was little evidence that they would. "All of our discussions have focused very much on financial issues and I think that the UAE has a huge stake in the international financial system," he said in an interview. "The discussions that are likely to take place are much more about regulatory reform, international financial governance, those kinds of questions, rather than political questions."

When Mr Olson arrived in Abu Dhabi two months ago he was back on old territory. This is his third tour of duty in the Emirates in the past decade. But he returns to a dramatically different set of circumstances to those of 2003 when he led the Dubai Consulate. Now he is the head of an American mission to a region bruised by war, escalating tensions with Iran and a financial crisis. His appointment weeks before a US election also casts doubt on whether president-elect Barack Obama will seek to replace him with his own man or woman.

Despite an uncertain future, Mr Olson is sanguine. "I have difficulty accepting that we are in decline," he said, referring to American power in the Middle East. "There have been some real challenges in this region for the US over the past five years. There has obviously been the challenge of the situation in Iraq, the challenge with the peace process [between the Israelis and Palestinians], the war in Afghanistan. We will be judged by how these things turn out. Mr Olson said he was impressed at what he described as an expanding US-UAE relationship - one so "institutionalised" major diplomatic changes would be unlikely, even under a new US administration.

"My first impression on coming back? is how much the bilateral relationship between the UAE and the US has expanded," he said. The embassy is much bigger than when he was last here, with about 500 people in Abu Dhabi and Dubai. And evidence of more intimate diplomacy was visible beyond the headlines, such as high-level meetings and Sheikh Mohammed's Camp David visit. He cited the blossoming of more mundane diplomacy as confirmation that US-UAE ties have matured. "We had Margaret Spellings, the secretary of education, here a couple of weeks ago. That is the demonstration, when you have a cabinet department that traditionally may have had a much more domestic orientation, actually out here engaged with its UAE counterparts." The UAE and the America's shared diplomatic history pointed to an even stronger future, Mr Olson said. As for everything else, he said even friends should be allowed to disagree. "We go to considerable effort to find out what their views are and to take their advice on political issues. We don't, of course, agree on everything. That's the nature of diplomacy." [e-mail]