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The oil bully

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Feb 28, 2013 | From the print edition

Book>> Private Empire, Exxonmobil And American Power • Steve Coll • Penguin • Rs 1,150

PRIVATE EMPIRE, EXXONMOBIL AND AMERICAN POWERIn 2009, a US court of appeals ordered Exxon Mobil, the largest publicly traded oil company, to pay $1 billion to the victims of 50,000 tonnes of oil spill in Alaska in 1989. But the US Supreme Court reduced the fine to $500 million following appeals by Exxon. The oil spill had damaged 2,100 km of the Alaskan coastline. That it managed to half the fine was to many commentators an indication of Exxon’s clout.

If revenue were counted as GDP, the corporation would rank among the top 30 countries. Exxon Mobil runs one of Washington’s biggest lobbying operations and has on payroll some of the bigwigs of American politics. After the Alaska spill, the corporation quietly called a University of Wisconsin professor to offer money if he would write an article for a respectable academic journal, arguing against punitive damages. The academic in question spoke up, but we don’t know how many other scholars received and may have acted on the same offer and said nothing. Unsurprisingly, therefore, Exxon muscled and lobbied its way to a lighter fine. The worst oil spill in American history was a blip in the corporation's ascendancy, says Pulitzer-winner Steve Coll in Private Empire, ExxonMobil and American Power.

Coll’s reporting spans Third World dictatorships enlisted as partners in finding the much-needed oil reserves, lobbyists fighting environmental and other regulatory legislation. He shows how Exxon constantly managed to bully American foreign policy, epitomised by then US president George W Bush’s response to a query from Indian prime minister Atal Behari Vajpayee in 2001: “Nobody tells these guys what to do.” For many oil producing nations in Africa, American power is synonymous with Exxon. Coll quotes a 1999 cable from the US embassy in Chad noting that Exxon was ignoring American diplomats there. He then asks: “And why should it be otherwise? Exxon Mobil’s investments in the Chad-Cameroon oil project would amount to $4.2 billion. The US’ annual aid to Chad was then only about US $3 million.” Exxon’s 2,500 security men patrolled the Chad countryside as the company set up an intelligence operation bigger and better than the local station.

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In the war-racked Niger Delta, Exxon supplied boats to the Nigerian Navy, deployed its own vessels at sea to scout for pirates and “recruited, paid, supplied and managed sections of the Nigerian military and police.” In Aceh, Indonesia, Exxon paid the salaries of Indonesian counterinsurgency forces even after the American government cut off aid to the Indonesian military. As Coll says, “ExxonMobil executives see themselves as an independent sovereign with their own foreign policy. Sometimes their interests ally with the United States government, sometimes they find themselves in opposition to the US.”

Coll also details Exxon’s role in shaping the debate in one of the biggest issues of our time: climate change. For years, Exxon funded pseudo research aimed at denying human culpability in climate change. The corporation funded several “independent” think tanks to research against the Kyoto Protocol. In the past few years the corporation has retracted somewhat. It now grudgingly admits to climate change—though not its past errors—but also talks of the indispensability of fossil fuels for the world economy. Some of this is well known.

But to Coll’s credit, he brings in a little known aspect. As the company attacked global warming publicly, geologists working within ExxonMobil were examining how a warmer Earth, resulting from global warming, could create new business opportunities for ExxonMobil. In recent times Exxon has cocked a snook at the Obama administration’s warning against striking oil deals in Arctic by partnering a Russian firm to access many billions of dollars worth of reserves.

With sea ice melting, the oil in the Arctic is now accessible. This magisterial investigation into one of the most secretive corporations in the world will be of interest to policy analysts, journalists, energy and foreign policy specialists and even lay geo-politics buffs.

Hrishikesh Mattoo is an independent researcher in Bengaluru

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