Author Topic: Mexico-US matters  (Read 322378 times)

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Whatsapp narcos?
« Reply #852 on: January 29, 2020, 09:53:19 PM »

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Stratfor: Tracking Mexico's Cartels in 2020
« Reply #855 on: February 04, 2020, 03:09:15 AM »
Tracking Mexico's Cartels in 2020
Scott Stewart
Scott Stewart
VP of Tactical Analysis, Stratfor
14 MINS READ
Feb 4, 2020 | 10:00 GMT

Editor's Note: This security-focused assessment is an excerpt from one of many such analyses found at Stratfor Threat Lens, a unique protective intelligence product designed with corporate security leaders in mind. Threat Lens enables industry professionals and organizations to anticipate, identify, measure and mitigate emerging threats to people, assets and intellectual property the world over. Threat Lens is the only unified solution that analyzes and forecasts security risk from a holistic perspective, bringing all the most relevant global insights into a single, interactive threat dashboard.

Since 2006, Stratfor has produced an annual cartel report that chronicles the dynamics shaping the complex mosaic of organized crime in Mexico and that forecasts where those forces are headed in the coming year. When we began producing these forecasts, the landscape was much simpler, with only a handful of major cartel groups. As we noted in 2013, the long process of Balkanization — or splintering —  of the groups made it difficult to analyze them the way we used to. Indeed, many of the cartels we had been tracking, such as the Gulf cartel, had imploded and fragmented into several smaller, often competing factions.
 
Because of this, we began to look at the cartels by focusing on the clusters of smaller groups that emanate from three distinct geographic areas: Tamaulipas state, Sinaloa state and the Tierra Caliente region (Guerrero and Michoacan). When viewed individually, the daily flow of reports of cartel-related murders and firefights can be overwhelming and often appears senseless. But the violence is not senseless when viewed through the lens of the dynamics driving it. Our intent here is to provide the framework for understanding those forces.
 
This year's report will begin with a general overview of the past year and then examine and provide an update and a forecast for each of those three areas of organized crime. For a detailed historical account of the dynamics that brought the major cartel groupings to where they are today, please read our 2017 report.

A map showing areas of cartel influence in Mexico
2019 in Review —  Mired in Bloody Conflict
The forces that shaped the violence in 2019 were much the same as those in 2018, and as 2020 dawns, the regions are mired in bloody cartel conflicts that show no sign of resolution. Part of the reason is the involvement of powerful external organizations that can supply the money, guns and men to sustain weaker local groups and prevent them from being defeated. This dynamic has been at work for several years in Tijuana and Juarez, where local proxies supported by the Sinaloa cartel and the Cartel de Jalisco Nueva Generacion (CJNG) are locked in bitter battles for control. In Reynosa, the CJNG has thrown its support behind a faction of Los Metros, preventing it from being defeated by the more powerful Gulf cartel faction from Matamoros, attacking from the east, or the Cartel del Noreste (CDN), attacking from the west. But the CJNG is also being vexed by this same phenomenon. The Sinaloa cartel is funding a breakaway CJNG faction in Guadalajara, creating problems for the CJNG in its core area. The Sinaloa cartel is also reportedly backing anti-CJNG forces in Guerrero and Michoacan states.

As a result of these brutal conflicts, murders in Mexico set another record in 2019, hitting 34,582 — and surpassing the record 33,341 of 2018. The rate of increase, however, has slowed from the steep jumps seen during 2015-18. It is important to note that these numbers don't account for the many abducted and slain people whose bodies are buried in clandestine graves, burned or dissolved in acid.
 
Violence has been persistent in border plaza towns such as Tijuana, Juarez, Nuevo Laredo and Reynosa. It has been nearly constant along the interior routes where drugs and precursor chemicals are smuggled, as well as in places where opium poppies and marijuana are grown. Despite this, the cartel groups continue to produce and traffic large quantities of drugs, including South American cocaine and Mexican heroin. But the cartels realize their biggest profit margins in synthetic drugs such as methamphetamine and fentanyl.
 
Last year also saw an increase in the amount of cannabis oil that the cartels are producing and smuggling (often in 5-gallon buckets) into the United States. The oil is a concentrated form of cannabis, making it easier to smuggle than large bales of marijuana. And vaping has opened a market for marijuana cartridges, which can be manufactured using the oil.

Tierra Caliente-Based Cartel Groups
A map showing areas of Tierra Caliente cartel influence in Mexico
Cartel de Jalisco Nueva Generacion (CJNG)
The CJNG is by far the most powerful of the Tierra Caliente-based groups, and it is involved in nearly every part of the country that is currently experiencing elevated violence. In Jalisco, Guerrero, Veracruz and Guanajuato, it is acting directly. In Tijuana, Mexico City, Reynosa and Juarez, it is working with local partners or proxies. The CJNG has aggressively sought control of ports, border plazas and areas where drugs are grown and where fuel is stolen. The government has reported that the CJNG has become the most powerful cartel group in Mexico and that it has a presence in more places than the Sinaloa cartel.
 
