THE THIRD LARGEST DRUG CARTEL IN MEXICO IS STRUGGLING:

Sarah,

The top three drug cartels in Mexico are the Gulf Cartel, the Sinaloa Cartel, and the Zetas.  This week, the boss of the Gulf Cartel was arrested.  This event signals major changes ahead.  Here is a breakdown:

Quick History:

In the 1980’s, American authorities shut down drug smuggling routes through the Caribbean and Florida.  This forced Colombian suppliers to use Mexican middlemen to get their drugs into America.  One of these middlemen, the Guadalajara Cartel, began investing in their own operation and soon became the most dominant cartel in Mexico.

When the leader of the Guadalajara Cartel died, the Sinaloa Cartel, the Tijuana Cartel, and the Gulf Cartel split the smuggling routes of the original operation and grew to be their own powerful entities. 

In 1999, elite soldiers in a special unit of the Mexican Army deserted and were hired by the Gulf Cartel as bodyguards and assassins.  In 2010, the soldiers broke away from the Gulf Cartel and started their own operation.  They call themselves the Zetas.

Since 2010, these three major players have dominated the Mexico’s drug trade.  The Sinaloa Cartel is the largest and most powerful.  The Zetas are the newest, most aggressive, and most violent.  The Gulf Cartel is still powerful, but seems to be rapidly disintegrating.

Recent Arrests:

The arrest of the Gulf Cartel’s leader, Jorge Eduardo Costilla Sanchez, signals only the most recent struggle for the organization.  The leadership has been decimated in recent years: one captain is in jail in Texas, one captain was arrested the week before, and one captain was killed in a 2010 shootout with the Mexican Army.

With their top leadership eliminated, it will be tough for the Gulf Cartel to continue fighting off the cartels.

Power Vacuum:

The Gulf Cartel controls prime assets and smuggling routes.  People are definitely going to fight over them.

First, there will likely be infighting among the second tier of Gulf Cartel leadership to obtain the top spots.

Second, the Zetas and the Sinaloa Cartel will be fighting to take over Gulf territory.

The Zetas have been expanding rapidly but lately there has been evidence of dissension in their ranks.  The more organized Sinaloa Cartel might have the advantage.

Politics:

Mexico has recently elected a new President.  There is a question as to how he will handle Mexico’s drug violence.  Mexico’s last administration focused on pursuing the top leadership in each cartel.  This strategy was criticized as ineffective because it did not focus on the source of drug cartel power and merely replaced one drug lord with another.  We will see if Pena Nieto (the new president) does anything different.

(click here for more detailed information on Mexican Drug Cartels)

THREE RECENT EXAMPLES OF MEXICO’S POLICE FORCE COMMITTING HORRIBLE ACTS:

Sarah,

For the last 6 years Felipe Calderon, Mexico’s outgoing president, spent most of his time trying to clean up Mexico’s police force.  Unfortunately, drug cartels still pay better than the state and corruption remains omnipresent.  Here are three recent incidents in which the “Federales” have committed horrible acts:

1.  This month, an SUV with a United States diplomatic license plate was attacked by plain clothes policemen wielding machine guns.  The car was traveling to a Mexican army base south of Mexico City.  Inside the SUV were two CIA agents; both were injured but survived.  The Mexican Police maintain that the SUV did not stop at a police checkpoint.  Even if that were true, it is unclear if police procedure is to pursue the car and riddle it with bullets from an AK-47, which coincidentally, is not even the gun the Mexican Police use.  Further, ambushing cars at police checkpoints is a common gangland strategy in Mexico. Supposedly, the driver, A CIA agent, saved his passenger’s lives with impressive evasive maneuvers.

2.  Two months ago, two different groups of Mexican police officers engaged in a running shootout against each other in Mexico City’s airport.  One group of officers was trying to arrest the other group of officers for their involvement in a cocaine smuggling operation.  Three officers were killed and after a subsequent investigation revealed the level of corruption at the airport, the entire police unit attached to the airport was fired.

3.  Last September, a businessman in Ciudad Juarez accused police officers of kidnapping him and extorting money from him.  Recently, he was stabbed to death and his corpse was covered with gasoline and set aflame.

In a recent poll, only 8% of Mexicans said they felt confident in the police.

