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Donald Trump

With Exxon Mobil boss Tillerson as top US diplomat, Trump’s new approach is ready to roll

Jesse Friedlander says the seasoned businessman appears set to be a formidable negotiator who will shake up the Washington establishment, with his close ties to Putin and a focus on economics and trade over politics

PUBLISHED : Monday, 26 December, 2016, 10:03am
UPDATED : Monday, 26 December, 2016, 5:03pm

US President-elect Donald Trump has chosen Rex Tillerson, the CEO of Exxon Mobil Corporation, to lead US foreign relations as secretary of state. In the modern era, every secretary of state has been part of the Washington political and/or military establishment. Current incumbent John Kerry is a former senator, as was his predecessor, former first lady Hillary Clinton, while her predecessor, Colin Powell, was a four-star general in the US Army.

In selecting a businessman, albeit a highly respected one, Trump is re-enforcing his message to the world that the US will adopt a radically new approach towards engagement with foreign partners.

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Tillerson has spent his entire career at the energy giant, ascending to the helm in 2006. Exxon Mobil has oil and gas production operations in 24 countries, plus an expansive portfolio of refining and distribution operations, and alternative energy initiatives.

Tillerson has, in fact, cultivated close relations with a vast array of national leaders

It even has its own “mini state department” that delivers a steady stream of information and analysis on global economic and political developments, to refine risk assessments of projects and support management negotiations with foreign government officials.

Trump’s detractors have criticised Tillerson for two primary reasons: his business ties to Russia and lack of government experience.

With regard to Russia, Tillerson oversaw Exxon Mobil’s strategic cooperation agreement with state-owned energy giant Rosneft, leading to 10 joint venture projects there. As an investor and business partner, Tillerson has cordial relations with Russian President Vladimir Putin – much maligned in the US for his authoritarian tendencies. Officials accuse Russia of interfering in the US presidential election to boost Trump, and harbour deep suspicions about Putin’s intentions in Ukraine, Syria, and elsewhere.

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Tillerson has, in fact, cultivated close relations with a vast array of national leaders, as he worked to further Exxon Mobil’s global interests. Forming trusting relationships with those in authority is not unusual; it is a critical part of a CEO’s role. Further, US investment in Russia is perfectly legitimate and is an important component of the bilateral relationship. Even during the tense years of the Obama administration, when relations soured and the US imposed sanctions, the US remained among Russia’s 10 largest investing nations.

Any criticism of Tillerson’s lack of government experience will actually be seen as a positive quality by those who endorse Trump’s new pragmatic approach

That said, if evidence surfaces directly implicating the Kremlin in the US election, Tillerson’s amicable relations with Putin could make him a political target.

For now, any criticism of Tillerson’s lack of government experience will actually be seen as a positive quality by those who endorse Trump’s new pragmatic approach and view Washington as a bastion of inefficient and inside-dealing bureaucrats and companies, all profiting on the backs of the taxpayer.

Tillerson’s leadership in making multibillion-dollar capital investments, spearheading difficult political negotiations and overseeing critical public image and community relations programmes, all demonstrate deep experience that is directly relevant to managing US foreign policy.

Tillerson is expected to focus on economics and trade. We should expect fewer multilateral forums, less attention on complicated political and military conflicts such as Syria, and more energy spent on furthering the interests of US businesses and workers.

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This new paradigm will raise serious challenges for organisations like the UN and World Bank, which will have to adjust their agendas and standard operating procedures or risk facing a political backlash from their biggest sponsor, the US.

It also seems clear that Tillerson will facilitate better relations with Russia, which could cause a revolt within the establishment in Washington.

What will be more interesting and difficult to predict is how relations will evolve with other energy producing nations, such as Saudi Arabia, where Exxon Mobil has investments.

Countries such as China, Japan and South Korea, which depend on industrial exports to the US, will also find themselves facing a formidable negotiator who will seek to amend current trade deals.

Jesse Friedlander, CFA, is a Hong Kong-based research analyst and investor. His areas of interest include macroeconomics, geopolitics, language and culture