STRUCTURE AND LEADERSHIP OF DUBAI PORTS OPERATIONS

UNCLAS SECTION 01 OF 02 DUBAI 001067

SIPDIS

SIPDIS

STATE FOR NEA/ARPI, EB/IFD/OIA, EB/TPP/BTA
STATE PASS USTR FOR DOUG BELL
COMMERCE FOR BIS MARY O'BRIEN

E.O. 12958: N/A
TAGS: EINV ETRD PREL TC
SUBJECT: STRUCTURE AND LEADERSHIP OF DUBAI PORTS OPERATIONS

1.(U) Summary: Operations and regulatory functions at Dubai's
ports are held under the umbrella of the Ports, Customs and Free
Zone Corporation (PCFC). Dubai Ports World (DPW) controls the
commercial and cargo handling operations at several UAE ports
(not including the Dubai Creek dhow wharfage),and at a growing
number of ports across the globe. Dubai Customs and a
newly-established Ports Authority hold overall regulatory and
enforcement powers at Dubai ports. End Summary.

PCFC Overview
--------------

2.(U) The Ports, Customs and Free Zone Corporation (PCFC),a
Dubai government-owned corporation established by a Dubai
Ruler's decree in 2001, was created as a legal entity to hold
various authorities and subsidiaries that operate or regulate
the ports business in Dubai. These now include Dubai Ports
World (DPW),Dubai Customs, and the soon-to-be announced Dubai
Ports Authority. (A fourth entity, the Jebel Ali Free Zone
Authority (JAFZA),plays no role in cargo handling or regulation
enforcement at the ports, serving only as a duty free zone for
business activity.) Sheikh Mohammad bin Rashid Al Maktoum,
Ruler of Dubai, and UAE Vice President and Prime Minister, is
the chairman of PCFC, while Sultan bin Salayem is the executive
chairman and handles the day-to-day management of PCFC's
operations. Hamed Kazim is PCFC's Chief Financial Officer, and
Jamal Majid bin Thaniah is PCFC Vice Chairman with
responsibility for Dubai Ports World (DPW) and Jebel Ali Free
Zone.

DPW History, Structure
--------------

3.(U) DPW, under CEO Mohammed Sharaf and COO Edward Bilkey, is
the result of a September 2005 merger between Dubai Ports
Authority (DPA) and Dubai Ports International (DPI). Prior to
the merger, DPA had been responsible for domestic (UAE) port
operations while DPI handled overseas ports. In early 2005, DPI
acquired CSX World Terminals for USD 1.5 billion, giving it new
locations in China, Australia, Germany, the Dominican Republic
and Venezuela. The former CSX ports, in addition to facilities
previously purchased or being developed by DPI in India,
Djibouti and South Korea, make up the bulk of DPW operations.
(Late last year DPW created a new subsidiary commercial entity,
Thunder FZE, expressly for the purpose of negotiating the
financing and purchase of UK-owned P&O.)

4.(U) DPW's domestic operations are at Jebel Ali and Port Rashid
in Dubai, and at the ports of Abu Dhabi and Fujeirah. DPW is not
responsible for port management operations at the dhow wharfage
on Dubai Creek. PCFC's main presence at Dubai Creek is the
large Dubai Customs operation there. Even prior to the merger
with DPI, DPA had not been involved in managing the loading and
unloading of cargo at Dubai Creek. While DPW itself plays no
role in Creek operations, a small legacy DPA unit there is
responsible for ensuring adherence to port regulations. DPA had
originally included two elements: (1) a large port management
element related to handling of cargo and containers, and (2) a
regulatory element responsible for ensuring adherence to
government regulations and port ordinances. After DPA's merger
with DPI, it became clear that the new entity, DPW, should not
be in the business of enforcing regulations and imposing fines
on violators. DPW thus recently signed an agreement with the
Dubai Government according to which a new PCFC entity, to be
known as the Dubai Ports Authority, will be responsible for
regulatory enforcement at all of Dubai's ports. This new
arrangement will become final with an announcement scheduled for
early March.

Dubai Customs
--------------

5.(U) Dubai Customs, under Director General Ahmed Butti,
regulates imports and exports to and from Dubai, enforces UAE
Federal Customs policies, collects customs duties and keeps
trade statistics. Dubai Customs is a member of the World
Customs Organization and is currently undergoing the WCO's
Customs Reform and Modernization program to make certain it is
fully in compliance with the most stringent international norms.
Dubai Customs hosts the region's only operational Container
Security Initiative (CSI) program. Under CSI, a team of DHS
agents is permanently assigned to Dubai's ports, where it works
closely with Dubai Customs to identify containers requiring

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additional scrutiny. The Department of Energy's Megaports
Initiative is on schedule to begin operations later this year;
it includes installation of radiation detection equipment in
Dubai's ports. The UAE Federal Customs Authority sets policies
that should be applied and enforced by local customs agencies;
it audits, regulates and oversees local customs agencies.
DAVIS