PEMEX AND THE MEXICAN NATIONAL INTEREST.

How can Mexican oil be produced in the optimum manner, so that it can give Mexicans full benefit? The answer to this question should be technical and economic, don’t you think? However, when I accessed Internet looking for information on this topic I found only articles about its political aspects. In Mexico today, as it has happened since the 1930’s when Lazaro Cardenas nationalized the oil industry, oil has been a matter of nationalistic pride, a symbol of Mexican “independence”. Oil is sacred, almost a religion to Mexicans. The question that matters most to Mexicans is not how to produce the oil optimally but how to keep it under total national control.
But what does national control mean? Once nationalized the Mexican oil industry fell in control of the workers. This was not in the best national interest but in the interest of a minority. The first board of eleven members included five members of the labor union. After only two years PEMEX was experiencing declining production, lack of discipline and wholesale thefts (Grayson: “The politics of Mexican oil, 1980). When the Director general called on the workers to change their attitude they requested his dismissal. From the start PEMEX had social objectives, it was not profit oriented. Labor felt that PEMEX should not be a commercial enterprise but a social organization.
By 1958 PEMEX was practically bankrupt. About 70% of its budget was financed with short-term loans. In the 1960’s PEMEX had almost 100,000 employees and the technical staff was obliged to join the labor union. Historically PEMEX has had the following characteristics:
1. Is a symbol of economic independence and of Mexican technical proficiency,
2. The Director general is usually very close to the president of the country,
3. The Board is controlled by the government and the labor union,
4. Financing is mostly based on short-term loans,
5. There are many more employees than required,
6. Jobs were actually sold by the labor union until recently,
7. The union receives or received a percentage of all contracts signed with the private sector and require union approval,
8. Vacancies are or were filled out by relatives of the employee retiring,
9. Prices of the hydrocarbons are regulated in the domestic market,
10. PEMEX has been used to borrow money for the government.

FACING A NEW, VERY ACUTE CRISIS
This has been the manner in which PEMEX has been managed for decades. Today PEMEX is facing another acute crisis: Production is down, from some 3.4 million barrels per day to about 2.8 million barrels per day. The main producing areas are declining. The country is importing increasing volumes of refined products, quite a blow to Mexican nationalism. PEMEX's reliability as an oil exporter is in doubt.
Faced with this crisis the current government has proposed to open some areas of the Mexican oil industry to private investment. PEMEX requires financial and technical help that cannot generate on its own, in order to increase production and allow Mexico to be, once again, self-sufficient. This would not mean giving up control of the company, the government argues.
The Mexican opposition to the government, led by defeated presidential candidate Lopez Obrador, has reacted strongly against this proposal. How to manage the Mexican oil industry has become, once more, a fierce ideological battleground between those who want PEMEX to remain totally free from foreign participation and those who feel that, without foreign participation, PEMEX will no longer be able to do a proper job for Mexico.
This clash is not rational but emotional, almost religious. I have mentioned before the example of the monkey who grasps a kernel inside the nut but cannot take it out. The monkey dies of hunger with the kernel firmly grasped because he will not let go. Is this not the case of PEMEX? The company requires the money to drill for new production but national pride or simple political demagoguery will not allow this possibility.
The case of PEMEX is not the only tragic case of state-owned companies that are on the brink of financial and technical disaster. PDVSA, PetroEcuador, Yacimientos Petroliferos Fiscales Bolivianos are some other examples of companies where dogma has replaced sound, professional management. In contrast, PETROBRAS, Brazil and ECOPETROL, Colombia, are good examples of companies that have overcome cultural and ideological inferiority complexes that keep companies like PEMEX from reaching its potential.
Are the Mexicans more patriotic than the Brazilians or the Colombians? Or, simply, less rational?