Trump’s Pick for Secretary of State Suggests Radical Shift in Foreign Policy
President-elect Donald Trump officially nominated Exxon Mobil Corporation (NYSE:XOM) Chief Executive Officer Rex Tillerson as his Secretary of State early this morning.
The move seems to echo to George W. Bush, who chose another oil executive, Condoleezza Rice, as his Secretary of State for his second term. Rice served on the board of Chevron Corporation (NYSE:CVX). Chevron even has an oil tanker named after her.
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I have chosen one of the truly great business leaders of the world, Rex Tillerson, Chairman and CEO of ExxonMobil, to be Secretary of State.
— Donald J. Trump (@realDonaldTrump) December 13, 2016
But the Tillerson choice might have even more strategic implications. The Texan oilman, whom Trump praised as a “world class player,” has secured close ties to Vladimir Putin.
Whether I choose him or not for “State”- Rex Tillerson, the Chairman & CEO of ExxonMobil, is a world class player and dealmaker. Stay tuned!
— Donald J. Trump (@realDonaldTrump) December 11, 2016
Trump observed that Tillerson has headed an oil company that is nearly twice as large as its nearest competitor. Trump added that Tillerson “does massive deals in Russia.” The 64-year-old Tillerson, who has led Exxon since 2004, has secured strong business ties with Russia’s state run oil company, Rosneft.
Indeed, Tillerson’s nomination is coherent with Trump’s not-so-veiled plan to improve ties to Russia. Tillerson has criticized the recent U.S. policy to enforce sanctions against Russia over its annexation of Crimea. Trump acquaintance and energy consultant, Carter Page, also praised the Tillerson pick for the Department of State.
Trump is sending a clear message to the geopolitical establishment. The strong pro-Russia sentiment of many of his top cabinet picks (and the not-so-accidental phone call with Taiwan’s President Tsai Ing-wen) have sent the world a signal. The United States would undo the diplomatic agreement that President Richard Nixon secured with China.
Trump Is Shifting That Crucial Relationship Away from China and Closer to Russia
If approved, Tillerson’s tenure at the State Department would relaunch an open season on foreign direct investment in Russian energy—in Russia and beyond.
It would, for example, necessarily imply a shift of U.S. policy in the Middle East as well. Tillerson’s Russian connections could favor, or at least not oppose, the proposed Iran-Iraq-Syria gas pipeline instead of the alternative Qatar-Turkey.
Trump may have officially announced his pick for Secretary of State early this morning, but the nomination still needs to be approved by the U.S. Senate. And the nomination will face opposition.
Tillerson represents a risk for Trump. The CIA has accused the Kremlin of interfering in the U.S. elections, but has not supplied proof. Tillerson’s choice also distances even Republicans. Perhaps people would have preferred a politician capable of keeping “The Donald’s” exuberance under control—like Mitt Romney—rather than a businessman representing as powerful an industry as oil.
Apart from Russia, Rex Tillerson’s choice as chief diplomat also suggests that Trump wants to shift U.S. policy in the Middle East away from Saudi Arabia. In this respect, shale oil has made America independent from an energy point of view. The higher prices resulting from OPEC production cuts also benefit shale oil investment.
Russia Would Replace China and Saudi Arabia in U.S. Relations
Another piece of the puzzle in this sense comes from Japan. President Putin will visit Japan on December 15 and 16. Russian and Japanese leaders are expected to revamp security talks and joint rescue training at sea—cooperation programs suspended after Russia’s annexation of Crimea in 2014. But the pièce de résistance could be the signing of an official peace treaty.
Russia and Japan never signed an official peace at the end of the second World War. Apart from supporting different sides, they still have a territorial dispute over four small Pacific islands, which the Russians call Kuril. The Japanese refer to them as the Northern Territories.
Japan hopes that Putin’s visit will be an opportunity to make progress on this territorial issue. The Obama White House has repeatedly expressed its disapproval of Tokyo’s diplomatic overture to Russia. Washington fears that the summit will cause a weakening of the G7 on Moscow.
Many European allies—to stem populists—want to scrap sanctions to Russia to reopen profitable trade. One of these is French Presidential hopeful Francois Fillon. Trump has captured the global feeling that the tide is turning in Russia’s favor. Tillerson would be the appropriate Secretary of State in such a world. But only if he is approved by the Senate.
