Adamant: Hardest metal
Sunday, February 9, 2003

'Rotten to the bone'

www.canada.com Tim Weiner New York Times Sunday, February 09, 2003 CREDIT: The Associated Press, File

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

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

"Corruption," he said, gazing at the refinery, 30 kilometres 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 US-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, Raul Munoz Leos, said.

Nearly every peso of Pemex's profits go to run the government of Mexico. The company, after paying taxes and royalties, actually lost $3.5 billion in 2001. Without a massive restructuring, tens of billions of dollars in foreign investment, or a huge budget increase, Munoz 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 U.S. 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, 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 Petroleos Mexicanos, or Pemex, in 1938.

After nationalizing U.S. 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.

ATTEMPTS AT REFORM HAMSTRUNG BY A HISTORY OF CORRUPTION

Even today, the PRI, which still holds a plurality in Congress, is fighting changes to the constitution and at the oil giant it created, partly on grounds of patriotism. 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 Fox.

Both men deny the charges. Romero Deschamps is battling an attempt in Congress to strip him of the legal immunity he enjoys as a sitting senator. Montemayor fled Mexico last year and is fighting extradition from Houston. The PRI, fighting to defend them -- and itself -- is also resisting all of Fox's efforts to change the oil giant it created.

"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, "the effort to reform the beast" has failed. 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.

Othon Canales Trevino is Pemex's director for competitiveness and innovation -- the man in charge of creating the "new" Pemex. He once ran a company that supplied Pemex with chemicals, and he was often solicited for bribes, he said. Today he sits on a commission on corruption at Pemex, composed of 14 directors.

"There is corruption," he said. "But I think the inefficiency is worse. There is brutal inefficiency."

For example, Canales said, he recently asked how much Pemex paid each year for goods and services -- everything from ice packs to helicopters rented to fly engineers to offshore rigs.

No one knew. It took four months to come up with the answer -- $7 billion.

"We want to act like a company," he said. "Pemex isn't a company. It isn't Pemex Inc. We're not a government ministry either. We are -- something weird. Our behaviour changes depending on whom we are dealing with.

"To the Finance ministry, we're their biggest taxpayer. To Congress, we're something else. To our customers, sometimes we're an opportunity and sometimes we're a threat."

Pemex had sales of $46.5 billion in 2001 and paid $28.8 billion in taxes -- almost 40 per cent of all government revenues. With the government taking such a large share of revenue, not enough is left to pay for exploring new sources of oil, repairing aging refineries or tapping vast pockets of natural gas.

If Fox could free the government of its addiction to Pemex's money -- by collecting taxes from millions of people who evade them, for example -- then Pemex could invest in producing more oil and gas, and in time generate more revenue.

But today, with foreign investment banned, and corruption and inefficiency sapping its cash flow, Pemex's ability to produce energy is bound to decrease, Pemex executives and industry analysts say.

Pemex is in "a very complex fix," said Munoz Leos, the director and a former chief of DuPont's Mexican operations.

But unless Fox finds a way to clean up Pemex's operations and, above all, change the constitution to permit foreign investment -- a path the PRI has blocked -- the company's production will start to plunge.

Mexico's ability to produce oil will peak by 2010, according to Pemex officials and the International Energy Agency, a coalition of 24 oil-producing nations. Then it will decline, they forecast.

By 2030, perhaps sooner, Mexico will have to import oil. It will not be able to sell a single barrel to the United States.

"If we're going to export oil in the future, we need more investment now," said Jose Herlindo Alvarez, a chemical engineer for 26 years at Pemex's Tula refinery, 100 kilometres north of Mexico City.

Pemex has six oil refineries working nearly at capacity in Mexico. But they cannot now meet the nation's needs. Mexico, sitting on huge pools of untapped oil, has to import nearly a quarter of its gasoline from the United States.

It has not built a new refinery since the late 1970s. One reason, said several oil industry analysts, is that to authorize a billion-dollar project at Pemex is to invite grand theft.

That corruption is something Tony Cantu said he had witnessed first-hand -- what he described as organized crime, systematic shakedowns and needless deaths due to mismanagement. He wept briefly as he talked, during a return visit to the Cadereyta refinery in December.

"It's sickening to see how something that could be so beautiful is such a mess," he said. "To advance at Pemex, it didn't matter how good you were, your knowledge or intentions, but whether you participated in the good-old-boys' system."

Pemex's chief back then, Jorge Diaz Serrano, later served five years in prison for embezzling $34 million. Its longtime union boss, Joaquin Hernandez Galicia, was released from prison in 1999 after serving seven years for amassing enough weapons to run a private army. Ten years before, Carlos Salinas, then president of Mexico, had sent government troops to arrest him in a political confrontation over the union's power -- which remains vast today.

