Author Topic: Mexico  (Read 580993 times)




Crafty_Dog

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GPF: Zapatistas extend authority in Chiapas
« Reply #603 on: August 21, 2019, 12:25:35 PM »
Competing for control in Mexico. The Zapatista Army of National Liberation, a Mexican militia that controls large swaths of territory in Chiapas state, claimed that it extended its authority to 11 more zones in Chiapas, giving it a total of 43 areas of control. Mexican President Andres Manuel Lopez Obrador responded cautiously, saying the expansion was welcome so long as it was not violent. Domestic security is still a challenge for Mexico, as self-defense groups like the Zapatistas have created obstacles to restoring order in certain parts of the country. Chiapas is also a key part of the route for migrants heading north from Guatemala, and maintaining control of the area is critical to controlling the flow of migrants.





Crafty_Dog

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Stratfor: Nuevo Laredo
« Reply #608 on: September 09, 2019, 10:34:24 AM »


    Violence between the Cartel del Noreste and state police has been surging in the Mexican border city of Nuevo Laredo in Tamaulipas state over the past two weeks.
    In response to these losses, CDN has threatened those that do business with security forces, prompting many gasoline stations to refuse to sell fuel to the authorities.
    Given running gunbattles involving automatic weapons and grenades, attacks on security forces and threats against businesses, those with interests in Nuevo Laredo should be on heightened alert until the wave of brutality subsides.

Editor's Note: ­This security-focused assessment is 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.


Violence between the Cartel del Noreste (CDN) and state police has been surging in the Mexican border city of Nuevo Laredo in Tamaulipas state over the past two weeks. The incidents began Aug. 22, when officers with the Center for Analysis, Information and Studies of Tamaulipas (CAIET) erected a pop-up checkpoint just outside Nuevo Laredo on Federal Highway 2, which leads to Piedras Negras up the Rio Grande in Coahuila state. A convoy of heavily armed CDN gunmen with the cartel's "Tropa del Infierno" (Spanish for "Soldiers of Hell") enforcer unit attacked the checkpoint and wounded two police officers. They attacked the officers again as they took their wounded to the hospital, injuring a third officer.

The Big Picture


Since 2013, Mexico's cartels began a long process of balkanization, or splintering. Many organizations, such as the Gulf cartel, imploded and fragmented into several smaller, often competing factions. One of the three main clusters of smaller groups we track by geography centers on Tamaulipas state.



See Security Challenges in Latin America

On Aug. 23, Tropa del Infierno gunmen attacked the Santa Teresa Hotel in Nuevo Laredo, where CAIET officers were staying, killing one officer and wounding two others. On Aug. 27, 11 members of the enforcer unit were killed — four in an attack on a police station and seven in an attempted ambush on a CAIET patrol. On Aug. 28, family members of the CDN gunmen protested outside the Santa Teresa Hotel and threatened to burn vehicles in the parking lot. This incident shows the CDN's deep roots in the Nuevo Laredo community.

On Aug. 31, CAIET arrested four members of the CDN Tropa 202 enforcer unit in Ciudad Mier after a running gunbattle. Several others escaped into the countryside. On Sept. 2, four CDN gunmen were detained at a roadblock on the outskirts of Nuevo Laredo, and on Sept. 5, eight members of the Tropa del Infierno were killed in a firefight with CAIET officers; the dead included three female gunmen.

With the running gunbattles, those with interests in Nuevo Laredo should be on heightened alert until this wave of brutality subsides.

 

In response to these losses, CDN has openly threatened businesses that support the CAIET and the military in Nuevo Laredo. It specifically warned gasoline stations that sell fuel to security forces. According to media company Televisa, stations have refused to sell fuel to the authorities since Sept. 2. Televisa broadcast a conversation between a Tamaulipas state official and a gas station owner in which the owner refused to sell fuel even if additional security was provided for his station. This has forced the authorities to ship in fuel.


