Dubai Ports World is to delay taking management control of US port facilities owned by the British company P&O which it is buying.
That follows opposition from American politicians who are concerned about security, because the terminals would be run by a firm that is controlled by an Arab country.
The US ports’ management will be kept separate while talks continue with Washington authorities over the security concerns.
But US President George W Bush is insistent the deal has already been thoroughly vetted and should be allowed to go ahead.
He said: “The management of some ports, which heretofore has been managed by a foreign country, will be managed by another company from a foreign land. And so people don’t need to worry about security. This deal wouldn’t go forward if we were concerned about the security for the United States of America.”
Members of Bush’s Republican party have expressed concern and opposition Democrats, like Senator Hillary Clinton, are using the issue to bash Bush.
She said: “If 9/11 was a failure of imagination and Katrina was a failure of initiative, this process is a failure of judgement. In the post-9/11 world, port security is too important an issue to be treated so cavalierly.”
The row comes at an awkward time for the US which is negotiating a free trade agreement with the United Arab Emirates, its third largest trading partner in the Middle East after Israel and Saudi Arabia.