Trump Shuffles Team by Firing Tillerson and Tapping CIA's Pompeo

(Bloomberg) -- President Donald Trump ousted U.S. Secretary of State Rex Tillerson on Tuesday, ending a rocky tenure in an abrupt move that stunned the former Exxon Mobil Corp. CEO and set in motion a shakeup of the administration's foreign policy team.

Trump announced Tillerson's ouster in a tweet shortly before 9 a.m. after weeks of staff turmoil, saying he would nominate CIA Director Mike Pompeo as secretary of state. But it was several hours before Trump discussed his decision with Tillerson, who said he'll hand over all responsibilities to Deputy Secretary John Sullivan at midnight Tuesday.

In a farewell statement, Tillerson said the president called him “a little after noon time” from Air Force One en route to California. The top U.S. diplomat didn't thank Trump or praise his leadership in his public comments, instead singling out the work of his State Department colleagues on high-profile issues including North Korea and counterterrorism.

The president's move comes as his administration is preparing for high-stakes and historic talks between Trump and North Korean leader Kim Jong Un. Trump told reporters at the White House Tuesday that he and Tillerson had disagreements over key issues including the Iran nuclear deal. Tillerson, Trump said, “had a different mindset. I think Rex is much happier now.”

The dollar fell versus most of its G-10 peers Tuesday as investors scaled back their risk appetites on Trump's shake-up of his foreign policy team.

Trump lauded Pompeo, saying that as CIA chief, he had “earned the praise of members in both parties by strengthening our intelligence gathering, modernizing our defensive and offensive capabilities, and building close ties with our friends and allies in the international intelligence community.”

Deputy CIA Director Gina Haspel would succeed Pompeo, becoming the first woman to lead the agency, Trump said. Haspel is a career spy, with more than three decades' experience at the agency.

The 65-year-old Tillerson took a middle-of-the-night phone call from White House chief of staff John Kelly on Friday during his Africa trip, telling him that the president was planning to replace him, according to two officials. He then spent the weekend fighting for his job between stops in Africa. Still, a top State Department official said Tillerson was blindsided by Trump's telling the world he was ousted in a tweet.

“He had no idea that this was occurring," said Steve Goldstein, Tillerson's undersecretary of state for public diplomacy and public affairs, who was fired by the White House hours later. “He did not know.”

With his voice appearing to break, Tillerson said that after handing over all responsibilities to Sullivan, he'll officially step down as secretary of state on March 31. He'll spend the coming weeks assisting with the transition and he encouraged his top aides to stay on until that process is finished.

The dismissal follows a wave of departures and turmoil in Trump's inner circle. The president's top economic adviser Gary Cohn announced plans to leave earlier this month, joining former communications director Hope Hicks. Staff Secretary Rob Porter was fired after allegations of domestic abuse.

“The instability of this administration in just about every area weakens America,” Senate Democratic Leader Chuck Schumer said on Twitter.

Daily Briefing

Trump, in his Tuesday announcement, signaled that Pompeo would bring the skills needed to confront the changing foreign policy challenges facing his administration. The 54-year-old former congressman from Kansas has grown close to Trump by delivering the president's daily intelligence briefing almost every day since taking office in January 2017.

“I have gotten to know Mike very well over the past 14 months, and I am confident he is the right person for the job at this critical juncture. He will continue our program of restoring America's standing in the world, strengthening our alliances, confronting our adversaries, and seeking the denuclearization of the Korean Peninsula,” Trump said.

The Senate Foreign Relations Committee will hold a confirmation hearing on Pompeo's nomination in April, according to Chairman Bob Corker. Haspel's nomination also would need Senate approval.

Hired for his business acumen and outsider's attitude, Tillerson, had initially earned Trump's praise as a deal-maker in the president's mold who would champion his “America First” policy to the world. He came to the position with recommendations from former Secretary of State Condoleezza Rice and ex-Pentagon chief Robert Gates. But after an early honeymoon with Trump, he appeared unable to maintain a bond with the president.

Repeated Clashes

The two repeatedly, and publicly, disagreed -- on whether to stay in the Paris climate change accord, on how aggressively to back the embargo against Qatar led by Saudi Arabia and on whether to pursue a diplomatic solution to North Korea's nuclear weapons program.

Tillerson also grew increasingly alarmed by what he saw as secret talks between Jared Kushner, Trump's son-in-law and senior adviser, and Saudi Arabian Crown Prince Mohammed bin Salman -- fearful that the discussions could backfire and tip the region into chaos, according to people familiar with Tillerson's concerns.

Speculation that Tillerson was on his way out -- so frequent that it was nicknamed “Rexit” -- escalated in October, when NBC News reported that Tillerson had referred to Trump in private as a “moron.” Tillerson scoffed at the report, although he left it to his spokeswoman to deny he'd used the word.

“My commitment to the success of the president and the country is as strong as it was the day I accepted his offer to serve as secretary of state,” Tillerson told reporters at the time. “I have never considered leaving this post.”

‘Laughable' Report

In December, Tillerson dismissed as “laughable” a report of a plan at the White House to replace him with Pompeo. Trump joined in with a denial that only underscored their policy disputes.

“The media has been speculating that I fired Rex Tillerson or that he would be leaving soon - FAKE NEWS!” the president wrote on Twitter at the time. “He's not leaving and while we disagree on certain subjects, (I call the final shots) we work well together and America is highly respected again!”

While battling the White House, Tillerson also faced dissent within the department he led. He oversaw a decline in morale as many long-time diplomats headed for the exits and he struggled to get dozens of his choices into top jobs at the State Department. He had a victory in December, however, when his acting assistant secretary of state for East Asian and Pacific affairs, Susan Thornton, was officially nominated for the job by Trump.

Budget Cuts

Tillerson also alienated many staff members by publicly championing the president's call to cut the department's budget by a third and promising a redesign of the department in a process led by outside management consultants. Leaders of the congressional foreign policy committees from both parties questioned why Tillerson was investing so much time in the department redesign and swore the cuts would never happen.

Richard Haass, the president of the Council on Foreign Relations, wrote in October that Tillerson had lost his effectiveness, saying that he had been dealt a “bad hand” by the president and had “played it badly. For both reasons he cannot be effective SecState & should resign.”

Aides at the State Department repeatedly rejected the notion of discord between the president and his secretary of state, arguing that Trump appreciated Tillerson's unvarnished advice. At the same time, White House officials said Trump had come to dislike Tillerson for his reserved demeanor and what was labeled his “establishment”point of view.

Bannon Troubles

He repeatedly clashed with key White House staff including former senior adviser Stephen Bannon, who acknowledged in an interview with the New Yorker in October that he had blocked some of Tillerson's appointments.

Tillerson also seemed to signal his displeasure with the president after Trump's widely criticized response to a neo-Nazi protest in August that led to a death in Charlottesville, Virginia. Tillerson said Trump “speaks for himself" and “we express America's values from the State Department.”

Tillerson had a rocky trip in Africa, canceling a number of events after his staff said he fell ill and then cutting the end of the trip short. He arrived back in Washington around 4 a.m. local time. Trump's announcement came less than five hours later.

--With assistance from Toluse Olorunnipa Nafeesa Syeed Jennifer Jacobs and Jennifer Epstein

To contact the reporter on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net.

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Larry Liebert

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