The CDN is a remnant of the Los Zetas cartel that is led by Juan Gerardo Trevino Chavez, also known as El Huevo; he is a member of the Trevino smuggling clan, which has a long history in Nuevo Laredo — and in the Los Zetas cartel. His uncles, Miguel Angel Trevino Morales, aka Z-40, and Omar Trevino Morales, aka Z-42, were both former leaders of Los Zetas. The Trevinos are old-school Nuevo Laredo smugglers and criminals with deep ties to the community.

Conflict between the CDN and government forces isn't a new phenomenon. In the summer of 2018, violence between the two sides also surged after the ambush and assassination of the director of a prison in Nuevo Laredo. With the running gunbattles involving automatic weapons and grenades, attacks on security forces and threats against businesses, those with interests in Nuevo Laredo should be on heightened alert until this wave of brutality subsides.

Crafty_Dog

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Stratfor: The Case for a Counter Insurgency Approach to Mexico's Cartel Wars
« Reply #609 on: October 02, 2019, 12:21:14 AM »
on security
The Case for a Counterinsurgency Approach to Mexico's Cartel Wars
Scott Stewart
Scott Stewart
VP of Tactical Analysis, Stratfor
9 MINS READOct 1, 2019 | 10:00 GMT
Favio Gomez, brother of Servando Gomez, also known as
(MANUEL VELASQUEZ/Anadolu Agency/Getty Images)

Favio Gomez, brother of Servando Gomez, also known as "La Tuta," is transported in Mexico City on Feb. 27, 2015, after his capture. Counterinsurgency tactics, rather than counterterrorism measures, might bring Mexico more success in battling its cartels.
Highlights

    Mexico has not designated its cartels as terrorist organizations, but it uses many counterterrorism tools and tactics to fight them.
    Such an approach has weakened many cartels, causing several to implode, but it has done little to enhance the government's legitimacy or address the issues that foster the rise of such groups.
    Because cartels have grown strong due to corruption, incompetent governance, economic malaise, impunity and the absence of the rule of law, Mexico might require a holistic counterinsurgency approach that goes beyond military means to remedy the underlying issues that facilitate such criminality.

 

Just last week, I was chatting with someone on Twitter who stated his belief that Mexican drug cartels should be classified as "terrorists" because of their actions. It's an idea, however, that I have long opposed: Cartels' gratuitous violence notwithstanding, their actions do not really fit the definition of terrorism, which many broadly define as political violence directed toward civilians. To my mind, Mexican cartels have simply not yet emulated Colombia's Pablo Escobar and his Medellin Cartel sicarios and engaged in political violence.

The Big Picture

Geographic proximity to the United States has been both a blessing and a curse for Mexico. Easy access to the giant U.S. market and free trade agreements have fostered more manufacturing activity, jobs and foreign investment in the country. At the same time, Mexico's proximity to illicit U.S. markets has resulted in the rapid growth of extremely violent criminal enterprises. Crime and violence are taking a huge toll on citizens and placing heavy fetters on the Mexican economy. There are many profound factors underlying the rise of the powerful organized crime groups, which are responsible for the majority of Mexico's violence. But until Mexico can address these issues, its government will be unable to kill its way out of this situation, causing the people and the economy to suffer.

See The Importance of Mexico

Still, it dawned on me that — definitions aside — the Mexican government and its U.S. ally have pursued the "war" on cartels using many of the same tools that we normally associate with the "global war on terror." Mexican special operations forces routinely raid hideouts to capture or kill cartel leaders, as well as employ sophisticated intelligence tools to track or hack cartel communications devices and networks. In one February 2017 incident, Mexican marines poured fire from a helicopter armed with a minigun into a house in Tepic, Nayarit, killing a Beltran Leyva Organization leader and 11 of his henchmen. Widely circulated videos of the incident resembled something one would expect to see in an operation targeting the Islamic State rather than an anti-crime operation in the capital of a Mexican state. 