In looking from west to east, we see that the CJNG is working with remnants of the Arellano Felix organization (Tijuana cartel) for control of the Tijuana smuggling plaza; is supporting the Chapo Isidro group for control of the smuggling plazas in Sonora state against Sinaloa cartel ally Los Salazar; is supporting La Linea in its efforts to push Sinaloa out of Juarez and the drug-growing areas of Chihuahua state; and is backing a faction of Los Metros as it attempts to maintain control of the Reynosa plaza. Farther south, the CJNG is continuing its bloody campaign in Guanajuato state, where it is fighting the Santa Rosa de Lima cartel, led by Jose Antonio Yepez Ortiz, alias El Marro. The CJNG is also fighting for control of Michoacan and Guerrero states against an array of smaller cartels. In addition, it has pushed into Quintana Roo state, home to the resort cities of Cancun, Playa del Carmen and Cozumel.
 
This avarice has led to the group's leader, Nemesio Oseguera Cervantes, aka El Mencho, being declared public enemy No. 1. The Mexican and U.S. governments have worked with other governments to track down and arrest members of his wife's family, the powerful Valencia smuggling clan, which facilitates money laundering for the group.

Other Tierra Caliente-Based Groups
Tierra Caliente is the most heavily fragmented region in Mexico, with dozens of distinct and often competing organized crime cartels in the states of Michoacan and Guerrero. The implosions of the Beltran Leyva organization, the Knights Templar and La Familia Michoacana resulted in the creation of a number of these groups.
 
In Michoacan, the remnants of the Knights Templar, including Los Viagras, and of La Familia Michoacana, such as La Nueva Familia Michoacana, fight for control of the state with the CJNG. One interesting development this past year was the creation of the Carteles Unidos (United Cartels), a group that combined Los Viagras and a number of smaller Michoacan cartel groups. The Sinaloa cartel may be supporting Carteles Unidos as a way to foil the aspirations of the CJNG in the state.
 
The militant landscape is further complicated by the large number of autodefensas, or self-defense, groups in Michoacan and Guerrero. These heavily armed militias often set up roadblocks and charge tolls. In July, two American citizens were shot dead and their 12-year-old son was wounded when they attempted to run a roadblock in Guerrero state.

Forecast
The CJNG will remain the largest and most aggressive cartel group this year. It will continue to profit handsomely from cocaine and synthetic drugs, and those profits will pay for its far-flung military operations and support for proxy groups. The CJNG can be expected to expand its operations to San Luis Potosi, Torreon, Monterrey and perhaps even Nuevo Laredo.
 
Efforts to roll up its leadership and its financial operations are unlikely to have a major impact on the group. We do expect to see more fractures of the CJNG in 2020, and if Oseguera Cervantes is finally captured or killed, his removal would increase the infighting and splintering. Guerrero and Michoacan will continue to be excessively violent in 2020.

Sinaloa-Based Cartel Groups
a map showing areas of Sinaloa Cartel influence in Mexico
Sinaloa cartel
While a great deal of attention has been paid to the July conviction of Joaquin "El Chapo" Guzman Loera and his life sentence, he isn't the only Sinaloa cartel figure who faced legal problems over the past year. In December, Ismael Zambada Imperial, the son of Guzman Loera's partner and current Sinaloa cartel leader Ismael "El Mayo" Zambada Garcia, was extradited to the United States to stand trial on drug charges. Zambada Imperial was arrested in Mexico in 2014 and convicted on drug and weapons charges. The United States requested his extradition in 2015.
 
Two of his half-brothers have already been convicted in the United States. Jesus Vicente Zambada Niebla was arrested in Mexico in 2009 and extradited in 2010. He was sentenced to 15 years in May 2019 after testifying in the trial of Guzman Loera. With credit for time served, he could be released as early as 2023. Half-brother Serafin Zambada Ortiz was arrested in 2013 as he attempted to cross the U.S. border in Arizona. He was sentenced to 5 1/2 years in prison and released in September 2018.
 
The only son of Zambada Garcia who remains free is Ismael Zambada Sicairos, who is also believed to be involved in the narcotics trade. The U.S. indictment of Zambada Imperial lists his half-brother Ismael Zambada Sicairos; their father; and Ivan Archivaldo Guzman Salazar, the son of Guzman Loera, as co-conspirators.
 
Guzman Salazar along with his half-brother Ovidio Guzman Lopez are known as Los Chapitos (The Little Chapos). They made international headlines in October, when Guzman Lopez was arrested in Culiacan, the capital of Sinaloa. Guzman Salazar mobilized his group's gunmen and laid siege to the city with the support of the forces of Zambada Garcia. These gunmen entered a military housing area and captured some military personnel and their families. They used them as hostages, forcing the government to release Guzman Lopez.

