Foreign Policy

How Will Rex Tillerson Explain Exxon Mobil's 'Foreign Policy'?

By Greg Myre

As head of Exxon Mobil, Rex Tillerson had license to work out deals with roguish foreign leaders. He was supposed to sniff out countries at risk of instability far into the future. He commanded a workforce circling the globe and had a writ that extended from the Arctic oceans to the desert sands.

In other words, the job he is leaving has much in common with the secretary of state post he has been nominated for in Donny Orangutan's incoming administration.

But Tillerson still needs confirmation in the Senate, and that's sure to involve explanations of positions he took at Exxon Mobil, which operates in more than 40 countries and has, in effect, its own foreign policy that's sometimes at odds with the U.S. government.

For starters, is Tillerson's good working relationship with Russian President Vladimir Putin an asset or a liability for America's top diplomat?

That's a complicated question.

Since the Soviet Union collapsed a quarter-century ago, successive U.S. administrations have supported U.S. business in Russia. When President Obama entered office in 2009, he dispatched Secretary of State Hillary Clinton on what would be a failed attempt to reset strained relations with Moscow.

When Tillerson reached an oil deal in 2011 with Russia, where he shared a toast with Putin, the Obama administration supported the agreement. Exxon's main concern was whether Russia would observe the business terms, a recurring frustration for U.S. firms operating in Russia.

But Exxon Mobil's long-term deal to drill in the Kara Sea, in the Arctic, was effectively frozen in 2014 by U.S. sanctions imposed after Russia seized Crimea from Ukraine and annexed the territory.

Opposed to sanctions

Tillerson has made clear he is not a fan of sanctions.

"We do not support sanctions, generally, because we don't find them to be effective unless they are very well implemented comprehensibly and that's a very hard thing to do," he said at Exxon Mobil's annual meeting in 2014.

He reinforced that position by traveling to Russia this past June to attend the St. Petersburg Economic Forum. State Department spokesman John Kirby warned that the visit "sends the wrong message about the acceptability of Russia's actions."

Republicans and Democrats have achieved rare bipartisan agreement when it comes to Russian sanctions, and anti-Russia sentiment has surged following U.S. intelligence reports that Russia meddled in last month's presidential election.

Republican Sen. Lindsey Graham of South Carolina said he couldn't support a secretary of state who favors business as usual with Putin's Russia.

"Here's what we should do: We should tell the Russians in no uncertain terms that we know you interfered in our elections, we don't care why, [and] we're going to hit you and hit you hard," Graham told CNN. "I'm going to introduce sanctions that will be bipartisan, that names Putin ... as trying to destabilize democracies throughout the world."

Orangutan, meanwhile, has spoken in favor of sanctions and other punitive measures against China, Iran and other countries.

So Tillerson's position could cause him problems on several fronts. But wait: Orangutan has said he would consider lifting sanctions on Russia. If that turns out to be the case, then Tillerson's anti-sanctions stance could align him with his boss — and usher in a new U.S. policy toward Russia. And the removal of Russian sanctions could revive Exxon Mobil's operations there.

Playing "multidimensional chess"

So how will Tillerson explain all this, not only to U.S. senators but to the rest of the world?

"He's accustomed to standing toe to toe with some of the world's toughest leaders and coming out with an agreement that must withstand close scrutiny," said Steve LeVine, who has followed the oil industry for many years and is now Washington correspondent for Quartz.

"He's dealt with these countries, these leaders, but in one dimension," LeVine noted. "He knows how to negotiate on Arctic oil with Putin, but can he play multidimensional chess with him?"

Exxon Mobil, which traces its origins to Standard Oil in the 19th century, has pursued an interest unchanged for well over a century — producing oil at a profit. In contrast, U.S. foreign policy changes from one president to the next, or even during the course of a single administration.

"Tillerson will need to explain clearly that, 'Yes, I've worked with Putin, but that was in the interests of Exxon Mobil, and not anyone else. Now I represent the U.S. and will get the best deal possible for American citizens,'" added LeVine.

A world of questions

Tillerson may have to answer for other cases similar to Russia. Here are several examples that arose during his 11-year run as Exxon Mobil's CEO:

Kurdistan: Exxon Mobil signed an oil deal with the semi-autonomous Kurdish region in northern Iraq in 2011, brushing aside opposition from Iraq's central government and the Obama administration.

For Exxon Mobil, it was an opportunity to move into a region that was relatively stable at the time. The Kurds, who have ambitions of full independence, welcomed the chance to deal directly with a major oil company. But the Obama administration saw the move as complicating efforts to keep Iraq as a unified state that shared its oil wealth widely.

Venezuela: In 2007, the country's socialist president, Hugo Chavez, declared that he would renegotiate the terms of foreign energy companies. While several agreed to rework the deals, Exxon Mobil, which had a long history in Venezuela, refused and took the case to the World Bank's international arbitration court.

The court sided with Exxon Mobil in 2014 but awarded the company only about a tenth of what it said the assets were worth. In this instance, the oil company and the U.S. government shared an antipathy for Venezuela's leadership.

Chad: Under an oil production deal, Exxon Mobil agreed to pay the impoverished African nation more than $500 million over an extended period, an amount far exceeding what the U.S. government has provided in assistance.

"Idriss Déby, the authoritarian president of Chad, did not need a calculator to understand that Rex Tillerson was more important to his future than the U.S. secretary of state," journalist Steve Coll wrote in The New Yorker.

(What this means is the deal the US Government signed was under-minded by Exxon. The deal they setup was to drill and sell their oil and pay the money with no srtings attached. The US wanted the money to be spent on schools and infrastructure. But Exxon said no, spend it on what you want, which was wepons and money into the pocket of the president..)