Recognizing the mounting public dissatisfaction with his own performance, Obama is attempting to jump on the growing anti-British bandwagon and has ratcheted up the rhetoric against BP and its embattled CEO Tony Hayward. In an interview this week he laid into Hayward personally, advocated his dismissal, suggested that BP had "cut corners" on safety and added that he wanted to know "whose ass to kick".
It's too bad Obama didn't put on his tough guy act when health care legislation was being debated. Had he "kicked ass" then, we might have ended up with something better than the insurance industry bailout that was cynically packaged up as a "historic" reform. But the recent attack on BP was a crude and self-serving performance; it displayed a tone unworthy of a President of the United States, and betrayed the mentality of a politician more interested in popularity ratings than the facts. This kind of language does nothing to contribute to cleaning up the Gulf of Mexico; but more important, it also assumes that BP is the sole culprit, a fact that is, as yet, far from clear. So let's start by getting some facts straight.
First, we know that the blowout occurred as workers were finishing the process of pouring cement into the cavity between the side of the well and the pipe, a process known as "cementing". For reasons not yet clear, the cement ruptured or did not set properly, causing a highly combustible mixture of oil and gas to shoot to the surface. The cementing was the responsibility of oilfield services company Halliburton, a U.S. public company based in Houston, Texas. The recent disaster bears more than a passing similarity to a blowout in the Timor Sea in August of 2009, in which tens of thousands of barrels of oil escaped over a ten-week period. Haliburton was also responsible for cementing that well. An investigation has not yet determined fault and Halliburton has refused comment.
Second, when the rig crew attempted to activate the blowout valve that is supposed to prevent this type of disaster from happening, the valve failed. Again, the reasons for the failure are not known, but we do know that the valve was manufactured by Cameron International, another U.S. public company, also based in Houston.
Third, the rig involved in the the accident, the Deepwater Horizon, was owned not by BP but by a company called Transocean Ltd. Transocean is also a U.S. company, or at least it was until December 2008, when it entered into a series of corporate transactions the effect of which was to reconstitute it as a Swiss entity, presumably to benefit from a more lenient tax regime. However, Transocean maintains its operational office in Houston, and its shares are listed on the New York Stock Exchange. Transocean had flagged the Deepwater Horizon in the Marshall Islands, a "flag of convenience" state where regulatory requirements are less onerous. Of the 126 workers on the rig at the time of the explosion, only 8 were BP employees. Questions have been raised as to whether Transocean had crewed the vessel adequately at the time of the accident.
Fourth, BP is not even the sole owner of the drilling concession in question; a 35% share is owned by Anadarko Petroleum Corporation, another U.S. publicly traded company also based in Texas.
As the concessionaire, BP is legally responsible for damages resulting from the Deepwater Horizon disaster and it has maintained from the very outset that it will honor all legitimate claims. But liability and culpability are different things, and we may not know for many months who was to blame for the disaster. It may well be that the accident was the combination of a series of unrelated events, and that all parties bear at least some responsibility. So why is the Obama administration beating up on British Petroleum, and ignoring the other companies involved? It's hard to avoid the conclusion that Obama feels a lot braver playing the role of tough guy when taking on a foreign oil company than he would one of its U.S. counterparts. He's ready to "kick ass" at BP, but apparently afraid to ruffle too many feathers in the executive suites at Halliburton.
Administration flunkies are marching to the same tune. Influential Democratic Congressman Anthony Wiener asserted that anyone speaking on behalf of BP with a British accent is lying to the American people. Lackluster Interior Secretary Ken Salazar proposed that BP be prohibited from paying a dividend that has already been declared, and which it is legally obligated to pay, in order to compensate U.S. oil industry workers who have been furloughed as a result of the Administration's moratorium on offshore drilling imposed following the recent blowout. That'll show those goddamn Brits, right? Hardly. It is in fact an astonishingly stupid and irresponsible suggestion, but one that nonetheless caused a further sharp decline in BP's share price this week. Salazar and his boss should bear in mind that roughly 40 percent of BP's stock is owned by Americans; it has always been seen a "blue chip" investment, so it's safe to assume that many pension funds - American pension funds - own it. Many individual investors - American investors - rely on the regular and healthy dividends that BP pays. Of BP's 80,000 employees worldwide, 29,000 are in the U.S., almost three times as many as in the U.K. Punitive confiscatory sanctions against BP would harm American workers and investors as much if not more than the British. And as to the moratorium itself, the Deepwater Horizon disaster didn't make future accidents more likely - but it did raise legitimate concerns as to the effectiveness of regulatory oversight of the oil industry, all of which is the responsibility of - you guessed it - Ken Salazar.
The tragedy in the Gulf raises many questions, not least of which is why there was no contingency plan for such a disaster. The various containment apparatus used in an effort to stem the flow of oil had to be designed and built after the blow-out occurred. BP 's Tony Hayward has been his own worst enemy - some foolish comments in the aftermath of the the explosion created the impression that he failed to grasp the magnitude of the problem. But to his credit he hasn't hidden away in his London office leaving U.S. underlings to take the heat. He has been "front and center" in the disaster response and next week faces the daunting task of testifying before the U.S. Congress. One can criticize BP's effectiveness in response to the explosion, but I am not convinced any other company would have done better. If found to have acted illegally or negligently, BP should be held accountable to the fullest extent of the law. But culpability must be determined by legal process, not Presidential finger-pointing. Obama's recent performance creates grounds for concern that BP may unfairly singled out in the criminal investigation and prosecution that the Administration is apparently already planning.
His public statements suggest that David Cameron is more intent on currying favor with the administration in Washington than in defending a British company against possible punitive and illegitimate sanctions. A performance Tony Blair would surely be proud of. One can only hope that, in private conversations with the President, Mr Cameron will point out that the same rationale underlying the threatened U.S. measures against BP would justify similar European sanctions against the U.S. financial institutions whose reckless and fraudulent lending practices triggered an economic disaster that will cost many times more to clean up than the oil spilling into the Gulf of Mexico. And as to Obama's threat to "kick ass", Cameron would do well to suggest to the President that the current crisis is better addressed with the brain than with the foot.
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