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The antihero
05-15-2008, 10:02
I thought I already posted this, but there must have been some computer snafu 'cause I can't see it among the threads. If I'm posting it twice I apologize.

Anyway, it's something I received by e-mail via STRATFOR. Sorry, no link.

Mexico: On the Road to a Failed State?

By George Friedman

Edgar Millan Gomez was shot dead in his own home in Mexico City on May 8. Millan Gomez was the highest-ranking law enforcement officer in Mexico, responsible for overseeing most of Mexico’s counternarcotics efforts. He orchestrated the January arrest of one of the leaders of the Sinaloa cartel, Alfredo Beltran Leyva. (Several Sinaloa members have been arrested in Mexico City since the beginning of the year.) The week before, Roberto Velasco Bravo died when he was shot in the head at close range by two armed men near his home in Mexico City. He was the director of organized criminal investigations in a tactical analysis unit of the federal police. The Mexican government believes the Sinaloa drug cartel ordered the assassinations of Velasco Bravo and Millan Gomez. Combined with the assassination of other federal police officials in Mexico City, we now see a pattern of intensifying warfare in Mexico City.

The fighting also extended to the killing of the son of the Sinaloa cartel leader, Joaquin “El Chapo” Guzman Loera, who was killed outside a shopping center in Culiacan, the capital of Sinaloa state. Also killed was the son of reputed top Sinaloa money launderer Blanca Margarita Cazares Salazar in an attack carried out by 40 gunmen. According to sources, Los Zetas, the enforcement arm of the rival Gulf cartel, carried out the attack. Reports also indicate a split between Sinaloa and a resurgent Juarez cartel, which also could have been behind the Millan Gomez killing.
Spiraling Violence

Violence along the U.S.-Mexican border has been intensifying for several years, and there have been attacks in Mexico City. But last week was noteworthy not so much for the body count, but for the type of people being killed. Very senior government police officials in Mexico City were killed along with senior Sinaloa cartel operatives in Sinaloa state. In other words, the killings are extending from low-level operatives to higher-ranking ones, and the attacks are reaching into enemy territory, so to speak. Mexican government officials are being killed in Mexico City, Sinaloan operatives in Sinaloa. The conflict is becoming more intense and placing senior officials at risk.

The killings pose a strategic problem for the Mexican government. The bulk of its effective troops are deployed along the U.S. border, attempting to suppress violence and smuggling among the grunts along the border, as well as the well-known smuggling routes elsewhere in the country. The attacks in Mexico raise the question of whether forces should be shifted from these assignments to Mexico City to protect officials and break up the infrastructure of the Sinaloa and other cartels there. The government also faces the secondary task of suppressing violence between cartels. The Sinaloa cartel struck in Mexico City not only to kill troublesome officials and intimidate others, but also to pose a problem for the Mexican government by increasing areas requiring forces, thereby requiring the government to consider splitting its forces — thus reducing the government presence along the border. It was a strategically smart move by Sinaloa, but no one has accused the cartels of being stupid.

Mexico now faces a classic problem. Multiple, well-armed organized groups have emerged. They are fighting among themselves while simultaneously fighting the government. The groups are fueled by vast amounts of money earned via drug smuggling to the United States. The amount of money involved — estimated at some $40 billion a year — is sufficient to increase tension between these criminal groups and give them the resources to conduct wars against each other. It also provides them with resources to bribe and intimidate government officials. The resources they deploy in some ways are superior to the resources the government employs.

Given the amount of money they have, the organized criminal groups can be very effective in bribing government officials at all levels, from squad leaders patrolling the border to high-ranking state and federal officials. Given the resources they have, they can reach out and kill government officials at all levels as well. Government officials are human; and faced with the carrot of bribes and the stick of death, even the most incorruptible is going to be cautious in executing operations against the cartels.

Toward a Failed State?