Tijuana Cartel Remnants
The remnants of the Arellano Felix organization (Tijuana cartel) remain divided into two camps. The stronger faction is affiliated with the Sinaloa cartel and is run by the Arzate Garcia brothers, Rene, aka La Rana, and Alfonso, aka El Aquiles. The brothers helped Sinaloa wrest control of Tijuana from the Arellano Felix organization.
 
Their main opposition sometimes refers to itself as the Cartel de Tijuana Nueva Generacion, an acknowledgment of its affiliation with the CJNG. This conflict has been extremely bloody, and the state of Baja California has the second-highest murder rate for Mexican states (76.7 per 100,000).

Juarez Cartel Remnants
The situation in Juarez is quite similar to that in Tijuana. The Sinaloa cartel worked with a splinter group of the Carrillo Fuentes organization (Juarez cartel) to establish a firm foothold in the Juarez plaza. The CJNG is supporting other remnants of the cartel — Nuevo Cartel de Juarez and La Linea — to strike back against Sinaloa and its allies. This struggle also involves the battle for the city of Chihuahua and the drug-growing areas in the mountains of Chihuahua state.
 
Last year it appeared that Sinaloa forces Gente Nueva with support from the Los Salazar organization in Sonora were gaining the upper hand in the mountains of Chihuahua, but the dynamics changed and La Linea began to win back territory. Perhaps one of the highest-profile events tied to this fight was the Nov. 4 ambush of a family in northern Sonora near the Chihuahua border, which resulted in nine dead women and children. Most of those killed were dual U.S. and Mexican citizens.

Remnants of the Beltran Leyva Organization
Fausto "El Chapo" Isidro Meza Flores continues to fight with the Sinaloa cartel. Though his organization hasn't made much headway in gaining control over a larger portion of the drug-growing areas in Sinaloa, it appears to have had more success in taking control of smuggling plazas and fuel theft rackets in Sonora. It is fighting Los Salazar, the Sinaloa faction that has long held power in Sonora.

Forecast
Despite the many challenges the Sinaloa cartel has faced in the courts and on the battlefield in recent years, the organization will remain strong in 2020. El Mayo Zambada Garcia appears to have slowed the fragmentation that has taken a heavy toll on the group since the Beltran Leyva organization split from it in 2008.
 
The CJNG has been working hard with the help of its local allies to undermine the Sinaloa cartel's control of the smuggling plazas stretching from Tijuana to Juarez. The Sinaloa cartel has lost some ground, but it hasn't been decisively defeated in any conflict zone. This is why the battleground cities have remained largely in stasis during 2019, and we don't anticipate a major shift in 2020.

Tamaulipas-Based Cartel Groups
A map showing areas of Tamaulipas cartel influence in Mexico
Gulf Cartel Fragments
Many people, including the U.S. Drug Enforcement Administration, continue to refer to the Gulf cartel as a unified entity, but it is nothing of the sort. It has disintegrated into an array of smaller, competing groups that control smaller pieces of territory, such as Matamoros or a part of Reynosa.

The border city of Reynosa remains a hot spot as several cartel groups vie for control of it. The two main local competitors are splinter groups of Los Metros, formerly a Reynosa-based enforcer group of the Gulf cartel. After the two factions exhausted themselves in years of battle, they reached out to more powerful outsiders for help. One group aligned with the Gulf cartel faction from Matamoros, which is aligned with the powerful Cardenas smuggling clan — the family of former Gulf cartel leader Osiel Cardenas Guillen.

Los Zetas Splinters
Many people continue to refer to Los Zetas as a cohesive entity, but like the Gulf cartel it split from, it is heavily fractured. The Cartel del Noreste (CDN), based in Nuevo Laredo, has also attempted to capitalize on the Los Metros infighting and a push toward Reynosa from the west, but it hasn't been able to make much headway. It has a strong hold on Nuevo Laredo, and the territory it controls stretches into Coahuila and Nuevo Leon. CDN remains at war with another Los Zetas remnant, the Zetas Vieja Escuela (ZVE), or the Old School Zetas, for Ciudad Victoria.

The CDN has aggressively gone after government forces in recent months, specifically the special forces of the state police agency known as the Center for Analysis, Information and Studies of Tamaulipas (CAIET). The CDN has attacked hotels where CAIET forces have stayed in Nuevo Laredo and have ambushed many of their patrols. The CDN and their Tropa del Infierno (Troops From Hell) have suffered serious losses in these confrontations, and their threats are alienating the local population.

Forecast
The battle for Reynosa will continue to rage because of the support from powerful outside actors who have the resources to keep the money, men and guns flowing. In the Monterrey area, violence will increase in 2020 if the CJNG makes a concerted effort to establish its presence in the important logistical hub.
 