I certainly don't fault the Mexican military for using military force against the cartels. Since the 1990s, the cartels have employed former soldiers armed with military-grade weapons in their enforcer units. But as we've seen in recent years, the military-based counterterrorism approach to combatting the cartels is not working. The government has captured or killed a long list of cartel leaders but failed to curb cartel violence. Indeed, 2019 is on track to be the most violent year ever in Mexico. Clearly, the Mexican government can't capture or kill its way out of its cartel problem. Instead, the road to solving the country's profound problems might lie along a different, more holistic, tack: a counterinsurgency model. Thinking of the cartels as criminal insurgents provides a valid blueprint for understanding the problem — as well as a road map for addressing it. 
 
Mexico's Cartels Stage an Insurgency

The idea that Mexican cartels are criminal insurgents is not a revelation. In fact, Stratfor contributor John P. Sullivan and Robert J. Bunker published an anthology in 2012 on the topic of Mexico's criminal insurgency for Small Wars Journal. As it is, the U.S. military defines insurgency as "the organized use of subversion and violence to seize, nullify, or challenge political control of a region," in its counterinsurgency doctrinal document, Joint Publication 3-24. And while Mexican cartels may not be seeking to establish an alternative government like a typical political insurgency, they are seeking to nullify or challenge the political control of territory to further their criminal operations.

Insurgents thrive in insecure areas that lack capable, credible governance. There are historical, geographic and political factors that have challenged Mexico City's ability to govern and control parts of the country. Indeed, banditry, smuggling and other criminal activity have historically plagued ungoverned places such as the sparsely populated deserts and mountains of the country's north.

In some ways, it is only when it comes to end goals that the Islamic State and Mexican cartels differ: Whereas the jihadist group wants to control territory for political power, cartels wish to do so for profit.

Geography and terrain are important factors that enable an insurgency, and it is no coincidence that most successful insurgencies take advantage of rough terrain, such as mountains and deserts, to wage their operations. But even more important than the physical terrain is the human terrain, as insurgents who enjoy the support of the population tend to thrive, relying on locals for shelter, material support, recruits and even intelligence. Chinese communist leader Mao Zedong noted that favorable human terrain allows a guerrilla fighter "to move among the people as a fish moves in the sea," and leftist and jihadist theorists alike have stressed the need to obtain local backing in their insurgencies. The cartels use a complicated combination of largesse and fear to ensure the population stays on their side. Indeed, Mexico's Joaquin "El Chapo" Guzman Loera did not become a revered and respected cultural icon by mistake, but rather as the result of a carefully cultivated campaign. In the end, mere popular support couldn't protect Guzman from the massive international effort to capture him, but it certainly complicated authorities' efforts to locate him, allowing the cartel boss to remain freer for much longer than he would have otherwise.

In places like Iraq and Syria, the Islamic State has conducted operations to destabilize areas in which it wants to operate by conducting targeted assassinations and engaging in efforts to influence or sway local leaders to its side. By offering "plata o plomo" (silver or lead), Mexican cartels operate in much the same way, seeking to tip the local population to their side, maintain their favorable standing or, at the very least, obtain locals' fearful acquiescence by demonstrating the government's powerlessness. In some ways, it is only when it comes to end goals that the Islamic State and Mexican cartels differ: Whereas the jihadist group wants to control territory for political power, cartels wish to do so for profit. 

Taking a Holistic Approach

As history has repeatedly demonstrated — including recent history in the war against jihadism — counterinsurgency is difficult. This is especially so when locals view the forces conducting the counterinsurgency as outsiders. For insular communities in the Mexican mountains, federal troops are nearly as foreign as U.S. troops in Afghanistan. At its heart, counterinsurgency is really more an art than a science, meaning it requires a great deal of foresight, patience and cultural understanding. Unlike the current counterterrorism approach, a counterinsurgency approach would go beyond mere military force to utilize all the tools of the national, state and local governments, including their political, economic, educational, health, legal and developmental resources. Getting all of Mexico's conflicting political parties and state and local governments on board would present a challenge, but perhaps only measures that erode cartels' support base will cut such enterprises down to size. 