There comes a moment when the imbalance in resources reverses the relationship between government and cartels. Government officials, seeing the futility of resistance, effectively become tools of the cartels. Since there are multiple cartels, the area of competition ceases to be solely the border towns, shifting to the corridors of power in Mexico City. Government officials begin giving their primary loyalty not to the government but to one of the cartels. The government thus becomes both an arena for competition among the cartels and an instrument used by one cartel against another. That is the prescription for what is called a “failed state” — a state that no longer can function as a state. Lebanon in the 1980s is one such example.

There are examples in American history as well. Chicago in the 1920s was overwhelmed by a similar process. Smuggling alcohol created huge pools of money on the U.S. side of the border, controlled by criminals both by definition (bootlegging was illegal) and by inclination (people who engage in one sort of illegality are prepared to be criminals, more broadly understood). The smuggling laws gave these criminals huge amounts of power, which they used to intimidate and effectively absorb the city government. Facing a choice between being killed or being enriched, city officials chose the latter. City government shifted from controlling the criminals to being an arm of criminal power. In the meantime, various criminal gangs competed with each other for power.

Chicago had a failed city government. The resources available to the Chicago gangs were limited, however, and it was not possible for them to carry out the same function in Washington. Ultimately, Washington deployed resources in Chicago and destroyed one of the main gangs. But if Al Capone had been able to carry out the same operation in Washington as he did in Chicago, the United States could have become a failed state.

It is important to point out that we are not speaking here of corruption, which exists in all governments everywhere. Instead, we are talking about a systematic breakdown of the state, in which government is not simply influenced by criminals, but becomes an instrument of criminals — either simply an arena for battling among groups or under the control of a particular group. The state no longer can carry out its primary function of imposing peace, and it becomes helpless, or itself a direct perpetrator of crime. Corruption has been seen in Washington — some triggered by organized crime, but never state failure.

The Mexican state has not yet failed. If the activities of the last week have become a pattern, however, we must begin thinking about the potential for state failure. The killing of Millan Gomez transmitted a critical message: No one is safe, no matter how high his rank or how well protected, if he works against cartel interests. The killing of El Chapo’s son transmitted the message that no one in the leading cartel is safe from competing gangs, no matter how high his rank or how well protected.

The killing of senior state police officials causes other officials to recalculate their attitudes. The state is no longer seen as a competent protector, and being a state official is seen as a liability — potentially a fatal liability — unless protection is sought from a cartel, a protection that can be very lucrative indeed for the protector. The killing of senior cartel members intensifies conflict among cartels, making it even more difficult for the government to control the situation and intensifying the movement toward failure.

It is important to remember that Mexico has a tradition of failed governments, particularly in the 19th and early 20th century. In those periods, Mexico City became an arena for struggle among army officers and regional groups straddling the line between criminal and political. The Mexican army became an instrument in this struggle and its control a prize. The one thing missing was the vast amounts of money at stake. So there is a tradition of state failure in Mexico, and there are higher stakes today than before.

continues

The antihero
05-15-2008, 10:04
The Drug Trade’s High Stakes

To benchmark the amount at stake, assume that the total amount of drug trafficking is $40 billion, a frequently used figure, but hardly an exact one by any means. In 2007, Mexico exported about $210 billion worth of goods to the United States and imported about $136 billion from the United States. If the drug trade is $40 billion dollars, it represents about 25 percent of all exports to the United States. That in itself is huge, but what makes it more important is that while the $210 billion is divided among many businesses and individuals, the $40 billion is concentrated in the hands of a few, fairly tightly controlled cartels. Sinaloa and Gulf, currently the strongest, have vast resources at their disposal; a substantial part of the economy can be controlled through this money. This creates tremendous instability as other cartels vie for the top spot, with the state lacking the resources to control the situation and having its officials seduced and intimidated by the cartels.

We have seen failed states elsewhere. Colombia in the 1980s failed over the same issue — drug money. Lebanon failed in the 1970s and 1980s. The Democratic Republic of the Congo was a failed state.

