"DP World will transfer fully the US operations ... to a United States entity," H Edward Bilkey, the company's top executive, said in a surprise announcement on Thursday.

 

It was unclear which American business might get the port operations, but the announcement immediately spread relief throughout the Capitol and the White House.

 

Just hours earlier, Republican House and Senate leaders privately told the president that Congress was all but certain to block DP World's plan.

 

Under pressure from a disapproving public, a House committee overwhelmingly voted against it on Wednesday, and it became clear the Senate would inevitably do the same, despite Bush's threats to veto any legislation killing the deal.

 

The company's announcement gives the president a much-needed escape from what could have been a bruising show-down.

 

'Way forward'

 

"We have a strong relationship with the UAE and a good partnership in the global war on terrorism, and I think their decision reflects the importance of our broader relationship"

Scott McClellan, 
White House press secretary

Bush now does not have to back down from his staunch support of the United Arab Emirates-based company or further divide his party on a terrorism-related issue with a veto.

 

"It does provide a way forward and resolve the matter," said Scott McClellan, the White House press secretary.

 

"We have a strong relationship with the UAE and a good partnership in the global war on terrorism, and I think their decision reflects the importance of our broader relationship."

 

Expressing surprise at the outcome, White House officials said the decision was the result of conversations between Congress and the company, and that senior administration officials were not directly involved in the talks.

 

Republican Senator John Warner of Virginia said "upper levels of both governments" had worked towards the result.

 

They included Shaikh Mohammed Bin Rashid Al Maktoum, prime minister of the United Arab Emirates and emir of Dubai, who "advised the company ... that this action is the appropriate course to take", the senator said.

 

It was unclear how the company would manage its planned divestiture, and Bilkey's statement said its announcement was "based on an understanding that DP World will not suffer economic loss".

 

Controversy

 

DP World says it will transfer the
US operations to a US firm

Even critics of the deal expressed cautious optimism that DP World's move would quell the controversy surrounding that company's plan to take over terminal leases at six major US ports held by the company it was purchasing, London-based P&O.

 

On Thursday, DP World finalised its $6.8 billion purchase of P&O which, through a US subsidiary, runs important port operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

 

It also plays a lesser role in dockside activities at 16 other American ports.

 

The plan was disclosed last month, setting off a political storm in the United States even though the company's US operations were only a small part of the global transaction.

 

Republicans denounced the plan, furious that they learned of it from news reports instead of the administration. They cited concerns over a company run by a foreign government overseeing operations at US ports already vulnerable to terrorist attacks.

 

Democrats also pledged to halt the takeover and were pressing for a vote in the Senate.

 

Throughout the row, the Bush administration had defended the deal, calling the United Arab Emirates a strong ally in the war on terror and pledging to cast the first veto of his presidency if Congress voted to interfere.