ExxonMobil CEO Rex Tillerson’s ties to Russia represent only one of the obstacles that could block his path into Donald Trump’s Cabinet — and each of them offers Democrats a chance to inflict some political damage on the potential secretary of state.
Tillerson would also face certain grilling in the Senate about the investigations being pursued by Democratic state attorneys general into allegations that Exxon spent decades deceiving the public about its research on man-made climate change. And that’s on top of Exxon’s stakes in Western Canada’s massive oil-sands fields, which environmentalists have labeled a danger to the health of the planet, as well as the company’s maneuvering in Iraqi internal politics following the U.S. invasion.
Even if he is confirmed, Tillerson’s role as secretary of state would give Trump’s critics a perpetual foil to accuse the administration of being beholden to the nation’s biggest oil company — much as former Vice President Dick Cheney’s ties to oil-services contractor Halliburton provided abundant fodder against George W. Bush.
Trump on Tuesday morning announced his plans to nominate Tillerson, a 64-year-old Texan who has spent his entire career at Exxon, whom he praised last weekend as a “world class player and dealmaker.” Even before the announcement, Tillerson’s long-time environmental foes were already planning an all-out campaign to target anyone on Capitol Hill who supports his nomination.
“We’ll just make sure that every senator understands that they own this guy if they vote to confirm him,” said climate activist Bill McKibben, who spearheaded the successful campaign to get President Barack Obama to reject the Keystone XL oil pipeline from Canada. “That they own his policy, they own his corporate past, they own his ties to Russia. It’s all part of the big deal.”
Here are five of the biggest issues Tillerson’s nomination would be likely to face:
Russia, Russia, Russia: Much of the criticism around Tillerson so far has focused on his personal relationship with Russian President Vladimir Putin and ExxonMobil’s deep partnership with Rosneft, the government-owned oil company run by Putin confidant Igor Sechin.
Tillerson has negotiated billions of dollars of joint oil projects with the Russian leader, signing deals to explore or drill in Siberia, the Black Sea and the Arctic, and Putin in turn awarded him the Order of Friendship in 2012. At the same time, Exxon has estimated that it could lose as much as $1 billion because of sanctions that the U.S. and other Western nations imposed on Moscow after Russia’s 2014 incursion into Ukraine.
Those ties have stirred alarm from some of the Senate Republicans whom Trump needs to confirm Tillerson to the top role in Trump’s Cabinet.
“When he gets the friendship award from a butcher, frankly, it’s an issue that I think needs to be examined,” Senate Armed Services Chairman John McCain (R-Ariz.) told Fox News on Monday, while Sen. Marco Rubio (R-Fla.) tweeted on Sunday: “Being a ‘friend of Vladimir’ is not an attribute I am hoping for from a #SecretaryofState.”
Behind-the-scenes endorsements from former Secretaries of State Condoleezza Rice and James Baker, as well as former Defense Secretary Robert Gates, may help counter some of those concerns. But the slim 52-48 Republican majority in the Senate means the Trump team won’t have much margin of error.
The controversy over reported CIA allegations that Moscow engaged in cyber hacking to tip the election to Trump will only increase the scrutiny on the new administration’s ties to Russia.
Even if Tillerson sells his Exxon shares — worth an estimated $238 million — critics worry that his view from Foggy Bottom might still be influenced by the benefits that could come from closer U.S. ties to Russia. (The value of Tillerson’s shares rose more than $5 million on Monday, following news that Russia had struck a deal with OPEC to cut oil exports.)
It’s the climate: Exxon has a long record of opposing efforts to fight rules on greenhouse gas emissions and questioning the science behind climate change, something sure to raise hackles among Democrats already rattled by the strains of climate skepticism among Trump and his Cabinet choices. Tillerson himself has downplayed the threats of climbing temperatures and rising seas, telling the Council on Foreign Relations in 2012 that “it’s an engineering problem and it has engineering solutions.”