Mexico’s potential failure is important for three reasons. First, Mexico is a huge country, with a population of more than 100 million. Second, it has a large economy — the 14th-largest in the world. And third, it shares an extended border with the world’s only global power, one that has assumed for most of the 20th century that its domination of North America and control of its borders is a foregone conclusion. If Mexico fails, there are serious geopolitical repercussions. This is not simply a criminal matter.

The amount of money accumulated in Mexico derives from smuggling operations in the United States. Drugs go one way, money another. But all the money doesn’t have to return to Mexico or to third-party countries. If Mexico fails, the leading cartels will compete in the United States, and that competition will extend to the source of the money as well. We have already seen cartel violence in the border areas of the United States, but this risk is not limited to that. The same process that we see under way in Mexico could extend to the United States; logic dictates that it would.

The current issue is control of the source of drugs and of the supply chain that delivers drugs to retail customers in the United States. The struggle for control of the source and the supply chain also will involve a struggle for control of markets. The process of intimidation of government and police officials, as well as bribing them, can take place in market towns such as Los Angeles or Chicago, as well as production centers or transshipment points.

Cartel Incentives for U.S. Expansion

That means there are economic incentives for the cartels to extend their operations into the United States. With those incentives comes intercartel competition, and with that competition comes pressure on U.S. local, state and, ultimately, federal government and police functions. Were that to happen, the global implications obviously would be stunning. Imagine an extreme case in which the Mexican scenario is acted out in the United States. The effect on the global system economically and politically would be astounding, since U.S. failure would see the world reshaping itself in startling ways.

Failure for the United States is much harder than for Mexico, however. The United States has a gross domestic product of about $14 trillion, while Mexico’s economy is about $900 billion. The impact of the cartels’ money is vastly greater in Mexico than in the United States, where it would be dwarfed by other pools of money with a powerful interest in maintaining U.S. stability. The idea of a failed American state is therefore far-fetched.

Less far-fetched is the extension of a Mexican failure into the borderlands of the United States. Street-level violence already has crossed the border. But a deeper, more-systemic corruption — particularly on the local level — could easily extend into the United States, along with paramilitary operations between cartels and between the Mexican government and cartels.

U.S. Secretary of Defense Robert Gates recently visited Mexico, and there are potential plans for U.S. aid in support of Mexican government operations. But if the Mexican government became paralyzed and couldn’t carry out these operations, the U.S. government would face a stark and unpleasant choice. It could attempt to protect the United States from the violence defensively by sealing off Mexico or controlling the area north of the border more effectively. Or, as it did in the early 20th century, the United States could adopt a forward defense by sending U.S. troops south of the border to fight the battle in Mexico.

There have been suggestions that the border be sealed. But Mexico is the United States’ third-largest customer, and the United States is Mexico’s largest customer. This was the case well before NAFTA, and has nothing to do with treaties and everything to do with economics and geography. Cutting that trade would have catastrophic effects on both sides of the border, and would guarantee the failure of the Mexican state. It isn’t going to happen.
The Impossibility of Sealing the Border

So long as vast quantities of goods flow across the border, the border cannot be sealed. Immigration might be limited by a wall, but the goods that cross the border do so at roads and bridges, and the sheer amount of goods crossing the border makes careful inspection impossible. The drugs will come across the border embedded in this trade as well as by other routes. So will gunmen from the cartel and anything else needed to take control of Los Angeles’ drug market.

A purely passive defense won’t work unless the economic cost of blockade is absorbed. The choices are a defensive posture to deal with the battle on American soil if it spills over, or an offensive posture to suppress the battle on the other side of the border. Bearing in mind that Mexico is not a small country and that counterinsurgency is not the United States’ strong suit, the latter is a dangerous game. But the first option isn’t likely to work either.