As I have noted in the past, there is little difference in the geographic factors that influence the north and south banks of the Rio Grande. The vast majority of the drugs that flow north out of Tamaulipas pass through the Texas Rio Grande Valley, while most of the money that flows south ends up back in Tamaulipas. Indeed, the same criminal cartels that operate in Tamaulipas also operate in Texas, but there are worlds of difference in terms of how these groups operate depending on whether they're on the U.S. or Mexican side of the line. As has become abundantly clear, they are far more aggressive and violent in Mexico than they are in the United States. It all goes to show that corruption, incompetent governance, economic malaise, impunity and the absence of the rule of law have allowed cartels to thrive and engage in wanton violence in Mexico. In essence, these are the same factors that have permitted groups such as the Islamic State West African Province to spread in Nigeria, Jamaat Nusrat al-Islam wal-Muslimin in northern Mali and other insurgent groups elsewhere.

This graph shows murder rates by year in Mexico.

Mexican governments have repeatedly tried to address the cartel problem through an institutional approach, focusing merely on reforming corrupt police agencies. The government of current President Andres Manuel Lopez Obrador is taking a similar path, creating a new Mexican National Guard and reviving the Secretariat of Public Security that his predecessor, Enrique Pena Nieto, abolished. These new institutions, however, have done little to reduce the violence wracking Mexico because they are not holistic and cannot address the underlying issues facilitating the criminal insurgencies. Lopez Obrador the candidate noted that corruption was the No. 1 problem facing Mexico, but Lopez Obrador the president has succeeded in doing very little about the issue.

To be successful, a counterinsurgency campaign must weaken the insurgent forces while building the government's legitimacy. Mexico's counterterrorism approach against the cartels has weakened many of the groups, causing several to implode, but it has done little to stem corruption or enhance the government's legitimacy. This, in turn, has allowed criminals to take advantage of the vacuum of authority and governance.

Joint Publication 3-24 notes that "the [host nation] government generally needs some level of legitimacy among the population to retain the confidence of the populace and an acknowledgment of governing power." The Mexican government has not been able to build legitimacy in the eyes of the population, which has very little confidence in central authorities' ability to govern. Until Mexico City can begin to make progress on the ground in governing, battling corruption, ending impunity and winning the trust and confidence of the local population, cartels will continue to thrive — no matter how many criminal leaders the military kills or how many new security institutions the state drafts into the fight.   




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« Last Edit: October 19, 2019, 07:26:16 AM by Crafty_Dog »

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WSJ on Culiacan
« Reply #614 on: October 19, 2019, 09:00:01 PM »



Mexican Cartel Rules City After Gunbattle
Operation to free Ovidio Guzmán was unprecedented in scope and sophistication
A policeman walks past a burnt vehicle after heavily armed gunmen waged a battle against Mexican security forces in Culiacán. Photo: Alfredo Estrella/Agence France-Presse/Getty Images
By David Luhnow,
José de Cordoba and
Santiago Pérez
Updated Oct. 18, 2019 7:04 pm ET

MEXICO CITY—A son of the infamous Mexican drug lord Joaquín “El Chapo” Guzmán is captured. Cartel gunmen respond with a vicious attack on soldiers and civilians across a major Mexican city, leaving at least eight people dead and 16 wounded. The government gives in and releases the son, a top figure in the cartel.

One of the most violent and harrowing days in Mexico’s long fight against drug cartels unfolded late Thursday as members of the Sinaloa cartel wreaked havoc across Culiacán, a modern, middle-class city of around 800,000 residents, in response to what appeared to be a botched attempt to arrest Ovidio Guzmán.