The CDN alienation of the local population will likely result in an intelligence windfall. However, we are skeptical that government forces will have the foresight to take advantage of the opportunity. But the weakness of the CDN will be noted by others, and it is quite possible that CJNG, ZVE or some other group will make a move on Nuevo Laredo in 2020.

Implications for Businesses and Organizations
Violence has affected almost every part of Mexico, including areas that are considered generally safer than others, such as upscale neighborhoods and tourist resorts and attractions. Most of the violence has been cartel on cartel or government on cartel, but with the organized crime groups using military-grade equipment, the risk of injury or death for bystanders is considerable. 
 
Moreover, these persistent conflicts rapidly burn through men, weapons and vehicles, forcing the groups to look beyond drug smuggling to augment their incomes. Many have resorted to other criminal rackets, including extortion, human smuggling, kidnapping, cargo theft and hydrocarbon theft. This is taking a heavy toll on businesses operating in conflict areas, forcing some to suspend operations in the states of Guerrero and Guanajuato.
 
We remain concerned that a significant breakdown or implosion of the CJNG could lead to a scramble for control of its territories, including the important commercial center of Guadalajara and the ports of Manzanillo, Lazaro Cardenas and Veracruz. Such a struggle could result in a significant increase in violence in those areas, or a drop in some cities as men and resources are pulled back to fight for control of these core areas.

Crafty_Dog

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G M

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Re: Three associates of El Chapo escape prison
« Reply #857 on: February 05, 2020, 06:52:18 PM »


https://mexiconewsdaily.com/news/3-associates-of-el-chapo-escape-prison/

Does this really count as an escape when you are escorted to your ride like a celebrity leaving the Four Seasons?

DougMacG

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Re: Three associates of El Chapo escape prison
« Reply #858 on: February 06, 2020, 06:35:36 AM »
Does this really count as an escape when you are escorted to your ride like a celebrity leaving the Four Seasons?
[/quote]

They went through 5 sets of doors??!!  Typically these door in maximum security don't have door handles; they are operated one set at a time by guards behind secured glass.

I don't know Mexican law but seems to me if you are a prison guard and help an inmate escape, you should serve his or her sentence until they are recaptured.

I suppose these gangs threaten to kill the families of the guards if they don't assist.

Like G M says, if you are free to go anytime you want in a limousine waiting in front, it would probably be cheaper to hold them in a Four Seasons hotel than in a prison.

Someday we will have a first-world country south of our border?

ccp

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Re: Mexico-US matters
« Reply #859 on: February 06, 2020, 07:13:07 AM »
"I suppose these gangs threaten to kill the families of the guards if they don't assist."

remember this :


https://www.vox.com/policy-and-politics/2019/12/12/20999191/trump-mexican-drug-cartels-terrorist-organizations-mexico-sinaloa-transnational-criminal-trafficking

since this is shot down by Mexico and the leftist media
the terror continues......  unbated really

Crafty_Dog

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WSJ: Mexico Slides towards one man rule
« Reply #860 on: February 25, 2020, 11:48:38 AM »
Mexico Slides Toward One-Man Rule
The president uses his authority to muscle business and suppress dissent.

By Mary Anastasia O’Grady
Feb. 23, 2020 1:55 pm ET


A recent “invitation” to business leaders from Mexican President Andrés Manuel López Obrador to attend a fundraiser at the National Palace was an offer many couldn’t refuse. Some 70 of the Mexican “suits” who showed up reportedly pledged to spend 1.5 billion pesos ($88 million) on government lottery tickets.

About half the tickets in the pot—another 1.5 billion pesos’ worth—remained unsold at the end of the evening. The drawing is scheduled for September, when up to 100 winners will take home 20 million pesos each. The proceeds, if any, will be earmarked for public assistance, which the president says he will allocate to the nation’s ailing hospitals.

It’s unclear whether the scheme can succeed, but the larger problem is that it looks like pay-to-play. Presidential fundraising for pet projects has the whiff of illegality because the state dishes out valuable concessions and no-bid contracts and can let unpaid tax bills slide. Yet when AMLO—the president is known by his initials—does it, no one dares stop him.

The Mexican economy did not grow in 2019 and the standstill is expected to continue this year because business and government investment has collapsed. To understand why, look no further than Mr. López Obrador’s use of executive power to try to make himself the savior of the nation.

AMLO has a utopian vision for Mexico in which he gets to decide what economic fairness looks like and how rich is too rich. Think Bernie Sanders en español. Not all wealthy people are brought low—only the ones who get in the way.

AMLO’s decisions to scrap the construction of a new airport in Mexico City and to force the renegotiation of natural-gas pipeline contracts have received a lot of international attention. His effort to cap salaries at the central bank may violate the Mexican Constitution and is seen as a ploy to chase out qualified technocrats so he can replace them with political loyalists.

