This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2016/12/13/world/americas/tillersons-company-exxon-mobil-follows-its-own-foreign-policy.html

The article has changed 4 times. There is an RSS feed of changes available.

Version 1 Version 2
Under Rex Tillerson, Exxon Mobil Forged Its Own Path Abroad Under Rex Tillerson, Exxon Mobil Forged Its Own Path Abroad
(about 5 hours later)
It has struck lucrative deals with repressive governments in Africa, built a close rapport with Russia, clashed with China, befriended Vietnam, challenged Venezuela and irritated Iraq. BEIRUT, Lebanon — Struggling to keep Iraq from splintering, American diplomats pushed for a law in 2011 to share the country’s oil wealth among its fractious regions.
As America’s biggest oil company, with operations on six continents and a stock market value of more than $360 billion, Exxon Mobil is in some ways a state within a state. Its chief executive, Rex W. Tillerson, nominated by President-elect Donald J. Trump to be the next secretary of state, has arguably left an American big-business footprint on more countries than any nominee before him. Then Exxon Mobil showed up.
Exxon Mobil’s quest for oil and gas has brought jobs, development and education to some of the world’s poorest places. But its agenda does not always mesh with that of the United States government. Under its chief executive, Rex W. Tillerson, the giant oil company sidestepped Baghdad and Washington, signing a deal directly with the Kurdish administration in the country’s north. The move undermined Iraq’s central government, strengthened Kurdish independence ambitions and contravened the stated goals of the United States.
Speaking at the Council on Foreign Relations in June 2012, Mr. Tillerson made clear that he believed American policy should be securing affordable access to energy. Mr. Tillerson’s willingness to cut a deal regardless of the political consequences speaks volumes about Exxon Mobil’s influence. In the Iraq case, Mr. Tillerson and his company outmaneuvered the State Department, which he has now been nominated by President-elect Donald J. Trump to lead.
“And if we’re able to do that, where it comes from should be of little consequence to us, if it’s reliable,” he said. “They are very powerful in the region, and they couldn’t care less about what the State Department wants to do,” Jean-François Seznec, a senior fellow at the Atlantic Council, a research group in Washington, said of Exxon Mobil’s pursuits in the Middle East.
Here is a look at some of the countries where his company operates: As America’s biggest oil company, with operations on six continents and a stock market value of more than $390 billion, Exxon Mobil is in some ways a state within a state. While Mr. Tillerson has never officially been a diplomat, he has arguably left an American footprint on more countries than any nominee before him — with an agenda overseas that does not always mesh with that of the United States government.
Mr. Tillerson’s success in guiding Exxon Mobil into the rough-and-tumble politics of the Russian oil business helped elevate him to chief executive. Under Mr. Tillerson, Exxon Mobil has struck lucrative deals with repressive governments in Africa, clashed with China and befriended Vietnam over disputed territory in the South China Sea, learned from hard experience in Venezuela, and built a close rapport with Russia at a time of deepening mistrust between the Kremlin and the West.
As for all oil executives, a working relationship with President Vladimir V. Putin, who takes a deep interest in energy politics, was crucial. Mr. Trump emphasized the unique role Mr. Tillerson had played in pursuing his company’s interests around the world, announcing the selection on Tuesday by saying that Mr. Tillerson’s “tenacity, broad experience and deep understanding of geopolitics make him an excellent choice for secretary of state.”
Exxon Mobil executives argue that Mr. Putin and Mr. Tillerson are not friends, countering some of the criticism in the United States that Mr. Tillerson is too close to Russia to take a strong stance against it. Mr. Putin awarded Mr. Tillerson a medal of friendship for concluding corporate deals in Russia. But the task is a new one for Mr. Tillerson, who as chief executive made it clear that a broad range of national interests and diplomatic priorities were not his main concern. His focus was access to energy.
The United States imposed sanctions on Russia’s oil industry in 2014 over its deadly intervention in Ukraine, leading American foreign policy and the company’s investment goals to diverge. Exxon Mobil now has billions of dollars in deals that will move forward only if the sanctions are lifted. “And if we’re able to do that, where it comes from should be of little consequence to us, if it’s reliable,” he said at the Council on Foreign Relations in June 2012.