Heavily-armed gunmen riding in convoys engaged in more than 70 separate firefights with Mexican security forces, set fires to vehicles, shot at government offices and engineered a jailbreak that freed 55 prisoners, with six recaptured, officials said. By nightfall, it was clear that the cartel was in charge of the city.

Mexican cartels have a history of blocking streets with burned-out cars to protect their bosses and of going on rampages when their leaders are captured by authorities. But Thursday’s events were unprecedented in their scope and sophistication, showing that the Sinaloa cartel is alive and well despite the absence of its legendary leader, who is now serving a life prison sentence.

The incident stunned many in Mexico and raised pressure on President Andrés Manuel López Obrador to make headway against the country’s relentless cartel-fueled violence. On Friday, he defended the decision to release the younger Mr. Guzmán.

“The situation became very difficult. Many citizens were at risk,” the president said at his daily news conference. “I agreed with that.”

Cartel gunmen had also kidnapped eight army soldiers and an officer, said Mexico’s Defense Minister Luis Cresencio Sandoval. They were released after the drug lord was freed.

Schools remained closed in Culiacán on Friday, as did many businesses.

Mr. Guzmán, who is only in his late 20s, has emerged as a top figure in the cartel along with his brothers Iván Archivaldo and Jesús Alfredo following the arrest and extradition of their father in 2017.

The incident was the third major gun battle of the week. On Monday, at least 13 state police in Michoacán state were massacred by suspected gunmen from the country’s powerful Jalisco cartel. A day later, one soldier and 14 alleged cartel gunmen died in a shootout in southern Guerrero state.

The violence, along with widespread extortion of businesses by organized crime, is one factor in Mexico’s economic stagnation. The economy has failed to grow so far this year. A survey by Mexico’s central bank found that violence and political uncertainty are the top two obstacles to economic growth cited by economists.

The administration’s backing down to the cartel’s offensive was sharply criticized by many ordinary Mexicans and security analysts, who challenged Mr. López Obrador’s policy of using force only as a last resort in an attempt to pacify one of the world’s most violent nations. He has called the policy “hugs, not bullets,” promising to focus on attacking poverty rather than cartels.

Murders in Mexico are on pace for a record-high 37,000 this year, according to the country’s national statistics agency. The U.S., which has nearly three times Mexico’s population, has about 15,000 murders a year, according to data from the Federal Bureau of Investigation.

Security analysts said the Culiacán incident was a public-relations disaster for the government, which looked weak in the face of cartel firepower.

“Lopez Obrador was confident his call for peace and love—and not going after narcos—would lower violence,” said Raúl Benitez, an analyst at the Autonomous University of Mexico. Instead, he said the president has given free rein to gangs. “It shows the peace-and-love strategy is not working.”

Adding to the sense of impunity, a lawyer representing the Guzmán family held a press conference in Mexico City on Friday to thank Mr. López Obrador for freeing Mr. Guzmán.

“The calculus the president made was that a single Mexican life is worth more than all the violence that was, as they say in music, reaching a crescendo,” attorney Juan Pablo Badillo said, adding that “we have no idea what would have happened” if the drug lord hadn’t been released.

Mr. Sandoval said Friday that a unit of Mexico’s National Guard had located Ovidio Guzmán, but acted hastily and arrived at a safe house without a warrant. While they were waiting for it, cartel gunmen allegedly opened fire. Security forces captured Mr. Guzmán, officials said, but then found themselves surrounded by cartel gunmen who arrived as backup.

Within minutes of Mr. Guzmán’s capture, hundreds of cartel gunmen sprang into action. Convoys of SUVs and pickups filled the city streets. Gunmen wore bulletproof vests and toted assault rifles, and at least two had machine guns, including an intimidating Browning M2 set up on the back of a light truck, according to security experts who analyzed video footage of the events.

Gunmen also began firing on army barracks where the family members of soldiers lived, Mr. Sandoval said. One unconfirmed report said gang members had hijacked loaded fuel trucks and parked them near the barracks, threatening to blow them up.