This smells bad. Behind the scenes it’s even worse, as “the law” is used to spread terror among opponents. A key tool is the Financial Intelligence Unit, which derives its power from international commitments to combat money laundering. The unit, which is inside the Treasury, is supposed to investigate suspicious financial activity and pass the information to the attorney general. In practice, critics say, it is being used to gain control of institutions that ought to be independent.

Mr. López Obrador remains popular because Mexicans still see in him a guy who is willing to stand up to corruption and crony capitalism. Hot money chasing high interest rates in Mexico has held up the peso, and U.S. ratification of a new North American free-trade agreement has removed a source of market uncertainty.

Yet 15 months into AMLO’s presidency, the weak economy, rampant violence and a breakdown of the public-health system have diminished his popularity. All eyes are now on the midterm elections of July 2021. If his Morena Party and its allies win two-thirds of Congress’s lower house and strong support among the nation’s 32 governors, he will have smooth sailing in the second half of his six-year term. If the opposition surges, he may become a lame duck.

Meantime, he is working to consolidate as much power as possible. The lottery spectacle at the National Palace showcased his muscle. He lavished praise on the tycoons, congratulating them for meeting their moral obligation to contribute to his causes.

Privately many Mexicans snickered about what was seen as a blatant act of extortion. The misuse of the Financial Intelligence Unit at the Treasury is also worrying. It has been employing its power selectively to pressure the president’s adversaries.

According to Article 115 of the banking and credit law and Article 41 of the anti-money-laundering act, officials at the Treasury must safeguard the confidentiality of ongoing investigations. Further, under Mexican law all suspects are entitled to the presumption of innocence. Yet the unit has a record of violating both norms, making public statements of condemnation and freezing the financial assets of the accused and their extended families even before charges are filed and without a judge’s ruling.

The chief of the unit, Santiago Nieto, told me Saturday that the prohibition on speaking about investigations applies only to the attorney general’s office and that he uses his freedom of speech to expose findings. He said freezing assets is an administrative tool to block the moving of money.

But Mexico’s Supreme Court has ruled that freezing assets without a court order is unconstitutional, and the attorney general has complained about the lack of due process. Nevertheless, the weaponization of the unit continues, probably because it gets results.

The head of the regulatory commission on energy and a Supreme Court justice were both named as suspects—along with family members—in possible financial crimes. Both maintained their innocence. But the freezing of assets meant possible financial ruin even if there was eventual exoneration. Neither was ever charged but both resigned. AMLO replaced them with his own handpicked appointees. Tick-tock, Mexico.

Write to O’Grady@wsj.com.

Crafty_Dog

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G M

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Re: Mexico-US matters
« Reply #867 on: March 28, 2020, 08:03:46 PM »
They don't need to build a wall.  How many Americans are going to swim the Rio Grande to get into Mexico? haha

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Re: Mexico-US matters
« Reply #870 on: April 11, 2020, 11:01:17 AM »


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GPF: Mexico's Three Economic Fronts
« Reply #872 on: April 23, 2020, 12:38:43 PM »
April 22, 2020   View On Website
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    Mexico’s Three Economic Fronts Face a Recession
By: Allison Fedirka

Mexico is bracing for a serious economic recession this year, much like the rest of the world. But unlike many other countries, the Mexican government is not meeting the event with an abundance of bailouts, tax breaks or other fiscal measures. Instead, Mexican President Andres Manuel Lopez Obrador (popularly known as AMLO) has opted to stay the course with his plans of austerity and social development funding, much to the chagrin of big business. He has made it clear that his goal for combating the recession is to avoid sovereign debt and mitigate the impact felt by the country’s poor. Lopez Obrador is facing three fronts in his battle against a recession in Mexico: the country’s formal, informal and black market economies. And his decision to focus on propping up and reining in the informal economy through continued social development funding is more than just a continuation of adherence to political policy. It also reflects that the government is unable to effectively address the other two economies on its own.

The Three Economic Fronts

Lopez Obrador’s strategy to confront the economic recession preserves his big-picture plan to “transform” the Mexican economy and wrestles with the fact that the Mexican economy can be clearly divided into three distinct sub-economies, each playing by its own set of rules. The formal economy is characterized by services, finance and high-end manufacturing with intricate supply chains. It generates 77.5 percent of the country’s gross domestic product and is concentrated in the central and northern parts of the country. The informal economy — a “gray zone” not taxed or regulated by the government but still legal — generates 22.5 percent of the country’s GDP and is characterized by precarious employment, basic manufacturing and low wages. It exists in much higher concentrations in the country’s south. The black market economy, run by organized crime, is prevalent throughout the entire country. Its economic contribution is not clearly known given the illicit nature of its activities, but recent estimates put Mexican drug sales to the United States at $19 billion to $29 billion annually. Despite its illegality, the black market injects a massive amount of capital into the economy, which generally speaking is a good thing. On the other hand, it also deters investment and infrastructure development and breeds extortion, corruption and violence. The result is a mixed bag of economic effects that is not easy to define or calculate.
 
