www.nytimes.com By TIM WEINER

CADEREYTA, Mexico — Tony Cantu grew up with the giant oil refinery that Pemex, Mexico's state-owned oil company, runs here in his hometown. He helped build it and operate it, rising from construction worker to computer programmer to chemical engineer.

Mr. Cantu gave Pemex a decade of his working life. But he will never work there again. He can explain why in one word. Advertisement

"Corruption," he said, gazing at the refinery, 20 miles outside Monterrey in northern Mexico. "People being stepped on, forced to be corrupt — I hated that. There were a lot of things you had to shut up about. The bosses would kill to protect themselves. People were subjugated by fear."

For more than 60 years, Pemex, the world's fifth-largest oil company, has been Mexico's economic lifeblood. A $50 billion-a-year enterprise, it controls every gas pump in Mexico, and it sells nearly as much oil to the United States as Saudi Arabia does.

Today, with some oil producers like Iraq and Venezuela facing nation-shaking crises, Mexico looks like a sure and steady source of oil. The United States may be tempted to rely on it even more.

But Pemex is in danger of breaking down. "Financially, we are falling," its director, Raúl Muñoz Leos, said in an interview. Nearly every peso of Pemex's profits goes to run the government of Mexico. The company, after paying taxes and royalties, actually lost $3.5 billion in in 2001. Without a huge restructuring, tens of billions of dollars in foreign investment, or a huge budget increase, Mr. Muñoz Leos warned recently, "We would face, in the short term, a collapse."

One reason is a rottenness at Pemex's core. The company loses at least $1 billion a year to corruption, its executives say, in a continuous corrosion of the machine that keeps Mexico solvent.

Fixing Pemex is as crucial to Mexico's future as it is to American oil supplies. When Vicente Fox became president two years ago after defeating the political machine that ran Mexico for 71 years — the Institutional Revolutionary Party, or PRI — he vowed to make his country more open and democratic and to make Pemex run like a 21st-century corporation.

To change Mexico, Mr. Fox must first change Pemex. It has been a cash machine for the government, a slush fund for politicians and a patronage mill for party loyalists since the party created Petróleos Mexicanos, or Pemex, in 1938.

After nationalizing American and British oil interests, the party promptly changed the Constitution to bar foreign investment in underground oil and gas. It was a declaration of independence: "Expropriation Day" is still celebrated each year.

Even today, the PRI, which still holds a plurality in Congress, is fighting changes to the Constitution and at the oil giant it created, in part on grounds of patriotism. President Fox's attempts at reform have been hamstrung by PRI resistance — and Pemex's history of corruption.

Pemex's last director, Rogelio Montemayor, a former PRI governor, and its union boss, Carlos Romero Deschamps, a PRI senator, each stand accused of stealing tens of millions of dollars from Pemex for the PRI's 2000 presidential campaign against Mr. Fox.

Both men deny the charges. Mr. Romero Deschamps is battling an attempt in Congress to strip him of the legal immunity he enjoys as a sitting senator. Mr. Montemayor fled Mexico last year and is fighting extradition from Houston. The PRI, struggling to defend them — and itself, is also resisting every effort to transform Pemex.

"The political will needed to reform Pemex has just not coalesced," said Eduardo Cepeda, the head of J. P. Morgan Chase's Mexico office.

Edward L. Morse, executive adviser at Hess Energy Trading Co. and former publisher of Petroleum Intelligence Weekly, said by telephone from New York that "the effort to reform the beast" had failed. President Fox, he said, does not "understand how thoroughly ingrained in the national political culture the monopoly of Pemex is."

Pemex remains one of the world's few national oil companies with no competition from within or without. Its resulting inefficiencies are stark.

www.nytimes.com By ERIC PFANNER

LONDON, Jan. 20 — The surge in oil prices caused by a loss of production at a leading exporter and the possibility of an American-led attack on another has created a rare spectacle: the president of OPEC, a cartel once feared for its ability to control prices, publicly complaining that current levels are too high.

Those were the straits into which Abdullah bin Hamad al-Attiyah, president of the Organization of the Petroleum Exporting Countries, was forced last week as oil prices hovered at two-year highs.

Only days before, OPEC ministers meeting in Vienna had agreed to step up production in an unsuccessful effort to keep prices from rising further, after antigovernment strikes in Venezuela had virtually halted exports from that country and the threat of war in Iraq had raised the prospect of shortages.

