Oil and Gas

COLUMN-The case for Exxon's Rex Tillerson as Trump's secretary of state

(Amir Handjani is a former energy executive and current member of the board RAK Petroleum PLC, an exploration and production company listed on the Oslo exchange. He is also a Senior Non-Resident Fellow at the Atlantic Council South Asia Center and Board Member of the Atlantic Council. The opinions expressed are his own.)

Dec 14 (Reuters) - Donald Trump has nominated Exxon Mobil chairman and chief executive officer Rex Tillerson to serve as his secretary of state. Having surrounded himself mostly with retired generals for national security positions, the president-elect has chosen someone with no previous government experience to be the nation’s chief diplomat. But it would be a mistake for foreign policy experts and political pundits to dismiss him for that reason.

Tillerson would not be the first secretary of state to come from the corporate world. George Shultz stepped down as president of construction and engineering giant Bechtel to lead President Ronald Reagan’s State Department, although Shultz had previously served in the Nixon administration. Tillerson has been at the helm of the world’s largest and most profitable publicly traded oil company for more than a decade.

Exxon has operations in more than 50 countries and is a symbol of America’s economic might and commercial prosperity. It has deep and historic roots in the Standard Oil conglomerate founded by John D. Rockefeller in 1870. It would not be wrong to conclude that as the CEO of Exxon Mobil there are only a handful of global heads of state that have more access and influence than Tillerson.

I witnessed the respect Tillerson commands firsthand. Almost a decade ago, as a young energy executive attending an industry conference in Madrid, I noticed that when King Juan Carlos of Spain addressed the audience, most attendees carried on their business - some paid attention, but most did not. When Tillerson took the podium, the room fell silent, with attendees tuned in to his every word.

Tillerson will bring extensive management experience to the State Department, having run a $385 billion conglomerate that is involved in everything from oil and gas exploration, logistics and construction, to human resources, risk management, government affairs and research in alternative energies. Having to answer to shareholders and investors who demand results - or else they will insist he step down - could prove invaluable as he tries to navigate a sprawling, often inefficient government bureaucracy that is not as results-driven as the corporate world.

The adage goes that “oil is not found in nice places” and as such, Tillerson has found himself dealing with leaders of some of the world’s most problematic regimes - men like Russian President Vladimir Putin and former Venezuelan President Hugo Chavez. The fact that he can successfully negotiate with them is an asset, not a liability.

While his relationship with Putin should be thoroughly vetted, it is shortsighted to suggest that because his company was heavily invested in Russia he would somehow be compromised while pursuing America’s interests. As CEO of Exxon, he had a fiduciary responsibility to his shareholders to make sure the company was active in parts of the world that were energy-rich and delivered high returns. His responsibility was not to support or advance U.S. foreign policy goals abroad. If he is confirmed as secretary of state, however, his priorities will shift accordingly.

Global energy companies and Exxon peers such as Total, Shell and BP all have a heavy footprint in Russia. This is because Russia, since the end of the Cold War, has become a key energy exporter, just recently being knocked off its perch as the largest combined oil and gas reserve holder in the world - by the United States. Exxon not being an important player in Russian energy development would be like a global financial institution not having a presence in New York or London - they couldn’t then claim the mantle of truly being “global.”

Tillerson has a reputation for being tough and driven in defense of Exxon’s interests. In Venezuela, for instance, when Chavez sought to expropriate Exxon’s leases, he took Venezuela to international arbitration and won. Most other companies settled for cash buyouts rather than going through the hassle of litigation. As much as he opposed sanctions on Russia - as many American CEOs do because it hurts their bottom line - Exxon has abided by them.

Indeed, Tillerson’s public statements indicate that he would be pragmatic in foreign affairs, more of a Republican in the mold of George H.W. Bush and Brent Scowcroft than Donald Rumsfeld or Dick Cheney. As a business executive, he has pushed for free trade and opposed sanctions that disadvantage American companies over their European and Asian counterparts. There is little in his tenure at Exxon to indicate that he would not be a zealous advocate for America’s foreign policy with the same rigor he showed while making Exxon the dominant energy company in the world. In fact, he could prove to be the “velvet glove” in Trump’s national security team, while retired generals with an appetite for military force - such as Michael Flynn and James Mattis - are behind him.

Trump campaigned and won the presidency on a platform of radically changing how Washington conducts domestic and foreign policy. He has stated that he wants corporate executives to serve in his cabinet because they know how to “win” and cut “better” deals than their predecessors who were mostly politicians with little real world experience. In nominating Tillerson, he will have fulfilled that goal. (By Amir Handjani)