What Tillerson’s Relationship With Russia Could Mean for Syria
Foreign policy experts have been worried for a while now that President-elect Donald Trump is too fond of Russia. Some worry that Russia tilted the election in Trump’s favor, and a few suspect collusion between Russia and the Trump campaign. And last week’s nomination of ExxonMobil (XOM) CEO Rex Tillerson for secretary of state seemed to confirm their fears. After all, he would be Russia’s man in the cabinet, focusing narrowly on corporate profit at the expense of American global strategy.
As the head of the world’s largest publicly traded oil and gas company (by market value), Tillerson certainly has ties to Russian oil and gas enterprises like Rosneft. These deals were canceled in 2014 when the U.S. imposed sanctions on Russia, and Exxon stands to make billions from a rapprochement. But should Americans be worried that he will place the interests of Russia and Exxon before the interests of the U.S.? It depends how one understands “American interests,” and here, Trump and Tillerson promise to reorient American foreign policy using Russia and Syria as the occasion.
Tillerson is likely to privilege American business interests over any exercise of power that is not tethered to economic gain. With regard to Russia, he is likely to pursue better business relations with a less harsh and sanctimonious rhetoric. But this, at least, should be welcomed. Beginning with Hillary Clinton and continuing with John Kerry, the State Department has been willing to “restart” Russian-American relations, but on its own terms, and at the price of losing influence over Russia.
Russia’s tacit allowance in 2011 of NATOs operations in Libya, a traditional Russian interest, was welcome by the U.S., but Russian concern that there was no plan to govern Libya after Muammar Gaddafi was ignored. Cooperation against radical Islam in Europe was nice, but radicals in Chechnya and Dagestan were not a U.S. problem. NATO promised to cooperate with Russia in Europe, but NATO expansion into the former Soviet Union and the former Warsaw Pact was completed under Barack Obama, new European missiles were added for good measure, and Ukraine became fair game in 2013. Russia was in no position to resist, and when Russia crossed the U.S. over Ukraine by seizing Crimea in 2014, there was a price to pay. The sanctions that followed had a real effect on Russian exports and shut the country out of the credit markets. Syria, another traditional Russian ally, descended into civil war in 2011, with Western powers demanding the resignation of president Bashar al-Assad. This is where Russia made a stand, for better or for worse, motivated by the conviction that Russian credibility was at stake.
There is a good reason why the U.S. has been reflexively anti-Russian: It costs the U.S. very little. Russia has never been among the top 25 U.S. trading partners, and the value of U.S.-Russian trade is dwarfed by U.S. trade with the likes of Chile, Malaysia, Singapore, Ireland, and Switzerland. At its highest point, in 2008, direct U.S. investment in Russia was $20.76 billion, out of a total of over $3 trillion. In 2015, U.S. investment in Russia was half that, while total direct investment rose above $5 trillion. Most Americans would not notice if all economic relations with Russia were somehow ended.
In domestic politics, too, hostility to Russia comes at a low cost. The ethnic Russian diaspora is small and divided between the pro- and anti-Vladimir Putin camps, with a large camp of the jaded and the apathetic. Anti-Russian rhetoric even pays political dividends because communities of Polish-Americans, Jewish-Americans, Ukrainian-Americans, Cuban-Americans, and even Lithuanian-Americans are larger or better organized, and they vote. Given that our last two secretaries of state were politicians—presidential candidates, no less—U.S. foreign policy has catered to a domestic consumer more than usual. Russia was the perfect place to show toughness and high moral fiber because it came at almost no price. Meanwhile, important economic partners like China and Saudi Arabia with terrible records in human and civil rights were handled delicately.
But some very big companies did notice, because they missed opportunities to make money. Enter ExxonMobil, which was a big loser in the sense that it stood to make money and now it can’t. Tillerson’s estimate of a billion in losses was “potential.” And Exxon and its Russian partner, Rosneft, split their joint ventures between Russian assets, which went to Rosneft, and Western assets, which went to Exxon. It’s not clear what Exxon actually spent and lost, but it’s surely not a lot by most standards, and it’s very little by Exxon standards. Tillerson is likely to consider economic opportunity (including—but not only—petrochemicals) as central to all U.S. interests, and he is less keen on moral and patriotic posturing that lacks an economic backbone. Like Trump, he’ll set aside the truth that Russian oil and gas in Russia does little for jobs and growth back home, in favor of “supply-side diplomacy” that emphasizes the health of a corporation as a key U.S. interest.
