October 3, 2008

Narco 101

Frontera NorteSur

The news from Mexico does not cease to startle, with the latest story seemingly outdoing the previous one. Two dozen execution victims are found slain in a rural field. Grenades are tossed into crowds celebrating the country’s Independence Day in Morelia, Michoacan, a colonial city designated a world heritage site. A long-imprisoned kingpin launches a website with cool photos like any other star.

In the Yucatan, a privately-owned airplane that crashes with more than three tons of cocaine aboard was once connected to the CIA’s “rendition” flights of suspected Middle Eastern terrorists, according to European Union investigators. And just like the plane that dropped from the sky, the story quickly vanishes from the radar screen.

What ties these stories together, of course, is their connection to the murky world of illegal drug trafficking.

Mexican media feature sensational stories about drugs and some of the people involved in the business. Yet there is little systematic reporting and analysis about the breadth and scope of the trade, the political economy of drug trafficking. Given the clandestine nature of the narco-world, as well as the risks entailed in covering the beat, the dearth of hard-nosed business reporting is not surprising. But pressing questions simmer beneath the ferocity of the conflict that is turning Mexico upside down. How much money is at stake? How many people are involved? Who benefits and who doesn’t? Who controls what? Why are drugs seemingly everywhere?

Now and then, fragments of an admittedly elusive truth filter out into the press. Mexican Defense Secretary Guillermo Galvan Galvan, for example, reportedly told a group of Mexican congressmen recently that about 500,000 people were involved in Mexico’s narcotics trade.

According to the account, the largest group, 300,000 people, is made up of farmers who cultivate prohibited crops, which in Mexico’s case means marijuana and opium. The second biggest group numbers about 160,000 people who operate as street dealers, transporters, distributors and look-outs. A smaller stratum consists of approximately 40,000 individuals who occupy different leadership positions within the drug cartels.

Virtually every nook and cranny of Mexican society is touched by the narco. To one degree or another, the financial, manufacturing, agricultural, construction, retail, popular entertainment, and tourism sectors of the economy are all magnets of narco-dollars.

Earlier this year, Mexican Senator Santiago Creel, a former Interior Minister during the presidential administration of Vicente Fox (2000-2006), triggered polemics when he contended that Mexican banks were money-laundering outlets.

“Let’s not kid ourselves,” Creel quipped. “Money from drug trafficking isn’t traveling all over the country in suitcases. It is deposited in banks.”

On a recent visit to Ciudad Juarez, former Mexican UN Ambassador and leading opposition politician Porfirio Munoz Ledo, offered his analysis of the narco-phenomenon. Insisting that drug traffickers operate from high spheres of power, Munoz Ledo expounded on the social and economic hierarchy.

“At the bottom there are assassins, dealers, collaborators, dirty cops, extortionists and murder victims,” said the historic co-founder of the center-left Party of the Democratic Revolution. “But above them, there is a zone, which is neither legal nor illegal, and which exists thanks to the inter-woven complex of institutions recognized by the law- stores, banks, customs and politicians.”

Munoz Ledo said the drug cartels owe their power to the prevalence of an informal economy pumped up by the corruption and the weakness of the Mexican state.

Eight or nine major crime syndicates purportedly control the production, distribution and sale of illegal drugs in Mexico. Their disputes and pacts are fluid, changing with the political circumstances and market conditions. Flashed on television or carried in the newspaper, the names and faces of the supposed bosses are well-known in Mexico, Reputedly wildly wealthy outlaws, the capos are legends in their own time. But given the corruption and involvement of political actors and government officials in the business, the narrative that depicts drug lords as belligerent criminals challenging a moral but besieged state is a questionable one.


In a 2007 interview with Proceso magazine, Ricardo Garcia Villalobos, president of Mexico’s agrarian reform court, credited the expansion of the drug economy on the effects of the North American Free Trade Agreement (NAFTA).

According to Garcia, NAFTA favored rural drug production as government subsidies for legal crops were reduced; guaranteed prices for crops like corn were eliminated with the disappearance of the government-owned CONASUPO buying and distribution system; energy supports were slashed; and a government-owned fertilizer company, FERTIMEX, was privatized.

Implemented by a coterie of US-educated “technocrats,” the NAFTA-inspired agricultural reform mirrored in striking ways policies put into motion in the United States decades earlier, when the Steagall Amendment expired and the 1953 Farm Act was passed. Price guarantees to farmers were reduced, and a group called the Committee for Economic Development (CED) caught the United States Department of Agriculture’s ear. Largely successful, the CED’s objectives were to eliminate the US’ “surplus” rural population, encourage corporate farming and let the marketplace work its magic.