Even now, Pemex loses more than $1 billion a year to fraud, theft, tax-evasion schemes and clandestine fuel sales by its workers and distributors, according to two senior Pemex directors.

The plunder includes thousands of gallons of jet fuel sold under the table to drug dealers for flights of cocaine into the United States. Those thefts, which create small fortunes for Pemex managers and union officials, continue apace despite a crackdown.

So do no-show jobs, a staple of Pemex operations for decades.

"People who didn't work at the refinery still came in to pick up their money every two weeks," Cantu said. "You had to give a cut to the union boss -- 30 per cent. I saw this with my own eyes."

Though the union does not acknowledge it, no-show jobs still exist, according to Pemex officials, and those who hold them are known as "aviators" or "parachute artists." Pemex's workforce has grown to 139,000, compared with 121,000 in 1996. More than 90,000 are union members.

Cantu said he had seen six untrained workers die building the Cadereyta refinery. They were sons and brothers of union workers, hired despite having no experience.

Pemex's safety record down the years has been grim. Two major explosions, in 1984 and 1992, killed at least 800 people in residential neighbourhoods in Mexico City and Guadalajara. Industrial accidents have killed hundreds more.

After nine years of working for Pemex, and after earning his degree as a chemical engineer, Cantu had had enough. He moved to Houston and started his own company and a new life.

But in 2000, he agreed to return to work at Pemex on two projects, one to upgrade Cadereyta's emergency-control room, another for natural gas processing plants in Villahermosa.

'You cannot change so deeply embedded a mentality in a few years.'

He said the Pemex engineer in charge of the Villahermosa project had "a private bank account" that he expected outside contractors to fill. On the Cadereyta project, he said, Pemex engineers never showed up to approve his work.

Munoz Leos said a recent $1.3-billion remodelling at the Cadereyta refinery was botched, and efforts to fix it were costing Pemex $15 million a month.

"I thought things might have changed" after Fox's election in 2000, Cantu said. "But Pemex hasn't changed. You cannot change so deeply embedded a mentality in a few years."

One of the strongest forces for change may be dissident union workers, who see their task as no less than rescuing the union from its own leaders.

"People inside the union hate this situation -- the embezzlement of millions, not only from the oil revenues, but from the union itself," said Oscar Edgar Hernandez Garcia, president of the group, the Oil Workers' Coalition.

"We know what's going on, but we can only fight from within," he said. "We have to end the cushy no-show jobs, to end the coziness with the PRI, to protect our workers from harm, and to improve Pemex's productivity."

But Cantu predicts an end to the power and pride of Pemex only on the day when the machine collapses.

"Then they would be forced to let Shell, Conoco and Exxon come in," he said. "But who would want to come in now? If Shell had a billion to invest, would they invest it in a system that is rotten to the bone?"

Ailing giant: Mexico's economic lifeblood is its state-owned oil company Pemex. But chronic massive corruption and inefficiency have now left the world's fifth-largest oil company in danger of collapse

A gasoline tank burns in November 1996 at a state-owned Pemex storage facility near Mexico City, where the explosion injured at least 12 people. Pemex's safety record over the years has been grim -- two major explosions, in 1984 and 1992, killed at least 800 people in residential neighbourhoods in Mexico City and Guadalajara, and industrial accidents have killed hundreds more.

Union members march last September in Mexico City in support of their leader, Carlos Romero Deschamps, accused of stealing tens of millions of dollars from Pemex to fund a political election campaign.

South America needs its own "International Court" similar to The Hague

www.vheadline.com Posted: Sunday, February 09, 2003 - 1:58:52 AM By: Patricia Stewart

Date: Thu, 6 Feb 2003 00:54:07 -0400 From: Patricia Stewart Circe009@hotmail.com To:  Editor@VHeadline.com Subject: I remember something I once said to my son...

Dear Editor: Listening to Channel 8 and the aggressions in Sta. Rosa de Lima as devolved humans vented their anger ... believing it to be caused by another ... I remember something I once said to my son ...

"Your emotions are yours, not mine. I don't want the reins that control your emotions. That is too much power to give away to anyone."

Something else I want to put into words and send out into the ethers to stick on the Grid, is this:  Inspired by Spain's "golpista" decision to judge Chavez and ignore blatant truth, we can see that South America needs its own "International Court" similar to The Hague, where trials against humanity can be held, and where North America has no say in its judgements, but where crimes against South American people and countries can be tried and sentenced.

Venezuela needs such a court to internationally air the truth about the "Golpistas" ... even if its own Supreme Court were not a disgrace.

I am also addressing the Bush crowd, the never-ending CIA plots to overthrow South American governments with their cover-up Presidents, and present Spain.