But Exxon has a more immediate problem: a loud, organized campaign by environmental groups alleging that the company knew from its internal research as far back as the 1970s that fossil fuels are contributing to global warming. That campaign, dubbed “#ExxonKnew” on social media, inspired the attorneys general of New York and Massachusetts to launch investigations into what the company knew and when it knew it.
The company and its defenders say the activists are attacking Exxon’s right to free speech. But because of strong New York laws on corporate fraud, state Attorney General Eric Schneiderman could inflict serious damage on the company if he can show that deception by Exxon hurt or defrauded its investors.
One point in Tillerson’s defense: In 2006, he pushed the company to come out in favor of a carbon tax to address climate change, saying such a levy would be far more efficient than the cap-and-trade law or industry-by-industry regulations that the Obama administration has favored. But environmentalists say Exxon has never expended political capital trying to get a carbon tax enacted.
Canada: Like Trump, Tillerson is a staunch supporter of building the Keystone XL pipeline. And that would give environmental groups an excuse to relaunch the seven-year-long green crusade that culminated in Obama’s rejection of the Canada-to-Texas artery last year.
Exxon is not directly involved in Keystone but has a deep financial interest in extracting fuel from the Western Canadian region that’s home to the “oil sands.” The company holds a majority stake in Calgary’s Imperial Oil, one of Canada’s biggest oil sands developers, and Tillerson said last year that the pipeline would “improve U.S. competitiveness, increase North American energy security and strengthen the relationship with one of our most important allies and trading partners.”
Tillerson’s support of Keystone could also open him up to opponents’ criticism about a different pipeline: Exxon’s Pegasus pipeline, which ruptured in 2013 and leaked more than 130,000 gallons of oil, contaminating a creek and sending oil streaming down a residential street near Little Rock, Arkansas.
Iraq: Trump may have called for the U.S. to “take” Iraq’s oil as payment for the U.S. overthrowing Saddam Hussein, but Tillerson guided Exxon to a slightly different prize: the oil fields in Northern Iraq under the control of the Kurds. But that placed Exxon in the middle of a power struggle between the semi-autonomous Kurdish region and the Central Iraqi government in Baghdad.
Frustrated with tough terms set by Baghdad for an Exxon oil project in the southern part of the country, Tillerson signed a separate deal in 2011 directly with the Kurds. That infuriated the State Department and Iraqi government officials, who said it undermined the United States’ “one Iraq” policy aimed at preventing the country from cleaving into three parts.
The deal landed Exxon access to billions of barrels in Kurdish oil and paved the way for other oil majors, like Chevron and Total, to enter the region, but it weakened the government of then-Prime Minister Nouri al-Maliki. Explaining the decision to the State Department in a conference call later, Tillerson simply said that “I had to do what was best for my company,” according to a New Yorker article by Steve Coll, author of a book about Exxon called “Private Empire.”
The Exxon punching bag: Exxon’s long shadow has made it a favorite target of the greens and the left for years over issues including the company’s links to the Indonesian government’s human rights abuses and its ties to the dictatorship in Equatorial Guinea.
Installing the head of that company as the nation’s top diplomat would give critics of the U.S. government — both at home and abroad — a handy weapon to tar the Trump administration’s postures on international issues.
So if Trump tears up the Iranian nuclear agreement to squeeze Tehran, opponents could paint that as an effort to benefit U.S. energy companies by eliminating competition in the global oil markets. Similarly, they could portray any sanctions relief for Russia as a sop to U.S. companies like Exxon that do business there. And increased U.S. pressure on the socialist government of Venezuela could fuel accusations that Trump is exacting payback for the seizure of Exxon’s assets when the regime nationalized its oil industry.
Domestically, if hostilities in the Middle East were to escalate or OPEC were to succeed in its promise to cut oil output, gasoline prices would almost certainly rise — never good political news for whatever party happens to occupy the White House. High prices might stimulate U.S. companies to ramp up their drilling in places like Texas and North Dakota, creating jobs in reliably red states, but they would cut into the $100 billion-plus windfall that cheap gasoline poured into the pockets of U.S. consumers last year.
Alex Guillén contributed to this report.
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