Bottom line: The airport story is blowing my mind.  I just imagine waiting for my Southwest flight and seeing a gunfight erupt between rival airport police in front of a CPK Express.

MEXICO’S RICHEST CITY IS SUFFERING HUGE INCREASES IN CRIME:

Sarah,

Oh man, there are a lot of horrible stories about Mexico’s drug war.  This one is particularly depressing. 

The city of Monterrey is Mexico’s most successful city.  Here are some details:

- The city’s GDP per capita is $20,000 per year.  This is the highest rate in the country and is nearly double Mexico’s GDP per capita.  As a point of reference, America’s GDP per capita is $48,000 per year.  Mississippi, America’s poorest state, has a GDP per capita of about $33,000 per year

(GDP stands for Gross Domestic Product.  Gross Domestic Product means the total economic output of an area.  GDP per capita takes the total economic output of an area and divides it by the number of people in area.  Thus it is a rough calculation of an area’s standard of living.)

- Monterrey is the industrial heart of Mexico and hosts many of Mexico’s most important companies.

- Monterrey has Mexico’s second highest rate of foreign investment.  (The rate at which foreigners invest money into a certain area)

- Monterrey has a great education system and impressive infrastructure.

- Monterrey is the third largest city in the country.

What Has Happened?

Crime has exploded.  The statistics are absolutely staggering:

-From 2010 to 2011 to murder rate increased 300%.  Let’s put that number in perspective.  Last year 300 people were murdered in Los Angeles.  A 300% increase would bring L.A.’s murder rate to 900 murders in only one year.

-Media outlets that report on crime have been attacked.  Last month, drug gangs torched the offices of a Monterrey newspaper named El Norte. (More than 80 Mexican journalists have been killed this year.)

- In May, 49 bodies were dumped near a roadside on the outskirts of the city.  The heads, hands, and feet were hacked off of each body.  (As another point of reference, there were only 38 murders in the entire city in San Diego last year.)

- Last August, 52 people were killed when drug gangs attacked a crowded casino.

- The historic center of the city, which used to be a center for nightlife, has been more or less abandoned.  Only one restaurant remains open.

Why Has This Happened?

All drug cartels are bad, but the Zetas are the worst.  They are by far the most violent drug gang in Mexico and are more prone to engage in other crimes such as kidnapping and extortion.  

The Zeta’s used to be the bodyguards of the larger Gulf Cartel.  They broke away from the Gulf Cartel in 2010 and have since been fighting Mexico’s more established gangs for control of Monterrey. 

Bottom line: The crazy part is that Monterrey is not even Mexico’s most violent city.  It is merely the latest casualty in a long, tragic war.

WHAT THE HELL IS NAFTA; A SHORT EXPLANATION OF FREE TRADE

Sarah,

Globalization is relentless.  A starting point in understanding globalization is to understand “free trade”.  NAFTA (North American Free Trade Agreement) is a classic example of a free trade agreement.

NAFTA:

The North American Free Trade Agreement was executed between Mexico, Canada, and the United States in 1994.  The basic idea of the agreement is to eliminate barriers to trade.  The most common barriers to trade are tariffs.  Tariffs are taxes on imports that often work to protect domestic companies from global competition. (An import will cost extra money if it is taxed and therefore the domestic product will be cheaper)  The idea of the agreement is that if two (or more) countries eliminate all tariffs, trade between those two countries will expand.

What Are The Arguments For And Against Free Trade?

There are several arguments in favor of free trade.  First, it lowers the price of goods and services.  For example, I just bought a laptop for $300.  I highly doubt I could find a laptop for that price that was made in America.  Second, companies can become more efficient.  Cheaper production costs created by importing cheap goods from overseas lead to higher profits.  Third, lower prices and more efficient companies bolster overall economic growth.

The main argument against free trade is simple: it screws American workers.  American workers cannot compete with their Chinese counterparts that are working for 75 cents an hour.  When Chinese workers are hired, the American workers that had been doing their jobs are fired. 

The second argument is that free trade hastens the destruction of the environment by creating more goods and shipping them around the world.

Could We Stop This Trend If We Wanted To?

Probably not.  By now, most companies have supply chains that are dependent on the system.  To stop free trade now would seriously short circuit their operations.