Mr. Tillerson’s first big overseas test came soon after he became Exxon Mobil’s chief executive in 2006, when he confronted the government of Venezuela head-on — and suffered the consequences.
The company had worked in Venezuela for decades, but then-President Hugo Chávez, calling for a Socialist-inspired revolution to benefit the poor, began renegotiating the industry’s contracts. By 2007, the Venezuelan government set its sights on projects that included oil industry titans like Exxon Mobil, Chevron and Total.
Foreign companies soon began cooperating with Mr. Chávez’s government, but Exxon Mobil and another company, ConocoPhillips, balked at the changes.
“From the very beginning, Exxon sent strong signals that they would not be run over, they would use all their legal rights, and they would be more confrontational,” said Francisco Monaldi, a former consultant for Venezuela’s state oil company, PDVSA.
In response, Venezuela expropriated the assets of both companies. Exxon Mobil took Venezuela to an arbitration court, and got a disappointing outcome. In 2014, seven years after the dispute began, the World Bank’s international arbitration court found in the company’s favor, but awarded only about one-tenth of what Exxon Mobil said the assets were worth.
The company has not operated in Venezuela since.
“In my opinion, he took it very personal with Chávez,” said Ghassan Dagher, a Venezuelan oil industry consultant, adding that Mr. Tillerson “fell into the trap completely.”
It was a lesson that may have helped inform Mr. Tillerson’s dealings with President Vladimir V. Putin of Russia, he said.
“Once Exxon finished with Chavez’s story, they said, ‘We’re not going to make the same mistake.’ That’s why they became so close to Putin.”
Mr. Tillerson has had success guiding his company through the rough-and-tumble politics of the Russian oil business.
Exxon Mobil executives said Mr. Tillerson was not available for an interview. But they argued that he and Mr. Putin are not friends, countering criticism in the United States that Mr. Tillerson is too close to Russia to take a strong stance against it. Mr. Putin awarded Mr. Tillerson a medal of friendship for concluding corporate deals in Russia.
Not long after, the United States imposed sanctions on Russia’s oil industry in 2014 over Moscow’s deadly intervention in Ukraine, leading American foreign policy and the company’s investment goals to diverge. Exxon Mobil now has billions of dollars in deals that will move forward only if the sanctions are lifted.
Some officials and executives argue that Mr. Tillerson’s business-minded approach to Russia could ease tensions, a view questioned by many diplomats, rights groups and advocates of disarmament.Some officials and executives argue that Mr. Tillerson’s business-minded approach to Russia could ease tensions, a view questioned by many diplomats, rights groups and advocates of disarmament.
Yuri Ushakov, a foreign policy adviser to Mr. Putin, praised Mr. Tillerson, saying Russia was ready to find a way out of the “ridiculous condition” between the two great powers. Yuri Ushakov, a foreign policy adviser to Mr. Putin, praised Mr. Tillerson, saying Russia was ready to find a way out of the “ridiculous condition” between the two great powers. “We want out of this crisis situation,” he said.
“We want out of this crisis situation,” he said. In West Africa, Exxon Mobil has made lucrative deals with the government of Equatorial Guinea, which arbitrarily detains and tortures critics, disregards elections, and has faced international prosecution for using oil profits to enrich the president’s family.
In 2011, American diplomats were pushing for a new law to determine how Iraq’s oil wealth would be shared — part of a wider effort to keep the war-torn country from breaking apart. Tutu Alicante, the director of the watchdog organization EG Justice, said that by doing business in Equatorial Guinea, Exxon Mobil was complicit in reinforcing President Teodoro Obiang Nguema Mbasogo — a strongman who has held office since 1979.
Then Exxon Mobil showed up, sidestepping both Baghdad and Washington to sign an oil deal directly with the Kurdish administration in the country’s north. That undermined Iraq’s central government and strengthened the Kurdish quest for greater independence, contravening the stated goals of the United States in Iraq.
