WASHINGTON, 10 March 2006 — Dubai Ports World (DPW), a Dubai-owned company, said yesterday that it was prepared to give up its management stake in US ports, a move made as congressional leaders warned US President George W. Bush that both the House and Senate appeared ready to block the takeover.

It was not immediately clear whether the announcement would be enough to cool widespread sentiment in Congress to pass legislation blocking the deal, which has become an election-year nightmare for Republicans.

Sen. John Warner, chairman of the Armed Services Committee, took to the Senate floor to read to colleagues a press release from the company disclosing its plans.

The Dubai Ports World announced yesterday that it would transfer US port operations to “a United States entity” to preserve bilateral relations, according to a DPW statement read by Warner.

“Because of the strong relations between the United Arab Emirates and the United States and to preserve that relationship, DPW has decided to transfer fully the US operations of P and O ports in North America to a United States entity,” Warner read.

Earlier, Republicans in Congress defied their president and voted against the Dubai ports deal. The House Appropriations Committee voted 62-2 to halt the transfer of management of operations at US ports to DPW. Lawmakers said the vote was designed to be a wake-up call for the White House. The vote comes at a time when Bush is facing his lowest approval rating in his presidency and mid-term congressional elections in November.

The House committee passed the proposal as an amendment to the president’s emergency-spending request, adding the ban to the $92-billion spending measure for Iraq and Hurricane Katrina recovery that could reach the floor next week. The move will make it difficult for the president to carry out his veto threat against that bill.

Over on the Senate side, Democrats — not to be outdone — are trying to attach a measure blocking DPW’s entry into the US maritime industry to legislation designed to overhaul lobbying rules.

Dubai Ports World closed its $6.8-billion takeover of Peninsular & Oriental Steam Navigation Co. Company officials reiterated that they would hold its US ports business separate from the rest of the company, pending a review in the US.

Dubai Ports Chairman Sultan Ahmed ibn Sulayem and Chief Executive Mohammed Sharaf flew to London this week to discuss integration of the two companies that will become the world’s third-largest ports group. A group representing US companies in the United Arab Emirates, the American Business Group of Abu Dhabi, said Wednesday it will visit Washington this month to tell lawmakers they should allow the DPW deal because it would protect American jobs.

Analysts said the political furor was bound to provoke businesses in the UAE. “It’s American double standard. Do you think that businesses and governments here won’t react and even retaliate?” Wadah Al-Taha of the National Bank of Abu Dhabi told reporters. He said the issue was likely to feature prominently in trade talks later this month between the United States and the UAE.

The Dubai Ports fight has reinforced fears in the Middle East that investments in the United States have become politically risky for Arabs and Muslims. Some Arabs say the US opposition to the deal smacks of racism.