(click to enlarge)

AMLO’s proposed solution for dealing with the segmented nature of Mexico’s economy involves diminishing the economic and development disparities across the country through youth education and job training programs, labor-intensive infrastructure projects, support for small businesses, anti-corruption measures and government austerity. In other words, he is attempting to reduce the informal economy and merge it with the formal economy. His approach has been controversial and viewed by the opposition as contrary to the ultimate objectives of developing and growing Mexico’s economy. Indeed, the segmented nature of the country’s economy makes it extremely difficult to pursue a policy that helps one segment without hurting the other two. But in the face of the recession, the government has opted to direct the few funds it has toward the informal sector, an approach that aligns with long-term goals and exists as the most viable short-term solution available.

The Formal Economy: Severe Limits

Mexico’s formal economy has a high degree of exposure to external forces and is therefore largely out of the government’s control. For starters, the Mexican economy is largely dependent on the health of the U.S. economy. Mexican exports to the United States are equivalent to about 31 percent of the country’s GDP, and the United States is the leading supplier of foreign direct investment to Mexico. Remittances, which totaled $36.05 billion last year, are Mexico’s largest source of U.S. dollars, and 95 percent come from senders in the United States.

When the U.S. economy performs poorly (or restricts border crossings), the effects are often amplified in the Mexican economy. The International Monetary Fund expects the U.S. economy to contract 5.6 percent this year, and new unemployment claims in the country at the time of publication stand at 22 million. For Mexico, this means that there are far fewer buyers of Mexican goods and that the country can’t trade its way out of the crisis, even considering the strong decline in the peso’s value relative to the dollar so far this year.

To escape its mild 2019 recession, Mexico had planned to turn to foreign direct investment in 2020. And even before a global recession became imminent, the government was struggling to attract foreign investment over concerns of regulations, crime and general doubts over management. Now, the United Nations estimates that foreign investment will drop by 30-40 percent globally this year. For Mexico, this means investment will be difficult to come by and require fierce competition with others.
Foreign investment is no longer a viable option to stimulate the economy. Lastly, other major financial sources, such as oil and tourism, not only remain out of Mexico’s control but have poor prospects this year. Admittedly, state-owned oil company Pemex has been struggling for years, but even in the company’s best-case scenario, it can do little to address low oil prices, let alone change them. As for tourism, travel restrictions and personal fears mean the cancellation of many summer trips.
 
(click to enlarge)

The Mexican government has offered little to mitigate the recession’s impact on the formal economy because the influence of external factors will outweigh much of what it can offer. The government says it only has about $10 billion available from various rainy day funds. This means the bailouts, tax breaks and fiscal stimulus called for by businesses in the formal sector cannot be executed on a scale that would have an impact on a $1.3 trillion economy. Effectively stimulating an economy takes massive amounts of money, which often means taking on debt — and the concern over government debt in Mexico predates AMLO. The government currently does not have enough reserves to cover its debt in the event of an emergency, and incurring new debt would make matters only worse. Additionally, spending money on the formal economy would largely put the two other major segments of the economy on the sidelines. The government’s financial authorities did loosen liquidity rules on banks, which they assert are well equipped to handle the pending economic crisis, but aside from that, it has taken a largely hands-off approach.

The Informal Economy: Opportunity for Impact

The Mexican government has directed its efforts toward the informal economy because its potential for impact is higher and the informal economy plays a critical role in the workforce. Mexico defines the informal economy as one that includes any economic activity that is legally produced and marketed but the production or distribution units are not formally registered. It also includes all economic activities that operate from family resources, such as micro- and small businesses that are not constituted as companies. Because informal workers tend to have lower-quality jobs, lower wages and no insurance compared to those with formal-sector jobs, they are more vulnerable to recession. And since the latest official figures from the end of 2019 show that Mexico’s informal sector employs 56.2 percent of all workers, a sizable portion of the country’s working population is highly vulnerable to recession.
 
(click to enlarge)

The actions the Mexican government has taken to mitigate the impact of a recession on the country’s economy have focused on supporting the continued employment of informal workers. Earlier this month, the government said it would provide a 25,000-peso ($1,000) credit for small and micro-companies that have retained employees and not reduced wages, offering low interest rates that increase slightly by company size. The plan allows for a million total recipients, though an estimated 5 million will request access, and money will arrive in May and June. This low-interest-rate credit will need to be paid back in three years, with payments starting after the fourth month. Lopez Obrador also announced additional credit for the creation of 2 million more formal jobs this year, but such a project was already in the works prior to the global recession.

