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If you were to identify a single time and place at which the Dubai Ports World deal was lost, it was February 21, aboard Air Force One as George W. Bush, US president, flew back to Washington from a Colorado visit. Bill Frist, leader of the Senate's Republican majority and a 2008 presidential contender, had just joined the gathering furore against the deal. Asked to respond, Mr Bush at first spoke calmly. He offered bland assurances that everything had been examined. He then added: "One of my concerns, however, is mixed messages. And the message is, it's OK for a Great British company, but a Middle Eastern company - maybe we ought not to deal the same way. It's a mixed message."
This talking point was immediately repeated and amplified by White House allies. "The only whiners left by next week will be the registered bigots," Grover Norquist, lobbyist and activist, told the Los Angeles Times.
Wrong. By that week's end, 70 per cent of all Americans and 58 per cent of Republicans opposed the deal. The president's personal approval rating, an already low 40 per cent, plunged to an abysmal 34 per cent.
The Dubai deal seems doomed. In the aftermath, the world's great and good have been tut-tutting about the alleged rise of American nativism and xenophobia. But let us be clear: there would have been no problem with this deal had the purchasing company been Japanese or French or South African. Even Chinese purchasers have not provoked much controversy.
The deal was not lost because the purchasers were foreign. The deal crashed because the purchasers were a very specific kind of foreigner: the Arab and Muslim kind. Since the terrorist attacks of September 11 2001, western governments have utterly repudiated the idea of any connection between terrorism and Arabs and Muslims. As Mr Bush declared on September 20 2001: "The enemy of America is not our many Muslim friends. It is not our many Arab friends. Our enemy is a radical network of terrorists and every government that supports them."
European governments have gone further still. Tony Blair, British prime minister, takes advice from Muslim commentators Tariq Ramadan and Iqbal Sacranie -- the latter of whom once led a group that called for the death of the writer Salman Rushdie. In Spain, which just recently marked the second anniversary of the Madrid terrorist attack, the government actively abjures the term "Islamic terrorism" to speak only of "international terrorism".
These governments have been so concerned to remind their populations that most Arabs and most Muslims are not terrorists that they have forgotten that most terrorists are Arabs and Muslims. Western governments have been so concerned to protect the good name of the silent Arab and Muslim majority that they have overstepped the truth to minimise the size of the extremist minority. They have described states such as Saudi Arabia and Pakistan as strong allies when it was obvious to any newspaper reader that these states were playing double games.
You might say that political leaders have been so concerned to prevent a backlash that they have hesitated to acknowledge the existence of the frontlash. And so over the years an idea grows: governments are being much less than fully honest about the extent and nature of the Arab and Muslim extremist threat. The Danish cartoon controversy only drove the point home.
Indeed, to a very great extent, you can see the collapse of the Dubai deal as a consequence of the broad support throughout the Middle East -- and in Muslim communities in the west -- for the attempted strong-arming of America's Danish ally. A recent Washington Post/ABC poll conducted just after the peak of the cartoon violence found that 46 per cent of Americans now have a negative impression of Islam, seven points more than in the weeks after the 9/11 terrorist attacks. One in three Americans believes that the teachings of Islam encourage violence against non-Muslims.
The terrible irony is that in the case of the Dubai deal, the official reassurance was right. The deal truly did not present any serious threat to national security. The United Arab Emirates really has been a staunch US ally.
Had Mr Bush from the outset acknowledged the legitimacy of the concerns among opponents of the deal -- and then explained in convincing detail why they were misplaced -- he may well have won his fight. By refusing to respond, by treating legitimate fears as groundless bigotry, the president instead stumbled into a humiliating and damaging defeat.
For years, American officials have demanded that ordinary citizens join them in denying the glaringly obvious about the Middle East. They have, it seems, succeeded only in discrediting themselves. The revolt against the Dubai ports deal and the resultant damage to Mr Bush's own standing is the price of this long pretence. Or, it might be more accurate to say: the price's first instalment.
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The writer, a former special assistant to George W Bush, is a resident fellow at the American Enterprise Institute and co-author with Richard Perle of An End to Evil: How to Win the War on Terror
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