Analysis: New US state chief a perfect fit for Russia

Moscow, Russia – The appointment of Rex Tillerson, ExxonMobil’s chief executive, as the new US secretary of state was a shock to many – mostly because of his lifelong employment at one of the world’s largest oil companies and friendship with Russian President Vladimir Putin. 

The friendship between the former KGB spy and the Texan oilman – they’re both 64 now – dates back to the late 1990s when Tillerson established the biggest presence of a US oil company in Russia, and Putin was a fledgling politician who had just been appointed prime minister in ailing president Boris Yeltsin’s government. 

In 2013, Putin handed Tillerson a pentacle-shaped Friendship Medal, one of Russia’s highest award for foreigners, for “special merits in development of bilateral ties with Russia”.

Donald Trump names Rex Tillerson as secretary of state

A year earlier, Tillerson presided over a multibillion dollar deal that was designed to help Moscow tap into the immense oil Bonanza in the Arctic – but fell through because of Western sanctions imposed after Crimea’s 2014 annexation. Tillerson lambasted the sanctions that cost his company billions of dollars in lost profit. 

And now, when Tillerson is a fledgling diplomat and Putin is a seasoned, iron-fisted politician, Kremlin critics wonder whether these amicable ties will mark a U-turn in Washington’s dealings with Moscow.

“This appointment is very beneficial for Putin,” Vladimir Milov, Russia’s former deputy energy minister now in opposition to the Kremlin, told Al Jazeera.

Tillerson will create “an environment that is much more comfortable for Putin that the previous architecture of transatlantic cooperation, a certain unified West with its own certain values”, he said. 

Russia’s annexation of Crimea, support for separatists in eastern Ukraine, and the pro-Damascus operation in Syria has brought ties with the West back to Cold-War lows. 

But the jingoistic, neo-conservative, and pragmatic course chosen by president-elect Donald Trump starkly contradicts years of Washington’s policies towards containing Russia – and strangely fits the Kremlin’s own political agenda.

No more lectures on democracy?

For most of his rule, Putin wanted the West to treat Moscow as an equal and detested reprimands for his crackdown on opposition figures, corruption, and concentration of key industries around state-run corporations. 

Analysts insist Trump’s approach will be much more businesslike. 

“Russia’s leadership proclaimed pragmatism as the basis of its foreign policy a long time ago. If the US will share the same foreign policy principle, I don’t think there will be any problems,” Alexey Mukhin, head of the Moscow-based Centre for Political Information think-tank, told Al Jazeera. 

Pro-Kremlin pundits are already ecstatic about the appointment.

“This is a positive development so unexpected that we still don’t believe it’s happening,” Kremlin adviser and political analyst Sergei Markov told Al Jazeera.

Profiting on Russia

In 1998-1999, Tillerson served as vice president of Exxon (before the company’s merger with Mobil) in charge of operations in the Caspian Sea and on Sakhalin, Russia’s largest Pacific island north of Japan.  

Dealings with Russian authorities weren’t always easy. In April 2015, the company sued Russia at the Stockholm arbitrage court claiming it overpaid profit tax on the Sakhalin project.

But Tillerson soon found himself among Moscow’s most trusted Big Oil executives.

In September 2005, Putin met Tillerson – ExxonMobil’s president at the time – as well as with the company’s then-chief executive Lee Raymond, and top managers of Conoco-Phillips and Shevron-Texaco. 

Months earlier, oil tycoon Mikhail Khodorkovskywas sentenced to nine years in jail for alleged fraud in what was widely seen as the Kremlin’s revenge for his financial support of the opposition. International investors were worried about the imprisonment, and the meeting was an attempt to reassure them that Moscow was still a reliable partner. 

Most of Khodorkovsky’s oil company, Yukos, soon became the bulk of state-run Rosneft, ExxonMobil’s main Russian partner and its nation’s largest oil company. Igor Sechin, a former Portuguese translator and Putin’s key ally often described as the second-most powerful man in Russia, heads Rosneft now. 

He is also a good friend of Tillerson, according to Russian and western media reports. 

Arctic oil dream

In 2011, ExxonMobil outmaneuvered oil giant BP to help Russia develop the world’s largest treasure chest of untapped hydrocarbons.

The Arctic Circle holds some 90 billion barrels of yet undiscovered but technically recoverable oil, about one-seventh of the world’s undiscovered oil reserves – as well as billions of cubic metres of natural gas, according to a 2008 assessment by the US Geological Survey. 

Russia’s share of the reserves is at least 41 percent of oil and 70 percent of gas, according to Norwegian officials. But Moscow lacked the deep-drilling technologies and equipment – and that’s where ExxonMobil stepped in.

In 2011, Putin oversaw the signing of a “strategic” deal between Rosneft and ExxonMobil to develop three oil-and-gas fields in Russia’s Arctic – in exchange for shares in six ExxonMobil projects in the United States. 

“I’d like to emphasise the exclusiveness of these decisions for Russian companies … that until today were not able to develop existing deposits in the US,” Sechin told the Interfax news agency. 

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Tillerson attended the ceremony and said in a statement that the deal “takes our relationship to a new level and will create substantial value for both companies”. ExxonMobil said it would spend $3.2bn to explore the fields that would give it access to tens of billions of barrels of oil.

The drilling began in 2014 but the deal – along with another joint development in western Siberia – was frozen because of sanctions over Crimea, and ExxonMobil reportedly lost $1bn. 

Sechin and Rosneft were blacklisted as part of the sanctions.

Tillerson told ExxonMobil’s shareholders “we always encourage the people who are making those decisions to consider the very broad collateral damage of who are they really harming with sanctions”.  

The sanctions did not stop him from visiting Russia at least twice to meet the energy minister and attend an economic forum in St Petersburg, Putin’s hometown.  

Bright future? 

So, the big question now is whether Tillerson will be instrumental in the lifting of sanctions, which will undoubtedly benefit ExxonMobil’s current and future operations in Russia. 

“He and Donald Trump will initiate the lifting of sanctions with a probability of 70-80 percent,” analyst Mukhin predicted.

Trump doubts President Barack Obama’s claims that Russia meddled in the November presidential vote through hackers and propaganda, and spoke in favour of lifting the sanctions and respecting Russia’s interests. 

“With him, a certain ‘reset’ is possible,” Andrei Kolesnikov of the Carnegie Moscow Centre, a think-tank, told Al Jazeera.

His boss at Carnegie, Dmitri Trenin, said in a tweet that Tillerson’s tenure as the fourth-most powerful man in the US would signify “the greatest discontinuity in US foreign policy since the end of the Cold War”.