One way to deal with the problem would be ending the artificial price of drugs by legalizing them. This would rapidly lower the price of drugs and vastly reduce the money to be made in smuggling them. Nothing hurt the American cartels more than the repeal of Prohibition, and nothing helped them more than Prohibition itself. Nevertheless, from an objective point of view, drug legalization isn’t going to happen. There is no visible political coalition of substantial size advocating this solution. Therefore, U.S. drug policy will continue to raise the price of drugs artificially, effective interdiction will be impossible, and the Mexican cartels will prosper and make war on each other and on the Mexican state.

We are not yet at the worst-case scenario, and we may never get there. Mexican President Felipe Calderon, perhaps with assistance from the United States, may devise a strategy to immunize his government from intimidation and corruption and take the war home to the cartels. This is a serious possibility that should not be ruled out. Nevertheless, the events of last week raise the serious possibility of a failed state in Mexico. That should not be taken lightly, as it could change far more than Mexico.

The antihero
05-15-2008, 10:05
Mexico Under Siege

By MARY ANASTASIA O'GRADY

February 25, 2008;

Mexico City

Perhaps it is a sign of a maturing electorate that Barack Obama's past drug use has not become a disqualifying factor in his bid for the presidency. It may signify that Americans are beginning to view the intake of mind-altering substances as a private decision.

For those who embrace the notion of personal responsibility, such a change in public attitudes might be considered progress. But in Mexico, what suggests an increase in tolerance of illegal drug use in the U.S. has a tragic flipside: the gut-wrenching violence that arises when demand meets prohibition. This country is paying dearly for that contradiction.

Under prohibition, only criminals can serve the market for illegal narcotics. And they have a lot of incentive to do so since prohibition pushes prices up. These market dynamics have given rise to transnational crime networks -- modern, savvy businesses run by ruthless killers bent on preserving their income. Anyone who tries to get in the way risks becoming a statistic. Last year in Mexico there were 2,713 homicides attributable to organized crime, up from 2,120 in 2006 -- according to the intelligence arm of the country's attorney general.

It's a pretty grim picture. Yet there is at least one man in Mexico who believes that it doesn't have to be this way. His name is Eduardo Medina Mora, and 14 months ago he chose to accept what some would regard as mission impossible: taking on the job of attorney general with the express goal of restoring order to a nation turned upside down by organized crime.

I interviewed him last year, just 100 days into his new job, and I met with him again two weeks ago to take a reading on progress. He reports that the Mexican state is reasserting itself, though he also warns that the battle is far from won.

Mr. Medina Mora suffers no illusions about his office's capacity to shut off the supply of drugs to the U.S., or for that matter in Mexico, where drug use is on the increase. That's a welcome relief: After decades of a war on drugs claiming thousands of innocent lives, poisoning institutions in developing countries, and raising the incentive for pushing narcotics on children -- all the while delivering not a modicum of success -- the argument for attacking supply to end demand is by now tedious.

Instead, Mr. Medina Mora is a realist. "The objective," he says, "cannot be destroying narcotrafficking or drug-related crime, because demand is inelastic." "It is very important not to lose perspective on the goal," he tells me. "Trying to get rid of consumption and trafficking is impossible, as a bold objective."

This in no way implies surrender on his part. What's important, he says, is that the goal be clearly understood. Instead of focusing on supply, he is concentrating on the suppliers, and specifically their ability to run business empires. It's about removing "the enormous economic and fire power" of the cartels which threaten the Mexican democracy, and "recovering the territory [controlled by organized crime] for the people and the state." This view is not unlike that of Colombia's President Álvaro Uribe, who has led the fight to end the tyranny of organized crime in some parts of his country.

In Mexico, Mr. Medina Mora continues, "there are areas where organized crime disputes the state's exclusive use of force and its power to collect taxes. They are not only shipping drugs but they are involved in extortion, prostitution rings, smuggling goods and people, stealing Pemex [the state-owned oil company] products, and forcing legal businesses to pay protection taxes."

The attorney general's strategy has been to hit these businesses where it hurts most: in their pocketbooks. By studying the way the narcotics market works, his office has used "operational mapping and mapping of their supply and distribution routes" to "put obstacles in the way and block traditional flows." This approach involves tighter controls on air traffic, better technology and smarter inspection systems for shipments from South America.

