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Russian ties in spotlight as Trump picks Exxon chief as top US diplomat

© Ben Stansall, AFP | ExxonMobile CEO Rex Tillerson, seen in 2015.

Video by FRANCE 24

Text by FRANCE 24

Latest update : 2016-12-13

ExxonMobil CEO Rex Tillerson, President-elect Donald Trump's choice to lead the US State Department, has “good” ties with Russian President Vladimir Putin, the Kremlin said on Tuesday.

"Russian representatives and not just the president have good, businesslike relations with Tillerson. He is a very solid figure," Putin's top foreign policy aide, Yury Ushakov, told journalists, adding that Tillerson was "very professional in his field".

Asked whether Tillerson's role as secretary of state could help mend U.S.-Russian ties, Ushakov said: "We want to get out of the crisis state (of our relations), which does not satisfy neither the Russian nor the American side."

Exxon, one of the world's largest oil and gas companies, has operations in dozens of countries, some of them politically volatile or estranged from the US. First among them is Russia, which has leaned heavily on Western companies for technology and know-how to tap its vast resources.

Tillerson has argued against sanctions that the US and European allies imposed on Russia after it annexed the Crimea from Ukraine in 2014. He also has backed free trade and an expansive US presence in the Middle East, stances at odds with the more isolationist approach Trump has pitched to his supporters.

A native of Wichita Falls, Texas, Tillerson, 64, is a career Exxon employee, having joined the company after graduating from the University of Texas in 1975 with an engineering degree. Groomed for an executive position, he spent years in the rough-and-tumble world of oil production, working in Exxon's central US, Yemen and Russian operations.

By the 1990s, Tillerson was overseeing many of Exxon's foreign operations. He played a key role in Exxon's involvement in the huge Sakhalin oil and natural gas project on Russia's eastern coast. That was a warm-up for a $3.2 billion deal in which Exxon and Russian state-controlled Rosneft announced they would work together to explore for oil in Russia's Arctic region. Production is expected to begin in the next decade.

Decorated by Putin

In 2011, Tillerson flew to the Russian resort town of Sochi to meet Russian President Vladimir Putin for the announcement. As news photographers recorded the scene, the men shook hands and smiled broadly at each other.

"This project promises to be highly interesting and ambitious," Putin said at the time, according to a Rosneft press release. Exxon exploration in Russia, he said, "will open new horizons".

Success in Russia required mettle, good relations with Putin, and aligning the company's interests with those of the Russian government. Exxon steadily expanded its Russian business while its rivals faced expropriation and regulatory obstacles. In 2013 Putin awarded Tillerson the Order of Friendship, an honour given to foreigners who improve relations with Russia.

"I've known him [Vladimir Putin] since 1999 and have a very close relationship with him," Tillerson said in a speech a few years ago at the University of Texas-Austin, adding that their relationship "dates back almost 15 years now".

The sanctions against Russia, if they remain in place for an extended time, could threaten the joint venture with Rosneft, and at Exxon's annual meeting in 2014, Tillerson urged Western political leaders "to consider the very broad collateral damage of who are they really harming with sanctions".

Exxon also has operations in Indonesia, Azerbaijan, Chad, Equatorial Guinea, and many other countries. Africa and Asia were its leading sources of oil production in 2015. The company says its diverse global portfolio of oil and gas projects helps mitigate risks.

Reagan precedent

Tillerson became Exxon's CEO on January 1, 2006, and is expected to retire next year. His heir apparent, Darren Woods, has been in place for a year, so there would be virtually no disruption to Exxon's succession plans if Tillerson were to become secretary of state.

In 2015, Exxon paid Tillerson compensation that the company valued at $27.3 million, most of it in stock awards. At the end of 2015, he held awards that had not yet vested that were worth $149.2 million.

By law, Tillerson will have to either sell his Exxon shares and stock options or recuse himself from government matters that have a "direct and predictable" effect on his financial interests, said Richard W. Painter, a University of Minnesota corporate law professor who served as President George W. Bush's chief ethics lawyer.

Failure to do one or the other would likely result in criminal charges, since cabinet members, unlike the president and vice-president, are covered by statutes designed to prevent conflicts of interest.

If Tillerson didn't sell the stock, he would have to stay out of decisions for a wide swath of the secretary's job including climate change matters, the oil industry or many dealings with Russia.

"There are going to have to be some pretty broad recusals in the State Department on anything that involves oil," Painter told the Associated Press. "In my view, it's unacceptable to have a secretary of state who has a lot of oil company stock or stock options."

Still, it's not unheard of for a high-profile businessman to serve as secretary of state.

Bechtel, the big, privately-held San Francisco engineering and construction firm, gained stature and prestige – and likely an advantage in bidding for foreign contracts – when President Ronald Reagan picked George Shultz as secretary of state and Caspar Weinberger as secretary of defence. Both had been top Bechtel executives.

At the time, critics said Bechtel had its own foreign policy, especially in the Middle East and didn't particularly care if its objectives were not aligned with those of the US.


Date created : 2016-12-13

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