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Susan Rice Keystone XL Attacks Put White House In A Bind

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WASHINGTON -- When Susan Rice's potential nomination to the post of secretary of state hit another snag this past week, the White House found itself in a quandary.

On Wednesday, a publication affiliated with the Natural Resources Defense Council dug into the ambassador to the United Nations' financial disclosures, and discovered that she and her husband were heavily invested in several oil companies in western Canada including one, Transcanada, that currently has a project under review at the State Department.

As secretary of state, Rice would have to oversee the review of that project, the Keystone XL pipeline, which has dragged on for several controversial and tortured years.

It would be an obvious conflict of interest, and were she to be confirmed as secretary of state, Rice would almost certainly have to divest from her shares in Transcanada. The ties could give some senators pause over whether to confirm her for the post.

But Rice is not yet the nominee, and as ambassador to the U.N., her investments were not deemed a conflict of interest by ethics lawyers. (Earlier investments were found to be conflicts, and in 2008, as she was being considered for a post in the Obama administration, she divested from Boeing and GE.)

And so the administration declined to comment about the impact of the investments on her possible nomination. A spokesman for Rice said she committed no wrongdoing with her investments.

"Ambassador Rice has complied with annual financial disclosure and applicable ethics requirements related to her service in the U.S. government and is committed to continuing to meet these obligations," Payton Knopf, a spokesman for the U.S. Mission to the U.N., told The Huffington Post.

The reticence to address the swirling controversy shows the limits of what the White House feels it can do to defend Rice unless she is actually nominated.

For the administration, openly backing its U.N. ambassador against the onslaught of attacks, from her financial portfolio to her role in the September attack in Benghazi, Libya, risks giving the impression that it is laying the groundwork for her appointment to a post for which she has yet to be nominated. Staffers were reluctant to even let Rice go to Capitol Hill last week to answer questions about her role in disseminating talking points about the attack on the American consulate in Benghazi, wary that it would be interpreted as preemptive diplomacy for a future confirmation hearing.

Some fear that if the White House offered a stronger defense of Rice against her congressional foes, it could make it politically harder to nominate anyone else. When the president -- during a national press conference shortly before Thanksgiving -- urged Rice's detractors to direct their criticisms at him, it was widely interpreted in Washington as the clearest indication that he intended to nominate her to the post. Nominating anyone else might be interpreted as political defeat.

Allies have been left confused and frustrated.

"Why is it that the White House seems incapable of doing anything to defend Susan Rice," one top Democrat close to the administration asked this past week. "She is actually a member of the administration, last time I checked."

For the time being, the administration has been heartened by the fact that few of the attacks so far have turned out to be sustainable.

Republicans have wavered over how hard to press Rice about her Sunday show appearances, in which she offered an early (ultimately erroneous) explanation for the terrorist attack in Benghazi, that left four Americans dead. It later emerged that Rice had faithfully transmitted the approved talking points from the intelligence community, which were ultimately deemed to be incomplete and inaccurate.

Another recent charge made by Sen. Susan Collins (R-Maine) -- that Rice may have been partially at fault for the failure to prevent the 1998 bombings at U.S. embassies in east Africa -- was undermined by the original investigators of the attacks, who told HuffPost that Rice played no direct role.

Even more recently, a conservative news website, poring over Rice's financial disclosure documents, pointed to a set of investments she made with a Dutch oil company with a history of doing business with Iran. But Rice is not alone. News reports later noted that Sen. John McCain (R-Ariz.), the senator who has led the charge against Rice's nomination, is also invested in the company.

The Canadian oil company investments may pose the clearest obstacle for Rice's nomination, although NRDC officials said should she fully divest, they would have no objection to her nomination on those grounds. A veteran of past confirmation battles noted that financial conflicts of interest are not unheard of for high-level nominees, and are typically reconciled during the nomination process.

"It is awkward for her to be in the position of being judged on how her finances may conflict for a job she has yet to be nominated for," said the source, who would only speak about a prospective nominee on the condition of anonymity.

Financial experts contacted by The Huffington Post say that the approval of the Keystone XL pipeline would have obvious benefits for the value of Transcanada stock, and would also affect the growth potential of several other companies exploring the oil fields of western Canada, and in which Rice also holds stock.

"In the event of her being nominated, we're confident that she would divest," said Susan Casey-Lefkowitz, the director of the NRDC's international program.

"For us, the main point is that high-level State Department officials dealing with the Keystone XL pipeline decision should not have any conflict of interests. That means they can't be invested in Transcanada stock or any other tar sands holdings."

Sam Stein's wife works for the Obama administration on matters of oversight that have included congressional inquiries into the Benghazi attack.

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