Tags: rex tillerson | secretary of state | trump | russia

The Oilman Cometh: Tillerson Brilliant Pick for State

The Oilman Cometh: Tillerson Brilliant Pick for State

Exxon Mobil Chairman and CEO Rex Tillerson addresses a keynote speech during the World Gas Conference in Paris on June 2, 2015. (Eric Piermont/AFP/Getty Images)

By and
Wednesday, 14 December 2016 01:22 PM Current | Bio | Archive

Deploying media skills honed while transmuting the dry business of recruiting subordinates into global entertainment and running global beauty pageants, the president-elect paraded a diverse wealth of top-tier talent through Trump Tower’s lobby before crowning Exxon Mobil CEO Rex Tillerson Secretary of State-designate. His careful, deliberate decision proved immediately controversial.

Democrats issued their stock condemnations, assertively confident, despite their recent drubbing, that anyone Trump selects is inherently and irredeemably unacceptable. And some establishment Republicans have also voiced concerns: They question the selection of a business leader rather than a career public servant. They wonder about Tillerson’s long friendship with prominent members of the GOP’s “realist” wing. They worry about Tillerson’s ties to Vladimir Putin, and his opposition to sanctions against Russia. And they fret about the anti-Israel sentiments rampant in the Arab oil sector.

We disagree with the partisan snipers, short-sighted skeptics, and professional critics. And we think Israel’s friends will find real reasons to cheer. Trump’s emerging national security team is impressive by any reasonable standards. By way of disclosure (and maybe a little by way of bragging also), we are London Center think-tank colleagues of both incoming National Security Advisor Michael Flynn and Secretary of Defense James Mattis. They are stellar choices. President-elect Trump deserves respect for his instincts — to date demonstrably superior to the sage counsel of noted experts. And though our own foreign policy proclivities are not with the realists, we anticipate that the Trump team will forge a bold new direction not perfectly aligned with any pre-existing school of thought.

Next, while we too are concerned about Putin’s authoritarianism at home and adventurism abroad, we recognize that the unipolar moment of the 1990s ended long ago. The U.S. must forge new interactions with the other powers capable of shaping global affairs — notably Russia, China, and the multi-headed hydra of political Islam. The Obama team caved to Russia, cowered before China, and empowered the terrorists running Shiite Iran and the Sunni Muslim Brotherhood. That approach has been a disaster. The emerging Trump team appears willing to stand up to China, seeks to defeat both Sunni and Shia radicalism, and envisions negotiations with Russia. We believe strongly that this nascent strategy will yield far superior results. It’s an inextricably thorny situation and what is needed is a constructive working relationship managed by a formidable arm’s length negotiator whom Russia takes seriously. For similar reasons, we thought Congressman Dana Rohrabacher’s existing relationship with Putin made him a wise option. That both men were dark horses in this contest suggests that this calculation is front and center for our president-elect. Put simply: Putin isn’t Stalin — but the Islamists sure as hell are Hitler.

Moreover, anxious extrapolations about an oilman’s approach to Arab/Israeli diplomacy derive from an overly simplistic view of the world oil market — even as they ignore the consistent clarity, moral sensibility, and commitment to American exceptionalism that have characterized Trump’s statements about Israel. Unlike most of our friends in the pro-Israel activist community, one of us spent six years analyzing geopolitics for an oil company and learned that structural, rather than ideological, divisions dictate a petrostate’s strategic approach to the oil market. Optimal market conditions for each petrostate emerge from the relationship between its short-term revenue needs and its ability to engage in long-term thinking.

Petrostates desperate to maximize short-term revenues favor a "Price Hawk" strategy: keep current prices as high as possible, despite encouraging the innovation and exploration that will expand future supply and suppress future prices. Because elevating prices without sacrificing your own revenues requires “persuading” other producers to curtail their production, Price Hawk countries tend towards aggression. Structural economics make Iran, Iraq, and Russia Price Hawks.

Petrostates with the luxury of long-term thinking prefer to keep prices simultaneously low enough to deter innovation and exploration and high enough to generate comfortable current revenues. These "Demand Hawks" attempt to hold global supply at manageable levels, thereby favoring long-term demand for oil from existing, developed sources with deep reserves. Saudi Arabia, Kuwait, and the UAE fit the bill. Shorn of external pressure, they tend to push for moderate prices — explaining both their longstanding confluence of interests with the U.S. and other oil importers (including India, Japan, and China), and the chilly relations between oil giants Russia and Saudi Arabia.

The interests of major multinational oil companies align unevenly with those of the various petrostates — though it obviously serves their interests to maintain positive relationships with as many petrostates as possible. In short, popular assumptions about the inclinations of an oil industry CEO are vastly oversimplified — and almost certainly wrong.

Trump’s choice of Tillerson is part of an unconventional transition the spectacle and subtlety of which we are enjoying immensely and appreciating more each day. Most importantly, we think conjecture about Tillerson’s personal policy proclivities is not only ill-informed but far less important than questions of his savvy and effectiveness as both negotiator and manager, about which nobody has raised any challenge. Tillerson understands already that he will either deliver on the president’s expectations, or his tenure at State will be short. Here’s to hoping that he enjoys a long and successful stint at Foggy Bottom.

Bruce Abramson is the President of Informationism, Inc., Vice President and Director of Policy at the Iron Dome Alliance, and a Senior Fellow at the London Center for Policy Research.

Jeff Ballabon is CEO of B2 Strategic, Chairman of the Iron Dome Alliance, and a Senior Fellow at the American Conservative Union's Center for Statesmanship and Diplomacy. To read more of their reports — Click Here Now.

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Democrats issued their stock condemnations, assertively confident, despite their recent drubbing, that anyone Trump selects is inherently and irredeemably unacceptable.
rex tillerson, secretary of state, trump, russia
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2016-22-14
Wednesday, 14 December 2016 01:22 PM
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