Republicans turn on Bush to end plans for Dubai firm's ports deal

In a stinging reverse to President George Bush, an Arab-owned company has bowed to overwhelming opposition in Congress and dropped its plan, previously strongly backed by the White House, to run six major US ports.

The announcement by Dubai Ports World (DPW) came hours after top Congressional Republican leaders told Mr Bush yesterday that the deal was heading for certain defeat in the House of Representatives and the Senate.

The private meeting took place almost at the very moment that the White House spokesman Scott McClellan was reiterating that the President would veto any bill that barred the take-over - where management of the ports would pass from Britain's P&0 into the hands of DPW, controlled by the government of the United Arab Emirates.

The confrontation - the climax of the biggest revolt by his own party since Mr Bush entered the White House - followed Wednesday's stunning 62-2 vote by a key House committee passing an amendment blocking the transaction.

Making matters even more uncomfortable for Mr Bush, the amendment was tacked on to a crucial measure providing $71bn (£36bn) of emergency funding for the Iraq and Afghanistan wars, whose combined cost is running at $7bn a month, as well as $19bn of relief for the hurricane-battered US Gulf Coast.

The White House was left with an impossible choice, between a showdown in Congress it was bound to lose, and a climbdown that would have Mr Bush eating words he spoke less than a fortnight ago. He would have been forced to explain to an already hostile Muslim world, why British management of the ports was acceptable, while Arab management was not.

As it is, the fact that the UAE company itself withdrew has provided only the barest fig-leaf for the President's humiliation. DPW last night said it would transfer operations at the six ports to "a US entity".