It's time the true traitors to humanity itself were judged ... and the evidence is there.

South America must put this Tribunal into place. Nicaragua should never be forgotten.

Do you have the text of Chaderton's remark just before the installation of the "Friends of Venezuela"? It seemed he was comparing them to the international group that tried to make peace between Colombia's government and ... the FARC!

  • I heard his mention of the "FARC" ... an excellent comparison!

Perhaps that's why they got short shrift for quick burial ... as did that interview. Huh!

Patricia Stewart Circe009@hotmail.com

Bad news for Venezuela's disloyal opposition

www.vheadline.com Posted: Sunday, February 09, 2003 - 1:27:18 AM By: Charles Hardy

VHeadline.com commentarist Charles Hardy writes: I've got some bad news for the opposition to the government of President Hugo Chavez Frias.  In spite of the hundreds of thousands of signatures that the Coordinadora Anti-Democratica has collected once again and in spite of the information that Datanalisis might release from another one of its telephone surveys, I have information that could be of value that was not gathered by randomly-selected phone calls to people who live outside the barrios, and who are wealthy enough to have telephones in their homes.

  • For whatever it might be worth, it is simply based on un-scientific conversations with people in the streets.

Here's the bad news:  in my daily contact with people in Venezuela, I have the impression that those who were with Chavez in 1998 are still with him today; and, those who didn't like him then, still don't like him now.  The problem for them is that he won the 1998 elections by an almost two to one margin.

And here is even more bad news:  Some who still don't like Chavez are now not ready to support the opposition either because of the effects of the strike/stoppage which they imposed on the country.

Two cases to consider: 

There is a small businessman in the eastern part of the city who has never spoken well of Chavez.  However, the greatest part of his yearly income is in December.  Last year, he could not operate his business because of the lockout imposed by the opposition.  He still damns Chavez.  But only AFTER cursing the opposition.

A few days ago I spoke to the owner of a grocery store that was looted during the April 11 coup.  The establishment is now open again and, with new shelves and remodeling, it is brighter and more pleasant than ever.  The owner, while not happy with the looting, was pleased with the low interest loan the government gave him.  The establishment was also looted in 1989, at which time no help was given by the government to recuperate.  The store, by the way, has not observed the "strike" called by the opposition.

And here are some other items worth considering:  I asked one bricklayer for whom he would vote if there were elections today.  He replied, I always vote for the Adecos.  I pursued the point since the Adecos don't have a candidate at this moment.  He replied, "it really doesn't matter since Im not registered to vote and haven't voted since Carlos Andres was President!" ... he's definitely on the side of the opposition, but don't count on his vote.

I also talked to a woman who said she voted for Chavez, but was the only one in her family to do so.  She said she would not vote for him again.  You can't put uneducated barrio people in positions of responsibility, she said.  Maybe she's right.  But maybe the barrio people aren't as uneducated as she thinks they are.  I sensed she was afraid of barrio people, which may indicate the opposition propaganda is making an impact.  On the other hand, I talk to barrio people who are feeling more and more insulted by the opposition and who are hardening their pro-government position.

There is also a strange reaction that should be noted.  When I ask opposition people for whom they would vote, the answer that I usually receive is, for whomever the Coordinadora Democratica puts forward ... I can't get them to name a candidate.  It's a response similar to the man who says he always votes for the Adecos and I get the feeling that these people have simply surrendered their opinion to the leadership of the CD and their hatred for Chavez would lead them to accept anyone.

That is certainly a plus for the CD ... but it is a dangerous attitude for intelligent voting.

These remarks are only my personal observations ... but, having lost all confidence in the professionally-slanted opinion polls regularly released, I think they're worthy of consideration.

  • I still think Chavez would win any election if he were allowed to be a candidate.

Only time will tell whose analysis is correct.

Charlie A native of Cheyenne, Wyoming (USA), VHeadline.com columnist Charles Hardy has many years experience  as an international correspondent in Venezuela. You may email him at: hardyce2@yahoo.com

Now they want their jobs back! Huh!

www.vheadline.com Posted: Sunday, February 09, 2003 - 3:42:54 AM By: Oscar Heck

For readers outside Venezuela, this is not a joke.  This is really happening.

VHeadline.com commentarist Oscar Heck writes: I was watching TV here in one of the Caracas barrios (slum areas) this afternoon between 3 and 5 ... as most typical "males" might do, I was flipping back and forth between RCTV, Venevision, Televen, Globovision and Venezolana de Television.

It was "cartoon time" on Venevision, Televen and RCTV, news on Globovision and government programming on Venezolana de Television (discussions with and engineer and an economist -- also the live broadcast of the inauguration of a new high-tech customs operation ... reminds me of BBC in the 80s and early 90s). Venezolana de Television  is the government-run TV station in Venezuela.