“The criminal organization’s ability to call on its members and power of response was underestimated,” said Mr. Sandoval.
Mexican soldiers patrol near the government palace in Culiacán on Friday. Photo: alfredo estrella/Agence France-Presse/Getty Images

Mobsters sprayed bullets in front of key government buildings and gas stations, torching cars and sending plumes of smoke over the Culiacán skyline. It gave the impression of a civil war, sparking panic among the population, said Eduardo Guerrero, a former top Mexican security official.

Between 100 and 150 gunmen surrounded the area near the house where Mr. Guzmán was hiding out, outnumbering some 70 to 80 troops. Another 150 or 200 cartel members were deployed in various parts of the city to create havoc, Mr. Guerrero estimates.

Another armed commando staged a parallel raid, taking advantage of the chaos spreading across Culiacán to free more than 50 cartel members from a nearby prison. Security guards offered no resistance.

“They were more powerful and showed tactical supremacy. The government didn’t expect a reaction in such scale,” said Guillermo Valdés, Mexico’s former intelligence chief. “As soon as some 300 hit men came out, there was no capacity to counter them.”

Mexico’s powerful drug cartels are likely to take note of the Sinaloa cartel’s use of military power and tactics in freeing Mr. Guzmán, and emulate it, said Mike Vigil, a former head of international operations for the U.S. Drug Enforcement Administration, who has also served in Mexico.

“Releasing Ovidio sends a vivid message to criminal cartels that if a group’s leader is captured, all you have to do is go into a town, commit wholesale violence, and the government will release him,” he said.
Residents were forced to flee for cover as armed gunmen and federal police clashed on the streets of Culiacán Thursday. Photo: str/EPA/Shutterstock

Mr. López Obrador campaigned on ending Mexico’s drug war. Since 2006, as cartels gained increasing power, successive presidents have used the armed forces to kill or capture cartel leaders and break up powerful gangs.

The strategy reduced the clout of the largest cartels, but it also led to growing criminal violence as cartels splintered into rival gangs and fought each other for control of drug-trafficking routes and territory. Hundreds of thousands have died in the carnage.

Mr. López Obrador said his government would no longer focus on capturing cartel leaders but work on alleviating poverty. “What happened yesterday was lamentable, but in no way does it mean our strategy has failed,” he told reporters during his morning news conference.

The government of President Andrés Manuel López Obrador has worked on alleviating poverty in order to prevent young people from joining gangs. Photo: daniel ricardez/EPA/Shutterstock

The president is also relying on the force of his personality to tamp down crime, calling on gang members to think of their mothers.

“We’re calling on criminals to tone it down, that we all start to behave better. To hell with criminals. Fuchi, guacala,” he said, using colloquial terms that mean “gross, yuck.”

Thursday, as word of the battles in Culiacán spread on social media, the phrase #Fuchi/guacala was trending on Twitter.

—Anthony Harrup and Robbie Whelan contributed to this article.

Write to David Luhnow at david.luhnow@wsj.com, José de Cordoba at jose.decordoba@wsj.com and Santiago Pérez at santiago.perez@wsj.com

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Narcos declarado terroristas?
« Reply #621 on: November 29, 2019, 11:31:45 AM »
HIGHLIGHTS

The long and complex relationship between the United States and Mexico has left the Mexicans far more sensitive to what they perceive as U.S. infringement on their sovereignty.

Many Mexicans view U.S. President Donald Trump's actions as offensive, patronizing and motivated by his 2020 election ambitions.

Merely labeling a few of the larger groups such as the Cartel de Jalisco Nueva Generacion and the Sinaloa cartel as terrorist organizations will not be helpful in meaningfully countering all the smaller groups.

Editor's Note: ­This security-focused assessment is 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.

