[jyl]

Here is my explanation.

HAL's opportunities in US military outsourcing, and US govt work in general, are slowing. The war in Iraq will wind down in 1 year, the Democrats are taking power, and the govt will be bidding contracts rather than handing them to HAL.

So the oil industry services business is increasingly important. Within that industry, US production is declining in significance. Globally, power is shifting away from the US majors. Exxon et al are still very important, but can no longer call the shots in oil-rich countries. Local governments are increasingly assertive and have to be wooed, bribed, etc.

Finally, oil is increasingly an arena of nationalistic competition. Look at Russia, whose ability and willingness to challenge the US is based on oil. China's foreign policy is increasingly driven by competition with the US for access to oil. If you want to service all these countries' oil industries, best to be seen as a neutral player.

So it is better for HAL to be seen as less of an "American" company and more of a "global" company. Better to entertain Russian, Venezulean, Iranian, Chinese, etc government officials in cosmopolitan, booming, politically-neutral Dubai, rather than in odiously American Houston. Easier to get visas. A nice little Islamic halo too, for your Arab customers.

The first step in becoming a "global" company is moving the CEO to Dubai. The next step will be for senior management to follow him; obviously it'd be good for the career to tag after the CEO. The third will be to re-incorporate in a non-US jurisdiction, and if it is a tax haven then so much the better. Might have to spin off the government services business to do this.

When it happens, I'm sure many will sing the company line about excessive regulation/costs driving American companies overseas, etc. Don't be a dupe - that will have very little to do with it.