Tillerson is not the first to equate corporate interests with national interests. Dwight Eisenhower nominated GM (GM) CEO Charles Erwin Wilson to be secretary of defense, and the Senate demurred. He had a fortune in GM stock, which initially he refused to sell. (Sound familiar?) Would he ever act as secretary of defense against the interests of GM, a senator asked? Yes, he replied, but the situation is unlikely “because for years I thought what was good for our country was good for General Motors, and vice versa.” This is objectionable to some, obvious to others, and interesting to all because it is coherent. Exxon is one of the few companies in the world that has its own foreign policy, and Tillerson is poised to make it a principle in American policy: Secure the resources. It is likely that some U.S. ventures in Russia will be resuscitated because it’s good business for American companies. This being Russia, oil and gas are the obvious places to start.
This will give the U.S. much more leverage over Russia than vice versa. Oil and gas account for over 60% of Russian exports. Oil and gas represent about 16% of Russian GDP, and with low prices, the Russians need to pump more oil to maintain stability. In fact, Russian GDP has contracted, according to the World Bank, from $2.23 trillion in 2013 to $1.33 trillion in 2015. This is a catastrophic fall, rooted in the halving of oil prices (from over $141 per barrel in May 2008 to under $50 in 2016) and accelerated by the sanctions. It gets worse: Oil and gas revenues account for over 50% of the state budget. As revenues contracted the only alternatives were austerity and budget deficits. Russia is practicing both. It’s in the state interest to pump more oil, which makes ExxonMobil’s projects in the Kara Sea, the Black Sea, and Sakhalin Island irresistible. Russia’s interest in American fracking and horizontal drilling technology is intense because it promises new reserves, cheap output, and Asian markets. Russians can see their own raw interests served by better relations with the U.S. And they’re desperate. In any negotiation on any subject, including cooperation over Syria, Tillerson is likely to dangle the prospect of new investment as an enticement. And he’s unlikely to engage in the holier-than-thou denunciations of the past several years.
Then there’s the selective neglect that Trump promises in his foreign policy. He is uninterested in conflicts when economic interests are not at stake, and they are not at stake in Syria. He is genuinely skeptical about the role that the U.S. might play. If Russia is so interested in stabilizing Syria, since we have no good plans of our own, and since we have no economic interests at stake, why not let Russia handle it? All this amounts to a conviction, put forward by Trump, that a secular Assad backed by Russia is the only alternative to ISIS, which is likely to fill any void left by the toppling of the regime. Russia should be allowed to finish the job of wiping out the oppositions, moderates included, in the name of authoritarian stability. Trump and Tillerson can make this accommodation easily: It is already tacit U.S. policy, and it is likely that Assad and Russia will have prevailed in Aleppo by the time Trump is inaugurated. The next target would be ISIS itself, which occupies eastern Syria, and which both the U.S. and Russia will have an interest in destroying.
It’s not that Tillerson and Trump like or dislike one or another Syrian combatant, and it’s not that they like or dislike Russia. Nor are they likely to sacrifice American interests to Russian ambitions. Russian oil and gas deals are American interests, as the new administration will understand them. And in Syria, there are no interests that they would recognize as important, i.e., economic. Even if Syrian democracy were on the Trump agenda, we’ve had problems locating that viable, moderate opposition, despite years of magical thinking on the part of Clinton and Kerry.
This is not a capitulation, but a redefinition of American interests. America’s power to coerce and entice is irresistible—a source of satisfaction for some and dismay for others. For the same reason, time is on the American side, and a country like Syria can wait. For now, the reasoning runs, let Russia do the ugly work.
Yanni Kotsonis is a professor of Russian and Slavic studies at the Jordan Center for the Advanced Study of Russia at NYU.