  • As part of their news highlights, Globovision was covering the government's present legal action against the privately-owned TV stations (those named in the previous paragraph- including Globovision).

I thought to myself, that finally, they're going to stop transmitting anti-Chavez propaganda ... especially since court proceedings have already been opened, which may lead to the 4 private TV stations losing their operating licenses.

To my surprise, when the commercial break came, they were showing anti-government propaganda again!

Now, the Coordinadora Democratica (the anti-Chavez opposition coordinating group) was inviting "all Venezuelans" to go march the streets to show their support for 'the people of PDVSA' ... more specifically, to support the thousands of PDVSA employees that have  recently been fired because they refused to show up for work in support of the opposition's "stoppage" and sabotage of PDVSA.

Here are some of the slogans, inciting people to take the streets:

  • "Come, all Venezuelans, to march the streets in support of the people of the petroleum industry..!"
  • "For the defense of  freedom!"
  • "For the defense of democracy!"
  • "For the defense of the nation!"
  • "We are all PDVSA"

Now they want their jobs back! Huh!

Would you rehire an employee that suddenly arbitrarily decided to not show up for work for several weeks?

Would you rehire an employee who broke your equipment (before leaving on an unplanned extended Christmas vacation) and left with the keys that control the main operations center in your refinery?

I wouldn't.  I would be a fool to do so! Would you?

Now, here comes the worst part of it all:

I switched channels to see if this propaganda was being aired on the other 3 private stations.  I was floored!  They were passing the same propaganda every 10 minutes or so ... during cartoon time!

The opposition ... Ortega, the two Fernandez's, the Coordinadora Democratica and most all other anti-Chavez opposition members, have been calling themselves "civilized, democratic, peaceful"

...my foot!

They tried unsuccessfully to shut down the educational system. Since they did not succeed ... I suppose they decided to shove political anti-Chavez propaganda down the throats of children during their cartoon time.

  • For readers outside Venezuela, this is not a joke ... this is really happening.

How much lower can the opposition go to? I can only imagine!

Oscar Heck oscarheck111@hotmail.com

What price is Chavez Frias willing to have his people pay?

www.vheadline.com Posted: Sunday, February 09, 2003 - 1:11:38 AM By: Will West

Date: Sat, 8 Feb 2003 00:52:38 -0800 From: Will West thewillies@cox-internet.com To: Editor@VHeadline.com Subject: A Letters to the Editor Submission

Dear Editor: The (perhaps fatal) damage Chavez has inflicted upon Venezuela's democratic form of government is unforgivable.  It is my belief that, in the long run, maintaining a healthy, functioning democratic form of government (including a "loyal opposition") will do more to increase and ensure the prosperity of all Venezuelans than any amount of heavy-handed economic tinkering.

Comparisons between Chavez and Hitler are obvious -- not with regard to the scale of the evil they represent, but with regards to the similar patterns their careers have followed thus far.  Several observers of the Venezuelan situation have noted this similarity, but let me mention one more example:  Both Hitler and Chavez have used gangs of armed thugs to intimidate (and worse) those who disagreed with them.  Hitler had the S.A., the brown shirts, while Chavez has his Bolivarian Circles (who have been used to intimidate and harass the free press, attack and kill protesters, etc.).  How can educated people reconcile support of Chavez (as a benign socialist?) with his use of Hitlerian (fascistic) tactics?  Can any good can come of this practice?

It seems as if many of Chavez's most vociferous supporters in the "Letters" area of VHeadline profess ideologies to the extreme left.  Although there is nothing necessarily wrong with being a leftist, it is the extremity of their position that seems to allow them to overlook Chavez's many negative aspects and to justify his actions.  Their devotion appears to be driven more by their own ideology than by any real resemblance between Chavez and a benign leftist head of state.

Do the ends Chavez envisions justify the means means he has chosen? 

What price is he willing to have his people pay in order to enforce his will? 

Is any price whatsoever acceptable? 

Where does Hugo Chavez Frias draw the line between acceptable means of political/economic change and unacceptable?

I ask these questions in order to give your readers who are Chavez apologists a way to determine for themselves if the label "extremist" (for whom the ideological end ALWAYS justifies the means) fits, or if their ideology is leavened with some modicum of humanity.

  • Lest anyone believe that I am some kind of right-wing, whacko extremist, let me say that I have never been accused of extremism (I lack the energy).

The only area in which my views even approach extremism regards my belief that functioning democratic forms of government are far and away superior to all others when it comes to ensuring the greatest degree of human happiness and prosperity for the largest proportion of people.  I would be greatly relieved if more Chavistas shared this belief.

Sincerely, William West thewillies@cox-internet.com