By Steven Mufson,
When ExxonMobil chief executive Rex Tillerson showed up in June at the annual St. Petersburg international economic forum that is dubbed Russia’s Davos, he was asked about the impact international sanctions on Russia were having on his company, which had abandoned ambitious drilling plans there.
“It’s a question for the government — if you find anyone from the U.S. government who’s willing to answer this question,” he replied to laughter from the audience of Western executives, who had been lavishing praise on their Russian hosts.
It was the first time in three years that Tillerson or most other chief executives had attended the confab, for the moment laying aside friction over Russia’s abrupt annexation of Crimea and its backing of violent separatist forces in eastern Ukraine. Back in Washington, the State Department was not amused. State Department spokesman John F. Kirby commented that “most American companies understand” that taking part in the forum “sends the wrong message about the acceptability of Russia’s actions.”
Six months later, Tillerson’s relationships with autocrats remain a source of friction after his surprise appointment by President-elect Donald Trump to be secretary of state. The ExxonMobil chief’s ties to Russia have alarmed hawks in Congress, who vow to scrutinize Tillerson’s good working relationship with President Putin and the latter’s longtime confidante Igor Sechin, the chairman of the Russian petroleum giant Rosneft.
With his nomination, the 64-year-old Tillerson has been thrust into the long-standing U.S. foreign policy divide separating those who value pragmatism and dealmaking from those who attach greater importance to principles, human rights and democracy. This is a divide that cuts across both parties.
Should he be confirmed, Tillerson will no longer answer to the more than 93,000 shareholders of ExxonMobil but primarily to a single shareholder named Trump. And he will draw on views refined in industry, not diplomacy.
To fans of Tillerson, his relationship with Putin is a sign of his pragmatism, seeking advantage for his company with a blunt, straightforward style that has won respect abroad. Speaking to students from the Texas Tech business school last year, Tillerson said the reason “why I’ve been able to gain Vladimir Putin’s trust” is “because throughout my career I’ve wanted people to view me as an honest person.”
To his critics, however, Tillerson and ExxonMobil come across as arrogant and indifferent to Russia’s record in Ukraine or Putin’s harsh suppression of domestic opposition. The oil giant’s vast enterprise spanning six continents and more than 50 nations has embraced a varied cast of national leaders, including the Saudi oil ministers, Equatorial Guinea’s corrupt Teodoro Obiang Nguema, the autocratic government of Kazakhstan and the emir of Qatar.
These contrary views are in some ways connected. Edward S. Verona, who worked for ExxonMobil for two years and spent several more working in Moscow, said one reason Tillerson was respected in Moscow was because of the way the company dealt with Venezuela’s then-president, the voluble Hugo Chávez. In 2007, Chávez had wanted to rewrite contract terms for companies operating in the country’s vast, oil-rich Orinoco belt. Exxon said no, abandoning 2 percent of its worldwide reserves and winning arbitration court orders to freeze Venezuelan assets.
In the same way, Exxon exited Nigeria’s Niger Delta after insurgents disputed operations there.
“You have to be willing to say, ‘No, we aren’t going to do it that way, we are going to do it this way; if we can’t do it this way, we won’t be here,’ ” Tillerson said about the company’s strategy of keeping its Nigerian exploration to offshore areas, where it was safer.
“Rex Tillerson gained the respect of Russians, particularly Sechin and Putin, because he was prepared to stand up and push back when he felt his company was being treated unfairly,” said Verona, now a senior adviser to McLarty Associates.
The fight coincided with efforts by Russia’s Gazprom, a state-owned company, to horn its way into a Sakhalin Island project off eastern Russia that Tillerson had helped negotiate years earlier. ExxonMobil was able to navigate the dispute with help from Putin and Sechin. The project, built in extremely harsh conditions, remains one of the company’s most lucrative, Tillerson has said.
