Tillerson's Russia Ties

Rex Tillerson's Russia Ties Leave GOP Lawmakers on Edge 

Tillerson's Russia Ties
Exxon CEO and soon-to-be U.S. Secretary of State Rex Tillerson

Sen. John McCain (R-AZ) told Reuters yesterday he has questions about Exxon Mobil Corp. (NYSE: XOM) CEO Rex Tillerson's Russia ties.

"I have concerns," McCain admitted. "It's very well-known that he has a very close relationship with [Russian President] Vladimir Putin."

Tillerson has been under scrutiny since President-Elect Donald Trump officially named him as his choice for the next U.S. secretary of state on Tuesday morning.

In this new role, Trump said Tillerson would "promote regional stability and focus on the core national security interests of the United States."

But U.S. legislators - especially those from the GOP, like McCain - aren't completely convinced...

Sen. Lindsey Graham (R-SC) also spoke out in opposition of Tillerson's appointment yesterday...

"Mr. Tillerson is a talented businessman with a great deal of international business experience," Graham said, according to Yahoo News. "I look forward to meeting Mr. Tillerson and discussing his world view - especially his views of the U.S.-Russian relationship. Based upon his extensive business dealings with the Putin government and his previous opposition of efforts to impose sanctions on the Russian government, there are many questions which must be answered. I expect the U.S.-Russian relationship to be front and center in his confirmation process."

That confirmation process involves Tillerson's appointment first passing through the Senate Foreign Relations Committee before the larger branch as a whole can vote either "yea" or "nay" on his nomination.

And right now, several Senate members are looking over Tillerson's ties to Russia with skepticism...

Tillerson's Russia Ties Span 40 Years

You see, 64-year-old Tillerson has worked for Exxon his entire life and came up through the ranks by managing its Russia account.

It's because of this job that his close relationship with Moscow not only developed, but actually flourished.

In fact, it was Tillerson's masterful ability to convince the Soviets that a Moscow/Washington oil alliance would handsomely profit both nations that cemented his succession of Lee Raymond as CEO of Exxon in 2006.

Once at the oil giant's helm, Tillerson made good on his promise to Russia and bet roughly $500 billion on the eastern country's vast but elusive oil resources via a bold partnership with Moscow's drilling leviathan, Rosneft.

In 2011, an official deal was struck between Rosneft and Exxon, after which the two companies focused solely on drilling in three key Russian regions:

  • The Arctic
  • The deepwaters of the Black Sea
  • Siberia

Putin himself attended the 2011 signing ceremony for the deal, which is majority-owned by Moscow.

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Immediately afterward, Rosneft's valuation shot up $7 billion over the course of five days.

The partnership also gave Russia the chance to get a stake in Exxon's North American projects, including ones in West Texas and in the deepwaters of the Gulf of Mexico.

In 2013, Putin awarded Tillerson the "Order of Friendship," which is given to foreign citizens for "special merits in strengthening peace, friendship, cooperation, and mutual understanding between peoples," reported CNN yesterday. It is also awarded for those who make a "great contribution" to "large-scale economic projects" in Russia.

And for about one more year, the mutually beneficial partnership between Rosneft and Exxon played out swimmingly.

But then...

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U.S. sanctions were imposed, which severed their lucrative oil bond indefinitely...

In 2014, Exxon was hit hard by a round of U.S. and European Union sanctions that targeted Russia for its intervention in Crimea.

Rosneft, which was producing more oil than either Iraq or Iran by then, wound up having to ask for 2.5 trillion rubles ($44.07 billion) from the Russian government to help it weather the sanctions and refinance its debts.

Meanwhile, Exxon lost over $1 billion from the sanctions, according to regulatory filings this past October.

And this issue in particular is what has U.S. legislative hackles raised...

Why There's Skepticism About Where Tillerson's Loyalty Lies

You see, Exxon would stand to gain if sanctions are lifted on Russia by the Trump administration.

"We are very anxious to get back to work there," Tillerson told industry analysts on March 3 when asked if Exxon would be interested in restarting its venture with Rosneft again.

Adding to legislators' current concerns about the oilman's business motives is the additional fear about the new kind of power he'll wield.

That's because the Exxon CEO also has a history of sidestepping the law...

Case in point: In 2011, around the same time the ink was drying on the Exxon/Rosneft deal, Tillerson managed to bypass Baghdad and Washington with another arrangement in Iraq. Exxon's intervention in the fractious country undermined its central government's plans to share the oil wealth there among the varying regions evenly. Not only did Tillerson's move directly alienate the Iraqi government from the United States, which agreed with its oil-sharing plans, it strengthened Kurdish independence ambitions there as well.

Such willingness to cut a deal regardless of its political consequences speaks volumes about the CEO's influence and loyalties.

Sen. Marco Rubio (R-FL) likewise spoke out about Tillerson's alleged fealty to money over political stability. "The next secretary of state must be someone who views the world with moral clarity," Rubio said on Tuesday, according to CNN, "is free of potential conflicts of interest, has a clear sense of America's interests, and will be a forceful advocate for America's foreign policy goals to the president, within the administration, and on the world stage. I look forward to learning more about his record and his views.‎"

Ultimately, Tillerson could face a very close confirmation vote.

With Republicans controlling 52 seats in the Senate, he can't afford to lose more than two GOP "yea" votes, assuming all Democrats oppose his nomination.

For their part, Dems on the Senate Foreign Relations Committee - which, again, hears testimony from nominees before the Senate votes on them - have already expressed their concerns about Tillerson's relationship with Russia.

The top-ranking Democrat on the committee - Rep. Ben Cardin (D-MD) - said in a statement yesterday that he, too, was "deeply troubled" by Tillerson's relationship with Putin, as well as his public opposition to sanctions on Russia.

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