Mr. Tillerson was central to the deal.
“They are very powerful in the region, and they couldn’t care less about what the State Department wants to do,” Jean-Francois Seznec, a senior fellow at the Atlantic Council, a research group in Washington, said of Exxon Mobil.
In choosing to pursue the oil deal with the Kurdish authorities in Iraq, Mr. Tillerson clearly decided that the agreement’s financial promise overshadowed other political considerations, said Ben Van Heuvelen, the managing editor of Iraq Oil Report.
The power of Exxon Mobil’s investment changed the calculations of some neighbors, convincing Turkey that it was worth pursuing its own oil deals directly with the Kurdish authorities, Mr. Van Heuvelen said.
“The one clear trend that runs through Exxon’s foreign policy is that they are really all about business and doing what is best for shareholders,” he said. “They are willing to look the other way in the face of a whole host of problems.”
Exxon Mobil has a long history as a major presence in West African countries like Equatorial Guinea, one of the most repressive regimes on the continent.
The company has made lucrative deals with the nation’s government, which arbitrarily detains and tortures critics, disregards free and fair elections, and has faced international prosecution for using oil profits to enrich the president’s family and select government officials.
Tutu Alicante, the director of the watchdog organization EG Justice, said that by doing business in the country, Exxon Mobil was complicit in reinforcing President Teodoro Obiang Nguema Mbasogo — a strongman who has held office since 1979.
“Exxon definitely has enabled a government that once upon a time was very repressive but didn’t have the resources to keep itself in power,” Mr. Alicante said.“Exxon definitely has enabled a government that once upon a time was very repressive but didn’t have the resources to keep itself in power,” Mr. Alicante said.
As for the selection of Mr. Tillerson as secretary of state, he added: “For just about anyone who cares about transparency in extractive industry, this is a devastating pick.” As for the selection of Mr. Tillerson as secretary of state, he added, “For just about anyone who cares about transparency in extractive industry, this is a devastating pick.”
The country’s president, Mr. Obiang, and his family have faced investigations by the Department of Justice and a Senate subcommittee in the United States and elsewhere, accused of looting hundreds of millions of dollars from Equatorial Guinea’s treasury to buy real estate in Malibu and Paris, as well as life-size statues of Michael Jackson, the musician. Mr. Obiang and his family have faced investigations in the United States and elsewhere for looting hundreds of millions of dollars from Equatorial Guinea’s treasury to buy real estate in Malibu and Paris, as well as life-size statues of Michael Jackson.
The president’s son is under investigation for money laundering in France and Switzerland, where the authorities seized 11 luxury cars including a Bugatti Veyron valued at about $2 million.The president’s son is under investigation for money laundering in France and Switzerland, where the authorities seized 11 luxury cars including a Bugatti Veyron valued at about $2 million.
Most of the population of Equatorial Guinea lives on less than a dollar a day.Most of the population of Equatorial Guinea lives on less than a dollar a day.
Documentation of questionable practices in the country began before Mr. Tillerson ascended to chief executive of Exxon Mobil in 2006. Documentation of questionable practices in the country began before Mr. Tillerson ascended to the chief executive position.
In 2004, an American Senate subcommittee identified a bank in Washington where Exxon Mobil and other oil companies deposited hundreds of millions of dollars owed to Equatorial Guinea for operating there. The cash went to the president’s family, the subcommittee’s report found.In 2004, an American Senate subcommittee identified a bank in Washington where Exxon Mobil and other oil companies deposited hundreds of millions of dollars owed to Equatorial Guinea for operating there. The cash went to the president’s family, the subcommittee’s report found.
“The government literally used the oil wealth of the country as a personal A.T.M.,” said Arvind Ganesan, a director at Human Rights Watch.“The government literally used the oil wealth of the country as a personal A.T.M.,” said Arvind Ganesan, a director at Human Rights Watch.
The same kind of behavior continues, he said. The same kind of behavior continues, he argued.
