WASHINGTON – A United Arab Emirates-owned maritime company at the center of a furious port security controversy bowed to pressure from Congress yesterday and announced it would sell off its American operations to an American owner.

The announcement, issued by Dubai Ports World’s chief operating officer, H. Edward Bilkey, came just hours after House and Senate Republican leaders bluntly told President Bush that Congress would kill the company’s $6.8 billion acquisition of London-based Peninsular & Oriental Steam Navigation Company and its operations at six major American ports, including New York and Baltimore.

The company’s decision ended an extraordinary three-week furor that pitted both Republicans and Democrats in Congress against Mr. Bush on a volatile national security issue in a midterm election year. Fueled by fear of terrorism in a post-September 11 world, opposition to the port deal mushroomed to the point where even Mr. Bush’s veto threat proved singularly ineffective and, if anything, further aggravated even once-loyal GOP allies.

The White House praised the UAE for its decision and reaffirmed the “strong relationship” between the two nations. “This decision provides a way forward and will allow us to continue working on other issues,” the White House press secretary, Scott McClellan, said in an interview.

Although the demise of the deal was sure to leave badly bruised feelings in the UAE, analysts predicted America would be able to preserve its extensive security and economic ties with the tiny country, given the strong mutual interests at stake. The bigger problem, they said, will be the fresh damage done to the American image in the Muslim world.

Even before the deal fell through, the Arab press had been portraying American opposition as an anti-Arab racist slur, contrasting the resistance to the acceptance generally afforded in America to investments from Asian and European entities.

“This can only make the already damaged image worse,” said Youssef Ibrahim, managing director of the Strategic Energy Investment Group, which is based in Dubai. “The problem is, for four or five years, we haven’t found a way to repair that damaged image.”

It is not clear what American company is willing to buy DP World’s North American properties. Some 75% of containers that enter American ports go through terminals that are foreign owned. Officials at SSA, a Seattle company that is the largest American owned terminal operator, said they have not been contacted. Several private equity firms are trying to determine whether to put forward bids. Some potential bidders may seek to join forces with firms that already operate American ports. But the process is in its very early stages and DP World appears to be determined to avoid a fire sale.

One potential private buyer would be Washington’s Carlyle Group, which bought the American container shipping business of CSX Corp. in 2002 for $300 million, selling it two years later for $650 million. Also, the Dubai government has been an investor in Carlyle’s investment funds, and put $100 million into its latest, $7.85 billion buyout fund.

A source at Carlyle, however, said the firm would probably not be interested in P&O’s port operations, given the political scrutiny such a deal would invite.

Another potential private equity buyer is Blackstone Group of New York. While not explicitly ruling out an offer for the business, a source at the firm said it was too early in the process to tell if P&O’s American operations are even worth an offer.

The administration approved the sale of the British-owned company to Dubai Ports World on January 17 following a review by its secretive Committee on Foreign Investment in the United States. Stung by the public and political outcry once the decision became widely known last month, the White House and the Dubai company tried to placate critics by agreeing to a 45-day investigation into the national security implications of the deal.

Congress began taking action this week to revoke the sale, driven by fears that Arab state ownership of U.S. port operations would compromise security. Majority Leader Frist, a Republican of Tennessee, and the Senate Armed Services Committee chairman, John Warner, a Republican of Virginia, warned company officials Wednesday that they would be prudent to cut a deal allowing them to sell off their newly acquired American operations through normal business channels rather than risk congressional action that would force a fire sale.