In a radio interview that aired on Nov. 26, U.S. President Donald Trump told former Fox News host Bill O'Reilly that he intends to designate Mexican cartels as international terrorist entities because of their role in human and drug trafficking. The statement was met with widespread condemnation in Mexico, where both the government of President Andres Manuel Lopez Obrador and the public are seriously opposed to the move. Mexican Foreign Secretary Marcelo Ebrard said in a Nov. 25 interview on the proposal that he didn't expect the United States to follow through on the idea.

The situation in Mexico is quite different from that in Colombia during the early 1990s when Pablo Escobar and the Medellin cartel were designated as narcoterrorists. Both the Colombian government and population supported the designation and the U.S. assistance. However, the long and complex relationship between the United States and Mexico has left the Mexicans far more sensitive to what they perceive as U.S. infringement on their sovereignty. Many Mexicans viewed Trump's threat to send U.S. troops to Mexico in the wake of the Nov. 4 LeBaron slayings as offensive, patronizing and motivated by his 2020 election ambitions. Any decision to designate the Mexican cartels as international terrorist organizations is seen in much the same light.

The harsh reality is that economics dictate that the flow of contraband across the U.S.-Mexico border — drugs going north and cash and guns flowing south — will never end as long as there is a huge market in the United States for illegal drugs.

From a practical perspective, the U.S. government has long been involved in supporting Mexico's military efforts against the cartels, and it has provided training, equipment, assistance and intelligence. The relationship is particularly close with the Mexican marines, who are involved in most operations targeting high-value cartel figures. The Mexicans have been able to either capture or kill a long list of major cartel figures. Such operations do weaken and fragment the cartels, but they do very little to address the underlying problems — corruption, impunity and a vacuum of authority — that allow them to operate the way they do in Mexico.

The harsh reality is that economics dictate that the flow of contraband across the U.S.-Mexico border — drugs going north and cash and guns flowing south — will never end as long as there is a huge market in the United States for illegal drugs. At the same time, it is important to recognize that the same cartels operate on both sides of the border, but they are far more restrained in the United States. Therefore, if Mexico can make progress in addressing corruption and related problems, it can regain the trust of the public and take steps to constrain the cartels so they behave as they do in the United States. Obviously, given the violent behavior of the cartels, the government of Mexico must continue to use military force against them so it will be able to address these underlying weaknesses. However, force alone will not be able to combat those problems.

Finally, there is a real practical difficulty in designating Mexican cartels as international terrorist organizations. The cartel landscape is far different from what it was 20 years ago, and there are an array of distinct and independent groups. For example, the Gulf cartel has completely imploded and turned into a host of smaller local criminal groups, including Los Zetas, which has splintered into at least a half-dozen competing factions. Merely labeling a few of the larger groups such as the Cartel de Jalisco Nueva Generacion and the Sinaloa cartel as terrorist organizations will not be helpful in meaningfully countering all the smaller groups.

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WSJ on AMLO
« Reply #623 on: December 07, 2019, 01:04:23 PM »
Mexico’s Polarizing President Presides Over Rising Violence, Flailing Economy
President Andrés Manuel López Obrador remains popular despite cartel crime and weak growth
Mexican President Andrés Manuel López Obrador greets supporters in the southern state of Oaxaca. PRESS OFFICE

David Luhnow and José de Córdoba
Dec. 7, 2019 12:15 am ET

MEXICO CITY—On Dec. 1, tens of thousands of people gathered in Mexico City’s gritty central square to celebrate Mexican President Andrés Manuel López Obrador’s first year in office. His supporters chanted “It’s an honor to support Obrador.”

A few blocks away, thousands of protesters marched along the city’s elegant Reforma boulevard to rail against the president. Their chant was different: “It’s a horror to support Obrador.”

Since taking power, the silver-haired populist has polarized Mexico more than any president in recent memory. A majority see him as their first honest leader in decades, a man of the people and champion of the forgotten poor. For a growing minority, the president is a dangerous authoritarian who is consolidating power and failing to address the country’s basic problems like out-of-control crime and weak economic growth.