Though the 10 OPEC members — 11 counting Iraq, whose production is monitored by the United Nations — still pump a third of the world's oil, their power is a far cry from the 1970's, when an oil embargo sent the global economy into recession. After oil prices fell into single digits in 1998 and 1999, OPEC managed to engineer an increase, but only when it acted in concert with several nonmember countries. Getting prices to fall has proved more difficult.

In part that is because other producers have stepped up output and exports, reducing OPEC's market share. The group still has a virtual monopoly on spare capacity. While demand for oil has risen slowly during a global economic downturn, that capacity is not enough to deal with the unexpected overlap of production losses in Venezuela and, possibly, Iraq. OPEC's response in Vienna, colored by internal politics, failed to send the clear message that the market needed to bring a cap on prices.

"The oil business is feast or famine," said Gary N. Ross, chief executive of the PIRA Energy Group, an international energy consultancy in New York. "They are trying to wrestle with a beast that's very hard to get your arms around."

Mr. Ross said OPEC deserved credit for keeping prices within a range of $22 to $28 a barrel for about two-thirds of the time since March 2000, when ministers decided that level would balance their needs for revenue with those of a global economy hungry for affordable oil. OPEC was concerned that if the price strayed stubbornly above that range, it could affect long-term demand, as importers would turn to non-OPEC producers, invest in developing their own supplies and seek alternative energy sources.

As strikes against the government of President Hugo Chávez turned off the taps on Venezuela's nearly three million barrels a day of oil output in December, analysts say Saudi Arabia, in particular, has been keen to show its good intentions. Stung by anti-Saudi sentiment in the United States in the wake of the terrorist attacks, Saudi Arabia has sought to reassure the market that it stands ready to make up the shortfall.

"They have made a virtue out of necessity," said Peter Gignoux, head of the petroleum trading desk at Schroder Salomon Smith Barney in London. "If they put more oil on the market they can wrap themselves in the mantle of global citizen."

But the agreement reached in Vienna, in an emergency meeting called at the request of the Saudis, left unclear how much oil would actually reach the market, and when. Instead of simply announcing a temporary increase in production quotas for those countries most capable of closing the gap — Saudi Arabia and the United Arab Emirates — OPEC came up with a political solution.

In an effort to ease Venezuela's fears of losing market share, the group raised the quotas for all members on a proportional basis, including Venezuela, which is pumping only a fraction of the oil allowed under its old, smaller allotment of 2.65 million barrels a day.

"The actual amount of what you are getting from the OPEC decision is so much less than what they are saying," Mr. Ross said. OPEC raised its overall production quota to 24.5 million barrels a day, from 23 million, as of Feb. 1, but analysts say production will probably fall short by at least one million barrels.

Since the meeting, Saudi Arabia has said it will produce as much as nine million barrels a day by February, a million more than even the new quota prescribes, in an effort to keep the markets supplied. But that oil takes six weeks to reach American ports, rather than the one-week trip for Venezuelan shipments.

As talk of war in Iraq heats up, oil buyers are eager to lock in supplies, even at the current high prices. In London on Monday, the price of Brent crude for March delivery rose 11 cents, to $30.65 a barrel.

"Oil prices at the moment are not determined by fundamental supply and demand but by psychology," said Axel Bush at the Energy Intelligence Group in London.

U.S. Lobbies Oil Exporters to Produce More

www.guardian.co.uk Giles Tremlett in Madrid Tuesday January 21, 2003 The Guardian

From Buenos Aires to Bogota, the daily queues outside Spanish consulates have begun to stretch around the block as up to a million Latin Americans exploit a new law allowing them to become Spaniards.

The law, which came into effect 10 days ago, opens the doors of Spain and, by extension, of the European Union, to children and grandchildren of Spanish exiles and emigrants in the Americas.

The Spanish foreign minister, Ana Palacio, expects a million applications, equivalent to a 2.5% rise in the population.

Ms Palacio, from the ruling conservative People's party, said the law would help right the wrongs suffered by those forced into exile by General Franco. But it has also been seen as a way of ensuring that the next wave of immigrants are people who share its language and religion.

With its low birth rate and booming economy, Spain has reversed its status as a country of emigrants, attracting an influx of mainly Moroccans, east Europeans and Africans. It now takes almost 25% of the foreigners who moved to the EU last year.

With Latin America, especially Venezuela and Argentina, suffering a major economic crisis, Spanish consulates have been inundated with requests.

Argentina, Cuba, Uruguay, Brazil, Mexico and Venezuela have the biggest Spanish emigrant populations, and therefore the most applicants.

In Argentina, where some 300,000 people are eligible to apply, news of the law made it onto the front pages.

