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Exxon, Russia, and Rex Tillerson’s Delicate Dance

Though a waiver request by Exxon to resume a joint venture with Rosneft in the Black Sea was shut down, it still reignited concerns over Secretary of State Rex Tillerson’s conflicts of interest with Russia.
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Rex Tillerson. (Photo: Mandel Ngan/AFP/Getty Images)

Rex Tillerson. (Photo: Mandel Ngan/AFP/Getty Images)

In the four months since President Donald Trump announced former Exxon Mobil CEO Rex Tillerson as secretary of state, the one-time oil executive continues to be dogged by worry over potential conflicts of interest.

On Wednesday, the Wall Street Journal reported that Exxon had filed a waiver request with the Department of the Treasury to resume a joint venture in the Black Sea with Russian state-owned oil and gas conglomerate Rosneft. On Friday, the government rejected the waiver request, a decision the Department of the Treasury said “was made in consultation with President Trump.”

This wasn’t the first attempt at collaboration between Exxon and Rosneft. A joint venture was stymied in 2014 by sanctions from the Barack Obama-led Department of State, imposed in response to Russia’s annexation of Crimea following the Ukrainian Revolution. According to the Associated Press, Exxon had previously sought a waiver from the Department of the Treasury in 2015, after the sanctions were first imposed.

Permitting that waiver could have yielded significant geopolitical ramifications, especially given the Trump administration’s own delicate dance with Moscow over an appropriate multinational response to the use of chemical weapons by Syrian forces loyal to President Bashar al-Assad. As Axios’ Steve LeVine wrote (prior to the dismissal of the waiver request):

If granted, the waiver would erode one of the most powerful American levers against Russia in terms of getting it to pull back from Ukraine. Russia relies on oil and natural gas exports for a majority of its government income, but the current generation of oilfields will start to peter out in the coming decade.

The fields on which Exxon has been working — deepwater fields in the Arctic, and the Bazhenov shale in Siberia — are meant to carry the Russian economy starting in the 2020s and beyond. The waiver appears to cover work in the Black Sea, which is also a primary target of next-generation Russian interest. But it could be a wedge into a broader revival of work including the Arctic and the shale.

But the most significant political ramifications of granting a waiver would have been domestic. Though Exxon’s waiver application was made under the Obama administration, per the New York Times, the Journal’s report on Wednesday reignites old fears of Tillerson’s conflicts of interest among liberals and neoconservatives still harboring Cold War fears of Moscow — and, in turn, the Trump administration’s priorities when it comes to U.S.-Russian relations.

The Department of the Treasury may have rejected the new waiver request (Tillerson had recused himself from decisions involving Exxon), but the specter of competing interests still looms large over the White House. It was Tillerson himself who led the negotiation of the aborted partnership with Rosneft back in 2014, reportedly worth more than $500 billion, to develop crude oil reserves in the Arctic. Exxon suffered more than $1 billion in damages to its joint venture as a result of post-Crimea sanctions imposed by the Obama administration and the European Union—the very sanctions the Trump administration has allegedly planned to lift.

Taken alongside Tillerson’s unusual friendship with Russian President Vladimir Putin, the waiver request looked even more suspect. According to New Yorker staff writer Steve Coll, Tillerson “has forged close relations with both President Vladimir Putin and Igor Sechin, the close Putin ally who runs Rosneft, one of Russia’s oil-and-gas giants.” In 2015, one year after Exxon and Rosneft formally reached the doomed agreement, Putin awarded Tillerson the country’s Order of Friendship decoration; there’s even video of Tillerson and Putin sharing a champagne toast after closing the deal.

Frankly, it seems that Tillerson’s most effective function in the Trump administration is to form a diplomatic bridge between Exxon and Rosneft. Barely months into the job, Tillerson appears to be everything but a “lame duck,” as a new analysis in Newsweek put it:

Tillerson’s chances in this administration do not look good when it comes to his relations with other foreign and security policy staff. Tillerson appears to be overshadowed by Secretary of Defense James Mattis and National Security Adviser H.R. McMaster. …

[I]n all major foreign policy activities, Tillerson has been kept out of the loop by Trump, without any exception, including: China, Japan, Israel, Palestine, and Canada. …

Even in regard to Russia, where Tillerson is supposed to have the strongest saying, things are looking uncertain. The other members of Trump’s staff are not as enthusiastic about rapprochement with Moscow.

It’s almost as though Tillerson was little more than a human vessel to ensure that the oil company’s long-term investment in the Black Sea would succeed. And if anyone’s going to make political headway with Russia, it’s apparently Mattis—rather than the country’s chief diplomat

Now saddled with a massive bureaucracy and frozen out by a quixotic commander-in-chief, Tillerson seems reduced to little more than an errand boy, his primary function to serve as a living, breathing nexus of influence for Exxon in the West Wing. And given that the Department of the Treasury’s decision was made in consultation with President Trump, the former Exxon CEO looks weak in what should be a strong role on the world stage.