Alan Jeffers, an Exxon Mobil spokesman, said that when dealing with countries that have records of corruption, the company was careful to follow the American Foreign Corrupt Practices Act, which prohibits bribes to foreign officials to do business. But Alan Jeffers, an Exxon Mobil spokesman, said that when dealing with countries that have records of corruption, the company was careful to follow the American Foreign Corrupt Practices Act, which prohibits bribes to foreign officials to do business.
“We’re a company that follows the laws,” Mr. Jeffers said. “We operate in a lot of jurisdictions, and we spend a lot of time in assuring that we know what the laws are in the various jurisdictions scrupulously. Absent a law prohibiting something, we evaluate it on a business case basis.” “We’re a company that follows the laws,” Mr. Jeffers said. “Absent a law prohibiting something, we evaluate it on a business case basis.”
When Exxon, the precursor of Exxon Mobil, took over Mobil’s operations in Nigeria in the late 1990s, it was given credit for righting a long history of misdeeds, including bribery and ignoring communities where Mobil had worked, said Matthew Page, a consultant who until recently was the State Department’s top expert on Nigeria. The company has been both complimented and criticized in Nigeria, Africa’s biggest oil producer.
“They came in with a much more rigid, by-the-book management culture and totally cleaned up Mobil’s operations there,” he said. When Exxon, the precursor of Exxon Mobil, acquired Mobil’s operations in Nigeria in the late 1990s, it was given credit for righting misdeeds, including bribery and negligence, said Matthew Page, a consultant who until recently was the State Department’s top expert on Nigeria. “They came in with a much more rigid, by-the-book management culture and totally cleaned up Mobil’s operations there,” he said.
More recently, under Mr. Tillerson’s tenure, Exxon Mobil’s offshore facilities have been attacked by militants in the Niger Delta who contend that the nation’s oil wealth overwhelmingly benefits a small circle of Nigerian elites, yet causes broad environmental damage. Like many oil companies that operate in the region, Exxon Mobil has been accused of major oil spills. More recently, under Mr. Tillerson’s tenure, Exxon Mobil’s offshore facilities have been attacked by militants in the Niger Delta who contend that the nation’s oil wealth overwhelmingly benefits a small circle of Nigerian elites, yet causes broad environmental damage like oil spills.
The company says it takes environmental protections seriously, including in places that have weak regulations or enforcement.The company says it takes environmental protections seriously, including in places that have weak regulations or enforcement.
“We’ll impose environmental standards on our own operations that may not necessarily be required by law,” Mr. Jeffers said. “It’s a good practice as a responsible operator.”“We’ll impose environmental standards on our own operations that may not necessarily be required by law,” Mr. Jeffers said. “It’s a good practice as a responsible operator.”
Mr. Page, the former State Department expert in Nigeria, said that Mr. Tillerson’s experience in negotiating deals around the world would help him in the role of America’s top diplomat. Mr. Page said that Mr. Tillerson’s experience in negotiating deals around the world would help him in the role of America’s top diplomat. “Exxon has this reputation as being take-no-prisoners in terms of its negotiations in other countries, and Tillerson was the big hitter,” he said. “He would fly around the world negotiating these deals with foreign heads of state. From that viewpoint, he’s a natural for secretary of state.”
“Exxon has this reputation as being take-no-prisoners in terms of its negotiations in other countries, and Tillerson was the big hitter,” he said. “He would fly around the world negotiating these deals with foreign heads of state. From that viewpoint he’s a natural for secretary of state.” But under Mr. Tillerson, Exxon Mobil has also been criticized for a lack of transparency in dealings with the Nigerian government. The country’s Economic and Financial Crimes Commission is investigating a 2009 license renewal deal for Exxon Mobil, after allegations that the company was significantly outbid by a Chinese competitor. Critics contend that the deal was done illegally.
But under Mr. Tillerson, Exxon Mobil has also been criticized for a lack of transparency in its dealings with the Nigerian government. The country’s Economic and Financial Crimes Commission is investigating a 2009 license renewal deal for Exxon Mobil, after allegations that the company was significantly outbid by a Chinese competitor. Critics contend that the deal was done illegally.
