As I write this column, the controversy of Dubai Ports World continues to consume newsprint and air-time. Although the ‘crisis’ appears to have been resolved, the negative effect is likely to linger.

The facts in the matter are established: Dubai Ports World agreed in late November to buy British-based P&O for $6.8 billion (out-bidding Denmark’s Moeller-Maersk, Singapore government investment agency Temasek Holdings and Hong Kong’s Hutchison Whampoa); the management of six U.S. ports (most notably New York-New Jersey) came along in the deal.

Which is pretty much where matters stood until, a matter of weeks before the closing, Washington unexpectedly went ballistic. Again, the argument is well known: that Dubai Ports, by virtue of being Dubai-based, poses too many potential security risks to be permitted authority over U.S. trade entry-points vulnerable to terrorism.

What isn’t so well known is how this issue surfaced as political fodder in the first place. The Wall Street Journal reported in late February that a Miami firm (Continental Stevedoring & Terminals, Inc.) had long been feuding with P&O over division of the port operations there. Announcement of the Dubai Ports deal gave Continental an opening to take the battle out of the courts and onto Capitol Hill, where it most successfully made use of a Washington lobbyist to generate Congressional opposition to the deal on grounds of national security. Several prominent Senators took up the cause and, voila, the conversation moved to the top of the Sunday talk shows.

In other words, a rather parochial (and garden variety) commercial dispute—a turf fight in Miami over stevedore operations—was the basis for what would subsequently blow up into a grand geopolitical confrontation. Largely lost in this firestorm, amidst the political posturing and legitimate public concerns, was the fact that the consolidation of port (and shipping) operations in the hands of a small number of foreign operators—around the world, including in the U.S.—is a logical corollary to the explosive growth in world trade.

Until the smoke clears, it is too early to appraise the long-term implications of the DPW affair. But we do know that extended global supply chains are putting ever increasing stress on worldwide transportation providers, especially ocean shipping. Port bottlenecks compound problems of capacity. Part of the solution is increased public development funding (see our article in this issue about the growth planned by Atlantic-coast ports) but another part, arguably just as critical, will require ever-bigger scale stakeholders—like DPW—to be able to command requisite resources in private capital markets.

None of this is to downplay security concerns. But, it does mandate a sense of perspective and proportion. In order for the United States to prevail in the emerging economic era of global supply chains, it will be imperative that we have leaders sensitive to how traditional geographical and political boundaries are being rendered less absolute by trade.

Just as the rise of national states in the 19th century was an historical event (driven by the emergence of the economic middle class), so will they pass someday into a model of more expansive multinational governance (initially economic, driven by the global supply chain). As the transition unfolds, we’ll need to pursue flexible responses lest we be trapped by outmoded ways of thinking.

Dubai Ports World is, in itself, not the cause but rather a sign of what’s going on.