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SELLING PEMEX WOULD SOLVE CRISIS

Mexico can blame its devastating currency crisis on its jingoistic love affair with Pemex, its run-down nationalized oil industry.

The privatization of Pemex with its oil and gas reserves, refineries and petrochemical plants would bring in billions of dollars of hard currencies for long-term investment. The inflow of money would boost the peso and bring an end to the ability of speculators and hedge funds to profit by shorting the currency and driving it below its value.The peso fell apart because it was dependent on short-term financial investment that took flight once confidence was shaken by political assassination, the Chiapas rebellion and the government's announcement of a 13 percent devaluation. As short-term investors fled, the peso declined by 40 percent or more, pulling down the stock market and the economy with it.

All of this could have been avoided by selling off Pemex. But Mexico could not protect its currency and its economy because of the mantra that Pemex is the "national patrimony."

What a myth! Pemex is the patrimony of corrupt politicians and union leaders who have stolen billions of dollars while Pemex's infrastructure and pipelines deteriorated from lack of maintenance. Pemex has been so plundered that it lacks revenues with which to explore for oil and modernize its refineries. Pipeline leaks pollute water and kill cattle. Explosions are routine, and a big one killed at least 200 people in Guadalajara in 1992.