When I grow up, I want to be half as adept as President Barack Obama is at the art of business negotiation.
In announcing his agreement with British Petroleum getting the oil conglomerate to put aside $20 billion to fund clean-up and damages from the oil spill from BP ‘s well in the Gulf of Mexico, President Obama pointed out that by law, BP’s liability was technically limited to just $75 million. While there’s no way BP would have gotten away with hiding behind that shield, they could have just waited until the lawsuits started rolling in and dealt with them then. And they’ll have to anyway, so why give up $20 billion ahead of time?
The answer could have been that by giving up the $20 billion now, BP had negotiated for legislation that really and truly capped their liability at that new level. But no; President Obama was clear and specific: no such limit has been set.
So why did BP deal?
Let’s assume there was a public relations angle. The bad press BP has been amassing has been immense, and making the settlement is a damage control filter that makes both British Petroleum and the US Government seem a bit more human and a bit more “on their games”.
But the real answer is likely that Barack Obama spoke to BP and intimated that the US Government would stop buying oil from BP unless they made a gesture. Or twenty billion gestures.
Brilliant, simple negotiating based on non-immediately-apparent leverage. I’ve been disappointed in the way a lot of Barack Obama’s presidency has gone to date, but this business change and the negotiation behind it were simply . . . perfect.
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