One wild card that could impede the government’s task of easing the recession’s impact is remittances, which play a key role in many household incomes, particularly in poor segments of the economy. BBVA estimates that, this year, remittances will decline by 17 percent to $29.9 billion due to the recession and mass unemployment in the United States. Nevertheless, from the government’s perspective, it’s still more cost-effective to support working programs now than deal with millions of people eventually out of work amid economic collapse.

The Black Market Economy: A Very Large Shadow

Though Mexico’s organized crime groups are not often considered in terms of their contribution to economic activity, they must also be factored in to efforts to combat the recession. For better or worse, the large scale and high value of their operations do create jobs and support economic activity at local levels. The pervasive nature of organized crime means it touches the pocketbooks of hundreds of thousands of Mexicans. And these groups are not immune to the recession, though they are positioned better than most to confront it. Like many multinational companies, organized crime groups in Mexico experienced supply chain disruptions with the slowing global economy, particularly with respect to the chemical precursors from China used to make fentanyl. The disruptions hurt major fentanyl suppliers, such as the Sinaloa and Jalisco New Generation cartels.

Meanwhile, alternative revenue flows, including human trafficking, fuel robbing and extortion, are not currently available due to increased border restrictions, low oil prices and businesses going on hold for quarantine. Of course, the addictive nature of drugs means that demand in that area remains. And that, in turn, has meant an increase in price due to supply chain shortages and stricter border measures.

AMLO’s government will have to face the threat of increased social and political encroachment by organized crime. The recession and health crisis have already presented organized crime groups with opportunities to intensify their presence in socioeconomic gaps in place of the government. Big-name cartels like Golf, Jalisco New Generation and Sinaloa have also started community outreach and charity programs to provide locals with goods at a time when supplies and funds are scarce. In this area, AMLO finds himself extremely limited in terms of what he can do to combat organized crime, particularly on the economic end; freezing assets will not reach a sum high enough to stop operations anytime soon. This is one major reason that AMLO reiterated his plans to continue social development funding and welfare programs, which are intended (at least on paper, over time) to undermine the hold that organized crime has on local communities. That said, the president knows this remains a weak point for the government because it cannot throw money around as easily as the cartels.

The Only Real Option

Lopez Obrador was forced to choose sides in preparation for mitigating the impact of Mexico’s deeper recession, and his outlier approach of rejecting stimulus measures reflects the reality of three very distinct economic segments, none of which overwhelmingly dominates the others. He does not have the funds or enough control over the formal economy to risk stimulus; he does not have the reach or security ability to take on organized crime. What remains is the country’s informal sector, where the bang for the buck (or punch for the peso) is larger, and where efforts generally align with longer-term goals of integrating the informal economy into the formal one, thereby improving economic standards for Mexico’s lower socioeconomic classes. This may not be considered the ideal move by many, but it’s AMLO’s only decent option.   





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Re: Mexico-US matters
« Reply #875 on: April 30, 2020, 04:52:51 AM »
"Cartels believed hurting due to partial border closure"

Well they can always have their illegal employees in the US apply for a bail out........

Newsom Como and DeBlasio AOC and the gang
already probably have helped

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Mexico falls 4% on Peace Index
« Reply #876 on: May 06, 2020, 07:22:52 PM »
Mexico falls 4% on peace index due to surge in organized crime
Baja California least peaceful state last year, Yucatán the most peaceful
Published on Wednesday, May 6, 2020
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Peacefulness in Mexico deteriorated 4.3% in 2019, largely due to a 24.3% increase in the rate of organized crime, according to a global think tank.

The Institute for Economics and Peace (IEP) said in its report Mexico Peace Index 2020 that peacefulness has declined 27.2% over the past five years. Published on Tuesday, the report highlighted that the homicide rate in Mexico last year was 28 per 100,000 residents, seven times higher than the global average.

The IEP noted that the rate increase of 1.4% in 2019 represented “a much slower rise than the previous year’s increase of 15.7%” but highlighted that the national violent crime rate increased by 4.7%. The latter increase was mainly driven by an 18.7% rise in the sexual assault rate, the think tank said.

It said that Baja California was the least peaceful state in Mexico last year for a second consecutive year followed by Colima, Quintana Roo, Chihuahua and Guanajuato. Yucatán remains the most peaceful state, followed by Tlaxcala, Chiapas, Campeche and Nayarit.

The IEP said that only seven states have recorded improvements in homicide rates since 2015. “Baja California Sur has achieved the largest improvement, reducing its homicide rate by more than half to stand at 10.3 deaths per 100,000 people,” the report said.

The think tank said that statistical analysis shows that there are four distinct types of violence in Mexico: political, opportunistic, interpersonal and cartel conflict.

The overall economic impact of violence in Mexico last year – the first full year of the new federal government – was 4.57 trillion pesos (US $238) billion, the IEP said, noting that the figure is equivalent to 21.3% of national GDP. Homicides caused just under half of the economic damage.

