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Trump picks Tillerson to drive ‘art of the diplomatic deal’

Chairman and CEO of US oil and gas corporation ExxonMobil, Rex Tillerson.
Ben Stansall | AFP | Getty Images
Chairman and CEO of US oil and gas corporation ExxonMobil, Rex Tillerson.

Exxon Mobil CEO Rex Tillerson – announced as the secretary of State pick by President-elect Donald Trump this week - could take U.S. foreign policy in a new direction with commercial deal-making taking precedence over a more traditional hard-ball diplomatic approach.

"The choice is evidence of Trump's focus on transactional foreign policy i.e. Art of the Diplomatic Deal," said Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS) a Washington based think tank focused on energy security. "It also reflects the shift from foreign policy based on geopolitics to one based on geo-economics."

The choice of Tillerson has clear implications for U.S. relations with Russia, Iran, the Middle East broadly and China and has proven controversial because of Exxon Mobil's considerable investments in Russia. Tillerson has also developed a rapport with President Vladimir Putin through the deal process.

Additionally, many critics see the selection as further proof of a corporate takeover of government.

Trump, however, sees a kindred spirit in Tillerson with the oil man's connections with and knowledge of Russia representing an asset not a liability.

"I actually think this is one of Trump's better picks," said Robin Mills, CEO of Qamar Energy, and a former Shell executive. "I don't think the Exxon Mobil interest will guide decisions on Iran or Russia. But the XOM culture of setting a clear bottom line and walking away from any deal if it's not met will."

A key test would be the new administration's views on continued European Union and U.S. sanctions on banks, companies and high-level officials in place since 2014, including ones that affect Exxon Mobil, in response to Russia for backing separatists in eastern Ukraine with military and logistical support.

Analysts suggested however that if confirmed by the U.S. Senate as secretary of State, the executive would be a sharp negotiator for deeper business ties with Russia and Iran in exchange for advancing Trump's foreign policy goals.

Tillerson "would do a good job and bring a different perspective … definitely pro-Russia and probably better for Iran," said Fereidun Fesharaki, chairman of energy consultancy FACTS Global Energy and a former energy adviser to the Prime

Minister of Iran in the 1970s. "I think it is possible that under Trump the door to Iran may become open wider with some tougher conditions."

Whether Tillerson's proximity to Russia in commercial terms undermines or enhances America's position in the event of diplomatic crisis remains a vexed question.

"By now it is clear that US-Russia relations will enter a new phase," said IAGS' Luft. "What is less clear is what will happen after the honeymoon."

Ultimately, Tillerson would in reality opt for a middle-of-the-road position on Russia, Qamar Energy's Mills said: "I don't expect any qualms about dealing with Putin but I wouldn't expect surrender either. Both Russia and Iran policy will depend very much on Trump and the rest of the administration too."

Richard Jerram, chief economist at Bank of Singapore, warned basing foreign policy on commercial deals was a risky strategy.

"You need predictability which constrains action. As soon as you start cutting deals, you lose the predictability. Iran is potentially a huge problem, South China Sea a huge problem and the Baltic States. Commercial interests can change in an erratic fashion," Jerram said.

Tillerson faces challenges internally within the ranks of government as well.

Cliff Kupchan, chairman of political risk consultancy Eurasia Group, said differences of opinion within Trump's national security team, which includes the secretary of State, may confuse foreign policy messages.

"Trump's style, White House rivalries, and probable discord within the national security team will all add to unpredictable behavior in U.S. foreign policy," Kupchan wrote in a note co-authored with Jonathan Lieber and Jeffrey Wright published late Tuesday.

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