There is a long wait, however - up to 18 months before applicants even have their cases looked at.

But such is the demand in Buenos Aires that professional queuers are charging £1 a day to applicants who cannot afford the time to queue or who wish to escape the harsh summer sun.

The law rights some of the anomalies of traditional Spanish machismo, which allowed children of Spanish men born abroad to claim nationality but not those of women who married foreigners. It also allows the grandchildren of exiles or emigrants to claim nationality if they themselves have resided in Spain for more than a year.

The new measure has gone largely unremarked upon in Spain, which is beginning to get used to the idea that its economy will need the labour of millions of new immigrants.

www.guardian.co.uk Giles Tremlett in Madrid Tuesday January 21, 2003 The Guardian

From Buenos Aires to Bogota, the daily queues outside Spanish consulates have begun to stretch around the block as up to a million Latin Americans exploit a new law allowing them to become Spaniards.

The law, which came into effect 10 days ago, opens the doors of Spain and, by extension, of the European Union, to children and grandchildren of Spanish exiles and emigrants in the Americas.

The Spanish foreign minister, Ana Palacio, expects a million applications, equivalent to a 2.5% rise in the population.

Ms Palacio, from the ruling conservative People's party, said the law would help right the wrongs suffered by those forced into exile by General Franco. But it has also been seen as a way of ensuring that the next wave of immigrants are people who share its language and religion.

With its low birth rate and booming economy, Spain has reversed its status as a country of emigrants, attracting an influx of mainly Moroccans, east Europeans and Africans. It now takes almost 25% of the foreigners who moved to the EU last year.

With Latin America, especially Venezuela and Argentina, suffering a major economic crisis, Spanish consulates have been inundated with requests.

Argentina, Cuba, Uruguay, Brazil, Mexico and Venezuela have the biggest Spanish emigrant populations, and therefore the most applicants.

In Argentina, where some 300,000 people are eligible to apply, news of the law made it onto the front pages.

There is a long wait, however - up to 18 months before applicants even have their cases looked at.

But such is the demand in Buenos Aires that professional queuers are charging £1 a day to applicants who cannot afford the time to queue or who wish to escape the harsh summer sun.

The law rights some of the anomalies of traditional Spanish machismo, which allowed children of Spanish men born abroad to claim nationality but not those of women who married foreigners. It also allows the grandchildren of exiles or emigrants to claim nationality if they themselves have resided in Spain for more than a year.

The new measure has gone largely unremarked upon in Spain, which is beginning to get used to the idea that its economy will need the labour of millions of new immigrants.

www.guardian.co.uk Giles Tremlett in Madrid Tuesday January 21, 2003 The Guardian

From Buenos Aires to Bogota, the daily queues outside Spanish consulates have begun to stretch around the block as up to a million Latin Americans exploit a new law allowing them to become Spaniards.

The law, which came into effect 10 days ago, opens the doors of Spain and, by extension, of the European Union, to children and grandchildren of Spanish exiles and emigrants in the Americas.

The Spanish foreign minister, Ana Palacio, expects a million applications, equivalent to a 2.5% rise in the population.

Ms Palacio, from the ruling conservative People's party, said the law would help right the wrongs suffered by those forced into exile by General Franco. But it has also been seen as a way of ensuring that the next wave of immigrants are people who share its language and religion.

With its low birth rate and booming economy, Spain has reversed its status as a country of emigrants, attracting an influx of mainly Moroccans, east Europeans and Africans. It now takes almost 25% of the foreigners who moved to the EU last year.

With Latin America, especially Venezuela and Argentina, suffering a major economic crisis, Spanish consulates have been inundated with requests.

Argentina, Cuba, Uruguay, Brazil, Mexico and Venezuela have the biggest Spanish emigrant populations, and therefore the most applicants.

In Argentina, where some 300,000 people are eligible to apply, news of the law made it onto the front pages.

There is a long wait, however - up to 18 months before applicants even have their cases looked at.

But such is the demand in Buenos Aires that professional queuers are charging £1 a day to applicants who cannot afford the time to queue or who wish to escape the harsh summer sun.

The law rights some of the anomalies of traditional Spanish machismo, which allowed children of Spanish men born abroad to claim nationality but not those of women who married foreigners. It also allows the grandchildren of exiles or emigrants to claim nationality if they themselves have resided in Spain for more than a year.

The new measure has gone largely unremarked upon in Spain, which is beginning to get used to the idea that its economy will need the labour of millions of new immigrants.