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Rex Tillerson Is Already A Diplomat — For Exxon Mobil’s Shareholders

When The Wall Street Journal profiled Rex Tillerson in March of 2006, shortly after he had taken over as the chief executive of Exxon Mobil, the newspaper said his success at the company was “likely to be measured by how well he plays the diplomat.”

Now, Tillerson may get to do more than play. On Tuesday, President-elect Donald Trump said he would nominate Tillerson to serve as his secretary of state — the country’s top diplomat.

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Tillerson’s confirmation is far from a sure thing. He will almost certainly draw strong opposition from Democrats due to Exxon’s history of fighting rules meant to slow global warming, among other reasons. The bigger obstacle to his chances is that even some Republicans are concerned about his close ties to Russian president Vladimir Putin, who in 2013 awarded Tillerson Russia’s Order of Friendship after a deal between Exxon and Russian oil giant Rosneft. Sen. Marco Rubio, a Florida Republican who serves on the committee that will consider Tillerson’s nomination before it can go to the full Senate, tweeted on Sunday that “Being a ‘friend of Vladimir’ is not an attribute I am hoping for from a secretary of state.” (On Tuesday, Rubio released a statement saying he has “serious concerns” about Tillerson’s appointment.)

But unlike some of Trump’s other Cabinet picks, many of whom lack a background in running large organizations or dealing with policy issues, Tillerson would bring years of relevant experience to the job. Running a global oil company in the 21st century requires diplomacy not unlike that engaged in by secretaries of state — and Tillerson, in his decade at the helm of the world’s largest publicly traded oil company, has proven an adept negotiator.

To understand the parallels between Tillerson’s current job and his potential new one, it helps to understand a bit about the oil industry. The biggest challenge facing Exxon and its rivals these days isn’t drilling in harsh environments or coaxing crude oil out of shale rock. It is finding — and negotiating access to — oil that is still in the ground. And despite the fracking-driven surge in U.S. oil production in recent years — a development that Exxon was late to recognize — many of the most attractive oil fields are still overseas. More than 70 percent of Exxon’s untapped oil reserves — which total 24.8 billion barrels — are outside the U.S., often in countries that are corrupt, riven by conflict and skeptical of western oil companies.1

Getting and keeping access to those reserves requires delicate negotiations. Oil executives need to understand local politics in the countries where they operate (is the opposition party on the verge of taking power?) and internal power dynamics (which of the president’s advisers holds the most influence?). They need to assess threats posed by terrorism and war. They have to monitor — and sometimes try to influence — international negotiations: Will OPEC agree to cut production? Will the United Nations impose sanctions? Will Azerbaijan and Turkey reach a deal on a new pipeline? It is little wonder that Exxon employs alumni of the State Department, the National Security Agency and the CIA.

Steve Coll, dean of the Columbia University journalism school, argued in his 2012 book on the company that Exxon has what amounts to its own foreign policy, complete with a security force that at times resembles a private army. The company’s interests aren’t always aligned with those of the U.S. “I’m not a U.S. company,” Tillerson’s predecessor, Lee Raymond, once told an industry colleague, according to an anecdote recounted in Coll’s book. “I don’t make decisions based on what’s good for the U.S.”

Tillerson is more, well, diplomatic than the brusque Raymond, and isn’t likely to get caught making such a statement. But he has been no less aggressive in pursuing Exxon’s interests, even when those interests differed from Washington’s. In 2011, he struck a deal with Iraq’s autonomous Kurdish government, undermining Iraq’s central government at a time when the U.S. was trying to bolster it. In 2014, he delivered a victory to Putin by announcing an Arctic oil discovery just as the U.S. was imposing sanctions on Russia over its invasion of Ukraine. (Quartz’s Steve LeVine has a good explanation of the geopolitical significance of that development.)

Tillerson, of course, wasn’t representing the U.S. in those deals — he was representing the shareholders of Exxon Mobil. The question facing the senators who will vote on Tillerson’s nomination is whether they trust that his priorities will shift when he takes on his new role. If they do, Tillerson may have a lot to offer as secretary of state. He runs one of the few companies that can credibly claim to rival a country in scale and complexity. He has a record of pragmatism — under his leadership, Exxon has acknowledged the science behind global warming and come out in favor of a tax on carbon, although many environmental groups suspect the company of working behind the scenes to discredit climate research. And he arguably understands Russia as well as any American — he struck a key deal there as president of Exxon’s Russia unit in the 1990s and has maintained a strong relationship with the country’s leaders ever since.

Tillerson’s ties to Putin, of course, are also the biggest source of skepticism about his suitability for the role. Exxon would stand to make billions of dollars if the U.S. lifted sanctions on Russia; Tillerson himself could make millions, depending on how completely he divests his Exxon holdings. Tillerson will have to convince senators of his independence. That could require some diplomacy.


VIDEO: Politics podcast talks Trump and Russia


Footnotes

  1. These numbers are for Exxon’s “oil-equivalent” reserves, which combine oil and natural gas into a single figure.

Ben Casselman is a senior editor and the chief economics writer for FiveThirtyEight.

Filed under Senate 256 posts, The Trump Administration 26, Trump Cabinet 19, Rex Tillerson 4, Secretary Of State 3

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