In Mexico, the surplus agricultural population slated for elimination in NAFTA was supposed to find work in the factories that assemble goods for export to the United States. The consequences of the free trade accord were felt in places like the state of Veracruz, a bountiful land known for its coffee, vanilla, sugar, and citrus crops. Barely registering a blip on the national migrant registry in 1993, Veracruz became the fifth largest contributor to Mexico’s migrant stream by 2000. Hundreds of thousands of Veracruzanos slipped across the US border or landed minimum wage jobs in the export plants of Ciudad Juarez. Back at home, drug cartels, especially the Gulf Cartel, expanded their hold on the populace.

In the Mexican countryside, meanwhile, cultivating contraband became a strategy of personal and economic survival for many small growers.

Cruz Lopez Aguilar, leader of semi-official Mexico’s National Farmers Confederation, charged this year that drug traffickers were extorting or pressuring rural producers to sell or rent their lands. Lopez cited the case of Diaz Ordaz, Tamaulipas, where he said traffickers pay $1,300 per hectare to grow dope-far more than farmers receive in subsidies from the Procampo program to grow legal crops.

“This situation,” Lopez added, “has occurred in the traditional mountainous zones, including Guerrero, Oaxaca, Chihuahua, Tamaulipas, Sinaloa.

Drugs and Policy Solutions of Choice

Mexican drug cartels control the shipment of cocaine into the United States and increasingly into Europe as well. An estimated market of 4.5 million European coke consumers assures a steady flow of blow to the Old World of Columbus and the other conquistadors. And this month’s exposure of alleged Mexican methamphetamine traffickers in Argentina only underscores the ability of drug organizations to carve out new niches.

As Mexican cartels diversify their international market and consolidate their internal one, a lot of funny money is circulating on the streets and in the suites. Again, because of the illegal and secret character of drug trafficking, no hard, publicly accepted number for the overall value of the Mexican drug business exists. Various estimates range widely from $10 billion to $50 billion yearly, the lower number comparable to annual revenue from international tourism and the higher one roughly equivalent to the country’s combined income from migrant remittances and direct foreign investment in 2007.

The impact of the drug business is even greater than the revenues from illegal substances suggest, since many drug traffickers have also branched out to other types of illicit activities, including pirating DVDs, illegally harvesting timber and kidnapping-for-ransom.

Income from drugs and the wider underground economy are never considered in official sets of economic indicators, though more than a few analysts have contended that the Mexican economy would collapse without the infusion of easy money.

Drugs and the Dilemmas of Political Choice

The illegal drug business in Mexico boasts decades as a major economic activity, but the first decade of the 21st century could well go down in history as watershed years for the business. Riding to office in 2000 on a platform of good government and democratic reform, President Vicente Fox, the first opposition politician elected in 71 years, promised anxious Mexicans many changes.

Seven years later, at the beginning of the Calderon administration, Coahuila Governor Humberto Moreira, a member of the former ruling PRI party, joined with others in openly blaming the explosion of the drug business on the shortfalls of the Fox administration.

“With the government of change, many things changed,” Moreira said. “Among them drug trafficking grew exponentially.”

Moreira, nonetheless, was initially confident that President Felipe Calderon’s drug control program, centered on law enforcement by the Mexican military, would bear fruit.

As the Calderon administration nears its second anniversary in office, many are skeptical that a law-and-order crackdown will have any real success. Taken to its full logic, emphasizing law enforcement implies locking up or processing hundreds of thousands or even millions of people in an already dysfunctional justice system.

Amid drug-driven violence and terror, proposals to reexamine alternatives to Mexico’s current drug control policy are gaining ground. In recent congressional testimony, federal public safety czar Genaro Garcia Luna conceded that drug legalization merits study and debate. On the other hand, Health Secretary Jose Angel Cordova Villalobos affirmed the idea is off the table.

Pointing to studies that show a connection between drug usage and memory retention difficulties in young people, Cordova said legalizing drugs could have an adverse public health effect. “From a health point of view, it would be totally pernicious, totally negative,” Cordova said. “I am not in agreement.”

Still, as in the United States, drug control policy in Mexico is an urgent matter that will demand fresh approaches in the years ahead.

Reprinted from Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico.

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