I honestly don't know what to make of the port management story. I'm not clear on what the implications of the whole deal are. On the one hand, I can certainly understand the "What the hell are they thinking?" instinctive reaction. That initial response to a country from the Middle East 'taking over US ports' is not hard to sympathize with.
On the other hand, I think Bush has a point when he says we aren't doing ourselves (or anybody else) any favors by taking a "no Arabs need apply" position on doing business. That's a bad way to make friends--and enemies. Whether or not you buy the line 'we are not at war with Islam,' we are not at war with every Arab on the planet. We really are trying to win people over in that part of the world. Throwing what appears to be a normal business transaction back in the faces of a decent ally is not going to help our cause.
And UAE is an ally. At least as I understand it, the UAE is easily the most Americanized of the Gulf states. We already sell them the most sophisticated version of the F-16 ever built; the new jets they're getting are more advanced than any US F-16 (no kidding). That's a pretty big statement of trust, and that deal was done well before Bush came to power; I remember seeing the first models doing flight tests back in the 1990's.
That's not to say that the US can't or shouldn't be careful here. I have no problem at all with doing extensive screenings of port employees, for instance (I'd be pretty hypocritical if I did, since I had to go through a pretty damn intensive government screening myself for my own job). But after further review, I do have a problem with "no Arabs need apply." The opportunistic stuff I'm hearing out of everybody from Hillary Clinton to Bill Frist sounds a lot like that, and that's not something we ought to be standing for.
For whatever it's worth, I think Bush is going to take a big political hit for the whole affair. Nobody can accuse him of going with polls or focus groups on this one.
UPDATE: The proprieter of Aladdin's Rant (full disclosure--he's a friend of mine) has a few thoughts on the subject.