Tillerson Knows Russia, But Don’t Ignore China – Bloomberg

In the many hours of back-and-forth during Rex Tillerson’s Senate grilling on Wednesday, I would say the most surprising exchange was this one regarding the ex-Exxon Mobil Corp. chief’s discussions to date with President-elect Donald Trump:

Senator Bob Menendez: And I would have thought that Russia would be at the very top of that, considering all the actions that have taken place. Is — did that not happen?

Tillerson: That has not occurred yet, Senator.

Call me old-fashioned, but if I happened to be a nominee for Secretary of State sporting a Russian Order of Friendship and a potential future boss whose relationship with Vladimir Putin isn’t necessarily warm but is pretty fuzzy, I probably would have insisted on chatting with Trump about those chaps in Moscow ahead of the hearing. Senator Menendez, for one, seemed to harbor similar feelings; his response: “That’s pretty amazing.”

It was of a piece with the whole hearing, though. Like any sensible nominee going up in front of a Senate panel, one of Tillerson’s objectives would have been to avoid getting tied down to any particular course of action before even getting the job. Like the answer above, he often deflected questions by saying he was yet to see classified information that could fully inform a considered response. This is a perfectly reasonable position, even if it did tee up some theater of the absurd at times:

Senator Marco Rubio: That’s correct, Mr. Tillerson. But my question is about the 6,200 people that have been killed in these alleged drug raids [in the Philippines]. Do you believe that that is an appropriate way to conduct that operation? Or do you believe that it is something that’s conducive to human rights violations that we should be concerned about and condemning?

Tillerson: Senator, if confirmed, again, it’s an area that I’d want to understand in greater detail in terms of the facts on the ground. I’m not disputing anything you’re saying because I know you have access to information that I do not have.

Senator Rubio: This is from the Los Angeles Times.

On a range of issues, Tillerson kept his options open. This wasn’t just filibustering, but likely a reflection of his Exxon DNA; an “engineer” just analyzing the facts and weighing the pros and cons.

On Russia, for example, he stressed America’s commitment to NATO’s collective-defense clause — something Trump has questioned — while also refusing to give blanket approval to further sanctions. Regarding China, Tillerson made hawkish comments on trade — “it steals our intellectual property” — North Korea and territorial disputes in the South China Sea. Yet he also mentioned the “positive dimensions” in America’s relationship with China and how their economic well-being is “deeply intertwined.” And on climate change, he had something for everyone, acknowledging its existence but casting doubt on “our ability to predict” its effects. Regarding the recent Paris Agreement on climate change, he said the U.S. would be “better served” by keeping a seat at the table. Yet he also said the agreement “looks like a treaty” — which, in practical terms, would also mean it resembles a corpse, as it would be DOA at the Senate.

So is there anything for oil watchers to take away from Tillerson’s grilling?

Assuming he gets confirmed, Tillerson’s core belief on foreign policy is that the U.S. needs to reassert itself, chiefly as a means of deterrence.

On Russia, in particular, he says supplying Ukraine with weapons and offering air surveillance would have been a more effective response to the annexation of Crimea than sanctions. He may be right; and, certainly, his experience at Exxon informs his understanding of Russian objectives and methods.

Yet his reluctance to endorse immediate sanctions if Kremlin interference in the U.S. elections is established — something Senator Rubio pushed him to do — along with his belief that Russia’s actions reflect a “geographic plan,” suggest Tillerson might try to reach some sort of deal with Russia, albeit one designed to draw a red line of his own.

Perhaps something like accepting Ukraine being in Russia’s sphere of influence but with a beefed-up NATO presence in existing eastern European allies. The corollary, of course, is that the current sanctions regime’s days look numbered (although the potential for further revelations about election-hacking is a wildcard).

More striking were Tillerson’s comments on China and, in particular, his comments on Beijing’s efforts to assert control over a large part of the South China Sea:

The island-building in the South China Sea itself, in many respects, in my view, building islands and then putting military assets on those islands, is akin to Russia’s taking of Crimea. … We’re going to have to send China a clear signal that first, the island-building stops, and second, your access to those islands is also not going to be allowed.

When Tillerson was first mooted as a potential nominee for the top diplomat’s job, I wrote that his documented support for free trade in energy would likely make him a moderating influence on Trump’s confrontational stance toward China. I am less sure of this now.

The logic of Tillerson’s core principle of reassertion is that the U.S. would move to reassure its Asian allies of its support by taking a harder stance against China, and this dovetails with Trump’s core message of upending a trade relationship he views as unfair.

As I wrote here, China’s own leadership transition later this year, along with North Korea’s studiedly erratic behavior, make this a particularly risky year for a hawkish shift in America’s posture. Tillerson made sure not to preempt his options. But the risk of a trade war is rising.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Liam Denning in New York at ldenning1@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net


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