“The economic impact of violence was nearly eight times higher than public investments made in health care and more than six times higher than those made in education in 2019,” the report said.

“The economic impact of violence was 36,129 pesos per person, approximately five times the average monthly salary of a Mexican worker. The per capita economic impact varies significantly from state to state, ranging from 11,714 pesos in Yucatán to 83,926 pesos in Colima.”

Despite the high cost of rampant violence, the federal government spent just 0.7% of GDP on domestic security and the justice system last year, the IEP said, highlighting that the percentage was the lowest among the 37 member countries of the Organization for Economic Co-operation and Development.

Source: Reforma (sp), El Economista (sp)

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PEMEX losses deepen Mexico's financial woes
« Reply #884 on: September 02, 2020, 10:09:25 AM »
Pemex’s Losses Deepen Mexico’s Financial Woes
3 MINS READ
Aug 31, 2020 | 19:41 GMT

HIGHLIGHTS

Mexican President Andres Manuel Lopez Obrador's failure to strengthen Pemex's finances and shore up domestic oil production will exacerbate Mexico's public finance woes from COVID-19.  On Aug. 24, Mexico's state-owned energy giant Pemex reported its lowest level of monthly crude oil production since 1979, with the company's July output totaling only 1.6 million barrels per day (bpd) -- marking a 0.6 percent decline from June and a 4.5 percent decline from July 2019. Pemex was already struggling before the current COVID-19 crisis, seeing record losses during 2019 and the first half of 2020. Lopez Obrador's attempts to strengthen Pemex's bottom line and increase domestic oil production, however, will continue to fail without new private investment to help increase long-term production, as well as a business plan that forces Pemex to focus on the most profitable areas....

Mexican President Andres Manuel Lopez Obrador's failure to strengthen Pemex's finances and shore up domestic oil production will exacerbate Mexico's public finance woes from COVID-19.  On Aug. 24, Mexico's state-owned energy giant Pemex reported its lowest level of monthly crude oil production since 1979, with the company's July output totaling only 1.6 million barrels per day (bpd) — marking a 0.6 percent decline from June and a 4.5 percent decline from July 2019. Pemex was already struggling before the current COVID-19 crisis, seeing record losses during 2019 and the first half of 2020.


Lopez Obrador's attempts to strengthen Pemex's bottom line and increase domestic oil production will continue to fail without new private investment to help increase long-term production, as well as a business plan that forces Pemex to focus on the most profitable areas.

Mexico's current oil fields in the Gulf, such as Cantarell and Ku-Maloob-Zaap, are nearing the end of their productive life. Any substantive increase in production thus needs to come from new developments in either deep-water fields or the unconventional fields in northeastern Mexico, which Pemex does not have the resources or expertise to develop alone.

Other national oil companies, such as Brazil's Petrobras or Colombia's Ecopetrol, have engaged in strategies to get rid of unproductive assets and focus on their resources on most productive areas. These strategies have helped prevent both Petrobras and Ecopetrol's credit rating from being downgraded in recent years. Pemex's debt, meanwhile, was downgraded this year and last.

Lopez Obrador has relied on Pemex's revenue and resources to boost government spending, which has spread the company's already scarce resources thin by forcing its involvement in unprofitable activities. This has included placing Pemex in charge of building a new refinery in southeast Mexico and modernizing various other refineries.

Lopez Obrador's administration has also barred Pemex from partnering with private firms on long-term exploration projects, further accelerating the deterioration of the company's finances and profitability prospects.

Pemex will increasingly become a drag on Mexico's already stressed public finances, which will impede Lopez Obrador's ability to mitigate the fallout from COVID-19 ahead of 2021 midterm elections by robbing his government of a key revenue source.
Amid the fallout from the pandemic, Lopez Obrador is facing mounting pressure to revive the Mexican economy, which was in a recession even before the onset of the global health crisis. But this time, he Mexican government won't be able to rely on Pemex to shore up spending, especially in the absence of any tax reform that would enable the company to diversify revenues, and may be forced to redirect its scarce resources to keep Pemex afloat.

Pemex has long been a key financing source for the Mexican government, which is one of the main causes of the company's chronic underinvestment. Pemex's revenues currently make up around 10 percent of the federal government's total revenues.
The Lopez Obrador administration has provided Pemex with debt relief and even some subsidies in the hopes of giving the oil company some room to make more productive investments. But given the magnitude of Pemex's cashflow erosion, that money has instead been used to cover the company's current expenditures.

In response to the COVID-19 crisis, Lopez Obrador's administration has also not passed any meaningful fiscal stimulus packages, and has instead continued to fund its pet infrastructure projects that are already underway, including the $8 billion Dos Bocas refinery.


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« Last Edit: September 30, 2020, 05:07:15 PM by Crafty_Dog »