After all, Donald Trump has thrown some missiles at an airbase in Syria, Putin has said bad things about him, and they’re definitely taken off their BFF bracelets. So now that it’s completely clear that Trump is not a Putin puppet, that makes it fine to go ahead and give Putin what he needs to dominate the region.
The waiver Exxon has asked for isn’t a complete rollback of sanctions, but it’s definitely a first step toward increasing the company’s involvement in Russia. A much more limited waiver in 2014 allowed Exxon to complete a test well in the Arctic. This round of waivers would be much more expansive, allowing a general transfer of technology and drilling of multiple wells in at least three large regions.
For Exxon and Russia this is a win-win.
Since the fall of the Soviet Union, Russia’s oil resources have been among the most sought-after prizes by U.S. and European oil companies, and multiple U.S. presidential administrations in both parties have worked to help them enter the country. As much as 100 billion barrels of oil is believed to remain untapped in the country, although many Western companies have been stymied in their attempts to reach those reserves, often by geopolitical risks.
Russia already produces over 10 million barrels of oil annually, putting it into the top three with Saudi Arabia and the United States. With oil prices remaining relatively low, the boost in production offered by advanced drilling techniques from Exxon could take Russia to the top of the chart. More importantly, the payments from Exxon would allow Putin to further fund military expansion without making more draconian cuts in domestic programs.
Exxon’s request for previous waivers were both smaller in scale and different in stated reasons from this request.
It is unusual for a company to seek a waiver based purely on future business prospects, according to former U.S. officials. American companies often seek waivers from sanctions citing humanitarian, trade or operational issues, the officials said.
Applying to the Trump regime for a humanitarian waiver would be worse than pointless. Tillerson has already done everything possible to signal that human rights are no longer a concern of the United States. But speculation over future business … is exactly the sort of approach likely to score with this crew.
What does this really mean for Russia?
To get a sense of just how large the deal is, Russia’s entire annual budget is around $200 billion dollars. That number currently includes a budget deficit of about $21 billion a year. On a percentage basis, that’s not all that different from the US. Except that the US annual budget is edging $3.8 trillion while running a deficit of about $500 billion. The difference here isn’t just scale, it’s that no one wants to lend money to Russia, especially not when their currency is in the tank.
The Exxon deal is sweet for the company, critical for Russia.