Mr. Medina Mora says the plan is working, and rattles off a string of captures and seizures, including some 10 drug-trafficking planes -- even one DC-9 -- large enough to carry up to five metric tons of cocaine. Last year he reeled in a 23.5 metric-ton shipment of cocaine coming by sea from the Colombian port of Buenaventura, and broke up a Mexico City operation that allegedly supplied "meth" producers annually with over 100 metric tons of the precursor pseudoephedrine.

The attorney general is rightly proud of this record, and says that lower availability has meant sharp increases in the street price of both cocaine and "meth" in 38 cities in the U.S. -- according to U.S. officials. Still, the seizure scorecard does nothing to prove progress in the battle against drug use, any more than body counts reveal who is winning a war. And as prices rise so do cartel incentives, particularly when demand is notoriously resistant to change.

But going by Mr. Medina Mora's measure of success -- which is damage to organized crime such that it ceases to dominate Mexican territory and society -- there may be progress. Unfortunately, he says, proof of that could come in the form of more violence in the short run. "When this kind of criminal network begins to collapse, the criminals go back to more primitive methods of crime -- kidnapping, car theft and extortion. They fragment and lose control; cells start operating on their own and fighting with each other. Turf becomes very important."

As if to prove his point, two days after we talked a bomb exploded in the trendy neighborhood of Zona Rosa here. A government investigation is ongoing, but there is reason to believe that the device was meant as payback to law enforcement for the arrest two days earlier of seven members of the powerful Sinaloa cartel.

Mr. Medina Mora believes more could be done with greater international cooperation against money laundering, and with a U.S. effort to stem the flow of high-powered weapons into Mexico. Another way, which he is too polite to mention, would be for U.S. authorities to acknowledge that under present policies they are losing their drug war.

HOLLiS
05-15-2008, 10:26
For the first time in Mexico history they have a pretty honest president. Calderon is doing a good in cleaning up corruption. Sort of comparison to
the roaring twenties in Chi-town. Seems the Mexican military has the least amount of corruption from the cartels. Local PDs are probably the worse.

I see this as a step forward. The cartels are in some ways like Hez in Lebanon, their state with in a state.

ZonieDiver
05-15-2008, 11:35
For the first time in Mexico history they have a pretty honest president. Calderon is doing a good in cleaning up corruption. Sort of comparison to
the roaring twenties in Chi-town. Seems the Mexican military has the least amount of corruption from the cartels. Local PDs are probably the worse.

I see this as a step forward. The cartels are in some ways like Hez in Lebanon, their state with in a state.

A major part of the solution to our illegal immigration issue is Mexico dealing with their multitude of problems. As one who frequently travels into Sonora, I am usually reassured when Mexican soldiers are manning checkpoints instead of Federal-Judicial police or other groups. My companions are often put-off by a smallish "indio" soldier wielding an FN/FAL almost his size, but for some reason, I am calmed.

jatx
05-15-2008, 13:47
Felipe Calderon was in my class at Harvard, and was a student in a course with David Gergen for which I was the teaching fellow. Mexico needs more men like him - very, very bright, sincere and public spirited.

HOLLiS
05-15-2008, 14:13
Felipe Calderon was in my class at Harvard, and was a student in a course with David Gergen for which I was the teaching fellow. Mexico needs more men like him - very, very bright, sincere and public spirited.

I think we could use men like him in the states too, sure beats our two Demo. Candidates for pres.

nmap
05-17-2008, 07:26
I fully expect the Mexican nation to face severe challenges - which will hit in about 5 years. In addition to the issues of crime and violence, the decline in production from the Cantarell field is steep - such that exports (an important source of revenue for the Mexican government) may cease in that time.

As I recall, Mexico's government gets about 36% of its revenue from Cantarell, so the implications of decline are troubling.

Here's a brief discussion in Investor's Business Daily: LINK (http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=295830940743160)