Some of Exxon’s perceived arrogance is rooted in the company’s history as the largest of the corporations split off from the Standard Oil Trust, the enterprise built by John D. Rockefeller.
Lifelong scout
Tillerson was born in Wichita Falls, Tex., the son of a Boy Scout administrator. He still lists the rank of Eagle Scout on his résumé and has remained active in the organization. In 2012, he was instrumental in pushing the Boy Scouts board to admit openly gay youths.
His experience as a scout fit well into the company, which insisted on rules that were more detailed than most other oil companies.
In 1997, Exxon sent Tillerson, then a promising executive who had been in Yemen, to Moscow to “pick up the relationship and repair it,” Tillerson later recalled. His predecessor had been kicked out of the country. Tillerson met six different prime ministers over the course of 14 months.
The last of those was Putin.
Nearly 15 years later in Sochi, Putin provided the blessing for what could become Exxon’s largest Russian deal, a joint exploration agreement with Rosneft covering almost 190 million acres, almost halfway across the Arctic shoreline and covering nine time zones.
Speaking later at Texas Tech, Tillerson cited the Boy Scout motto and urged students to have honor and integrity. “Those words mean a lot to me,” Tillerson said. “And I can tell you they mean a lot in any culture.” He added that “integrity is recognized by every government, every leader. It’s the most valuable asset you have, your personal integrity.”
But while Tillerson preaches the value of honesty and integrity, ExxonMobil has not shied away from doing what is good for its bottom line, which has made environmental groups and others suspicious of its aims.
While Tillerson has acknowledged human involvement in the warming of the globe and backed a carbon tax to deal with it, the oil giant has continued to fund groups such as the American Legislative Exchange Council, whose leading members have cast doubt on climate change or its urgency. The relationship contrasted with that of Shell, which also acknowledges climate change but dropped its membership in ALEC last year, citing differences over the issue.
The company is also in the midst of a bitter fight with the attorneys general of New York and Massachusetts and with more than a dozen nongovernmental organizations that are looking at whether the oil giant failed to disclose what it knew 40 years ago about the damage fossil fuels were doing to the Earth’s climate. The attorneys general issued broad subpoenas for internal Exxon documents, and the NGOs have encouraged them to consider bringing a fraud case similar to the one that extracted billions of dollars from tobacco companies years ago.
ExxonMobil has fought back, going to a Texas federal court near its headquarters and winning the judge’s highly unusual backing for discovery on the attorneys general, including with regard to internal emails, to determine whether they were acting “in good faith.”
The company also is scrutinizing individuals and organizations. The day after the presidential election, for example, the company hand-delivered a subpoena to Carroll Muffett, the head of the Center for International Environmental Law, a nonprofit organization focused on environmental and human rights issues.
“The subpoena is in fact a fishing expedition that goes far beyond any issue arguably before the Texas court,” Muffett said in an email. “It is clear that Exxon is trying to leverage this case, outrageous as it is, to intimidate and silence its critics.”
Engineering quotient
Another important piece of Tillerson’s background is his engineering background. ExxonMobil has been widely seen as a place with a higher “EQ,” for engineering quotient, than IQ, or intelligence quotient.
Even the EQ has failed from time to time. The Exxon Valdez oil-tanker accident spilled crude off the pristine coast of Alaska in 1989, and more recently company pipelines leaked in Montana’s Yellowstone River and in Mayflower, Ark. The company has taken tough legal strategies in those instances, too, and it litigated the Valdez spill for 20 years.
Still, Tillerson draws on that engineering construct and has applied it to the problem of climate change. “It’s an engineering problem, and it has engineering solutions,” he said at an event sponsored by the Council on Foreign Relations in 2012.
As he looked back on his career during the Texas Tech event, Tillerson said that he views the company’s oil and gas operation on Sakhalin Island — an area beset by poverty, seismic instability, long icebound winters and 100-foot waves in the summer — as one of his crowning achievements.
It might look easy compared to being secretary of state.
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