Are Politicians Doing Anything To Slow The Trend?

Definitely not.  Obama approved free trade deals with Panama, Colombia, and South Korea.  Despite all the grumbling about China’s unfair trade practices, the United States is yet to hit China with any significant tariffs.

Are American Workers Really Getting Screwed?

You could argue it.  Most Americans receive health care through their jobs so getting laid off hurts.  Further, our education system isn’t really preparing our workers to compete internationally.

The flip side of this argument is that our education and health systems are not the problem; our tax code is.  Santorum, for example, made the argument that if you stop taxing manufacturers in America, the cost of employing American workers will fall below that of employing workers overseas.

Further, some people argue that jobs lost in manufacturing are gained in other sectors of the economy.  For example, Apple computers are built in China but the growth of the company allows it to hire more Americans in America.

Lastly, some people argue that the lost jobs would be lost no matter what because businesses that didn’t cut costs would go out of business and be forced to lay off their entire staff.

Who is right?  I have no idea.

Bottom line: Globalization is inescapable.  We can try to soften its impact but cannot reverse the trend.

THE SINALOA DRUG CARTEL IS FIRMLY IN CONTROL OF THE NORTH AMERICAN DRUG TRADE

Sarah,

Over the last six years, Mexican authorities have waged a war on the drug cartels that dominate Mexico.  50,000 people have been killed and depressingly little has changed.  The Sinaloa Cartel, Mexico’s biggest and most powerful cartel, remains firmly in control.  Here is some background on the organization.

A Very Quick History:

In the 1970’s, Colombian drug cartels dominated the drug trade.  They shipped drugs through the Caribbean and up through Florida.  After the United States authorities beefed up security along the Caribbean route, the Colombians started using Mexican gangs as middlemen.  They would fly the drugs into Northern Mexico and employ the Mexicans to bring drugs over the border into California, Arizona, New Mexico, and Texas.

With this new income, the Mexican gangs began investing in their own operations.  By the 1980’s, the Guadalajara Cartel began to rival the power of the original Colombian cartels.  When the leader of the Guadalajara Cartel died, the organization splintered into three rival cartels: the Tijuana Cartel, Juarez Cartel and the Sinaloa Cartel.

The Sinaloa Cartel has since risen to prominence and is headed by Joaquin “El Chapo” Guzman.  El Chapo is now 55 and worth over a billion dollars, making him one of the richest men in the world.

Scope:

The scope of the El Chapo’s operation is breathtaking.  The Sinaloa Cartel and their allies account for about half of all drugs brought into America.  Although estimates as to the Cartel’s yearly income vary greatly, authorities figure that the Cartel can buy a kilo of cocaine in Peru for $2,000 and sell it in the United States for over $100,000 once it is broken down into grams.  In terms of volume, the figures are equally incredible.  Recently, 252 TONS (504,000 pounds) of the chemical used to manufacture meth were found on a Chinese ship that was impounded at a Mexican port.

Methods:

The cartel’s methods can be grouped into innovation and bribery.

Innovation: The cartel uses submarines, tunnels, and even catapults to bring drugs into the country.  They grow marijuana in National Forests in the US and import heroin by hiding it inside individual chili peppers.

Bribery: Bribery is present in all levels of Mexican government.  Although El Chapo was briefly incarcerated, most of the prison was on his payroll and when the time was right, he was smuggled out of jail in a laundry basket.  In 2008, a top Mexican drug official was charged with accepting $450,000 in bribes per month.

Rivals:

Most of the violence plaguing Mexico can be traced to rivalries between the Sinaloa Cartel and its rivals.  In addition to fighting the Juarez and Tijuana Cartels that formed after the dissolution of the Guadalajara Cartel, El Chapo is also up against a new group of psychopaths called the Zetas.  The Zetas are former cartel bodyguards that struck out on their own and operate in extortion and kidnapping as well as drug trafficking.  It was this extraordinarily violent group that dumped 49 mutilated bodies on the side of a highway last year.  Currently, there is conspiracy that the Mexican government favors the Sinaloa Cartel because they are slightly less violent and their emerging dominance is the only thing that can bring relative calm back to Mexican cities.

Bottom Line: Don’t buy drugs.

source: http://www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html?_r=1&pagewanted=all  (this article is unreal)