Mexico in Crisis, The Struggle for Balance

Politics / Mexico Apr 08, 2010 - 06:37 PM

This week’s Geopolitical Intelligence Report provided a high-level assessment of the economic forces that affect how the Mexican people and the Mexican government view the flow of narcotics through that country. Certainly at that macro level, there is a lot of money flowing into Mexico and a lot of people, from bankers and businessmen to political parties and politicians, are benefiting from the massive influx of cash. The lure of this lucre shapes how many Mexicans (particularly many of the Mexican elite) view narcotics trafficking. It is, frankly, a good time to be a banker, a real estate developer or a Rolex dealer in Mexico.

However, at the tactical level, there are a number of issues also shaping the opinions of many Mexicans regarding narcotics trafficking, including violence, corruption and rapidly rising domestic narcotics consumption. At this level, people are being terrorized by running gunbattles, mass beheadings and rampant kidnappings — the types of events that STRATFOR covers in our Mexico Security Memos.

Mexican elites have the money to buy armored cars and hire private security guards. But rampant corruption in the security forces means the common people seemingly have nowhere to turn for help at the local level (not an uncommon occurrence in the developing world). The violence is also having a heavy impact on Mexico’s tourist sector and on the willingness of foreign companies to invest in Mexico’s manufacturing sector. Many smaller business owners are being hit from two sides — they receive extortion demands from criminals while facing a decrease in revenue due to a drop in tourism because of the crime and violence. These citizens and businessmen are demanding help from Mexico City.

These two opposing forces — the inexorable flow of huge quantities of cash and the pervasive violence, corruption and fear — are placing a tremendous amount of pressure on the Calderon administration. And this pressure will only increase as Mexico moves closer to the 2012 presidential elections (President Felipe Calderon was the law-and-order candidate and was elected in 2006 in large part due to his pledge to end cartel violence). Faced by these forces, Calderon needs to find a way to strike a delicate balance, one that will reassert Mexican government authority, quell the violence and mollify the public while also allowing the river of illicit cash to continue flowing into Mexico.

An examination of the historical dynamics of the narcotics trade in Mexico reveals that in order for the violence to stop, there needs to be a balance among the various drug-trafficking organizations involved in the trade. New dynamics have begun to shape the narcotics business in Mexico, and they are causing that balance to be very elusive. For the Calderon administration, desperate times may have called for desperate measures.

The Balance

The laws of economics dictate that narcotics will continue to flow into the United States. The mission of the Mexican drug-trafficking organizations and the larger cartels they form is to attempt to control as much of that flow as they can. The people who run the Mexican drug-trafficking organizations are businessmen. Historically, their primary objective is to move their product (narcotics) without being caught and to make a lot of money in the process. The Mexican drug lords have traditionally attempted to conduct this business quietly, efficiently and with the least amount of friction.

When there is a kind of competitive business balance among these various organizations, a sort of detente prevails and there is relative peace. We say relative, because there has always been a level of tension and some level of violence among these organizations, but during times of balance the violence is kept in check for business reasons.

During times of balance, the territorial boundaries are well-established, the smuggling corridors are secure, the drugs flow and the people make money. When that balance is lost and an organization is weakened — especially an organization that controls one or more valuable smuggling corridors — a vicious fight can develop as other organizations move in and try to exert control over the territory and as the incumbent organization attempts to fight them off and retain control of its turf. Smuggling corridors are geographically significant places along the narcotics supply chain where the product is channeled — places such as ports, airstrips, significant highways and border crossings. Control of these significant channels (often referred to as “plazasâ€