“They were running a very corrupt and opaque renewal process,” Olanrewaju Suraju, the chairman of the Civil Society Network Against Corruption in Nigeria, said of the Nigerian government in power at the time.“They were running a very corrupt and opaque renewal process,” Olanrewaju Suraju, the chairman of the Civil Society Network Against Corruption in Nigeria, said of the Nigerian government in power at the time.
Mr. Jeffers, the Exxon Mobil spokesman, argued that the company makes efforts to help develop, not just profit from, the countries where it works. Some analysts said that Exxon Mobil had a singular goal overseas.
“It’s very much about supporting, ensuring that our presence has a positive impact on society beyond the revenues that flow from development of raw materials,” he said. “The one clear trend that runs through Exxon’s foreign policy is that they are really all about business and doing what is best for shareholders,” said Ben Van Heuvelen, the managing editor of Iraq Oil Report. “They are willing to look the other way in the face of a whole host of problems.”
He added that the company spent millions of dollars on social programs like promoting women’s businesses and girls’ education in countries where it has big investments — including Nigeria, Angola and Papua New Guinea — “because there is a lot of research that shows that when a woman’s business succeeds, it is more beneficial for the communities.” But Robert M. Gates, who served as secretary of defense under President Obama and President George W. Bush, said he had recommended Mr. Tillerson to Mr. Trump. Mr. Gates said Mr. Tillerson would be more than capable as America’s top diplomat: “I think Rex is a hard-eyed realist, and I think he will absolutely put America’s interests first in any negotiation.”
Exxon Mobil has come under repeated criticism from the Chinese government and China’s state-run news media for working with Vietnam in exploring for oil and gas in waters that China claims come under its jurisdiction. The areas developed by Exxon Mobil have included a gas field close to an area where a Chinese exploration rig has drilled.
Analysts contend that Vietnam has courted multinational companies like Exxon Mobil partly to insulate itself from reprisals by the Chinese, who have claimed vast parts of the South China Sea as their own.
Despite the tensions, Exxon Mobil has business activities in China and cooperates with Chinese energy companies in other parts of the world. Mr. Tillerson has visited China at least five times since 2008, as recently as July this year.
In Venezuela, Mr. Tillerson confronted the government head-on — and suffered the consequences.
Exxon Mobil had worked in Venezuela for decades, but former President Hugo Chávez, calling for a Socialist-inspired revolution to benefit the poor, began renegotiating the industry’s contracts. By 2007, the Venezuelan government had set its sights on projects that included some of the biggest players in the oil industry, including Exxon Mobil, Chevron and Total.
Foreign companies soon began to cooperate with Mr. Chávez’s government, but Exxon Mobil and another company, ConocoPhillips, refused to accept the Venezuelan government’s changes to their contracts.
“From the very beginning, Exxon sent strong signals that they would not be run over, they would use all their legal rights, and they would be more confrontational,” said Francisco Monaldi, a former consultant for Venezuela’s state oil company, PDVSA.
In response, Venezuela expropriated the assets of both companies. Exxon Mobil took Venezuela to an arbitration court, and got a disappointing outcome. In 2014, seven years after the dispute began, the World Bank’s international arbitration court found in the company’s favor, but awarded it about one-tenth of what Exxon Mobil said the assets were worth. The company has not operated in Venezuela since.
“In my opinion, he took it very personal with Chavez,” Ghassan Dagher, a Venezuelan oil industry consultant, said of Mr. Tillerson. “He should have dealt with it like any other businessman, in a coldblooded way.”
Many analysts argue that Chevron, which did not take a war footing with Mr. Chávez in those years and accepted his terms, pursued a more pragmatic and ultimately more lucrative approach.
By contrast, Mr. Dagher contends, Mr. Tillerson “fell into the trap completely.”
It was a lesson that may have informed Mr. Tillerson’s dealings with President Putin of Russia, Mr. Dagher said.
“Once Exxon finished with Chavez’s story, they said, ‘We’re not going to make the same mistake,’” he said. “That’s why they became so close to Putin.”