Stalling Out
Annual change in GDP
Source: International Monetary Fund
Note: 2019 data are estimates.
%
Mexico
U.S.
2009
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
-6
-4
-2
0
2
4
6
His first year wasn’t an optimistic harbinger of his remaining five years in power. Mexico’s economy hasn’t grown at all this year, its worst performance in a decade. Even as the U.S. economy chugs along, Mexican businesses have slowed investment, spooked by the president’s governing style and economic decisions like suspending the country’s historic opening to private investment in the energy industry. At the same time, the window may be closing for ratification of a renegotiated free-trade pact among Mexico, the U.S. and Canada.

Crime has hit record highs, with murders climbing another 2.2% during the first 10 months of the year compared with last year’s record tally of 36,685 slayings. More than ever, parts of Mexico appear ungovernable as powerful crime syndicates take on the government. In October, the Sinaloa cartel overran the northern city of Culiacán in a successful attempt to force the army to liberate a captured drug lord.

President Trump had been expected to designate Mexico’s drug cartels as foreign terrorist organizations, putting them on a par with groups like Islamic State and al Qaeda. On Friday night, he said he would “temporarily hold off” on that move at the request of Mr. López Obrador.

Mr. Trump, in tweets, said the two nations would “step up our joint efforts to deal decisively with these vicious and ever-growing organizations!” He said “all necessary work” had been completed to designate the cartels as terrorist organizations.

A series of recent clashes between cartel gunmen and security forces as well as massacres of civilians in Mexico has captured global attention. Last month, presumed gunmen from a cartel killed three mothers and six of their children, all U.S. citizens living in a fundamentalist Mormon community in the northern state of Chihuahua.


Men carry the remains of Dawna Ray Langford and her sons Trevor and Rogan, who were killed by unknown assailants in November. PHOTO: CARLOS JASSO/REUTERS
Rafael Chávez, a burly construction worker who runs a business remodeling homes, voted for Mr. López Obrador last year on the politician’s promises he would “transform” the country. But a sharp slowdown in construction has forced Mr. Chávez to cut the size of his crews to 12 from an average of 30.

“I had the hope he was going to be able to conjure a change,” says Mr. Chávez. But with crime growing and a weak economy, he says, it seems “everything is falling apart.”

Since taking power, the man who once said “to hell with your institutions” has become the most powerful president in decades, with a big majority in both chambers of congress. He has attacked many of the country’s fragile institutions like courts, the central bank, and regulators as part of a “mafia of power” against him. And his party is now trying to oust the non-partisan head of the agency that oversees elections in time for the 2022 midterms.

“It’s not yellow flashing lights—they are glowing red,” says Enrique Krauze, one of the country’s leading historians. Mr. López Obrador’s government appears to be “on the road to becoming a populist dictatorship.”

Despite the shaky first year, the veteran politician and baseball fan remains Mexico’s most popular leader in decades, with different recent polls showing an approval rating between 60% and 70%. Those are enviable numbers at a time when some leaders in Latin America have approval ratings in the single digits and others face violent street protests.

“It’s a paradox,” says Héctor Aguilar Camín, a leading Mexican writer. “It’s a president who has high credibility and very poor results.”

The answer may lie in Mr. López Obrador’s masterful use of political symbols. He slashed his own salary and that of top bureaucrats, arguing that Mexico can’t have a rich government and poor citizens. The savings have gone partly to fund an expansion in cash transfer programs for the elderly, middle-school students and others.

The austerity is a welcome change in a country where many former presidents retired as multimillionaires. Enrique Peña Nieto, Mr. López Obrador’s predecessor, left office hounded by scandal and a record low 16% approval. The former president appears regularly in the pages of Mexico’s top society magazines, jet-setting on holidays around Europe with his new 31-year-old girlfriend, a model. Mr. Peña Nieto has long denied wrongdoing.


President López Obrador talks to a fellow passenger during a commercial flight in in Mexico in February. PHOTO: ALFREDO ESTRELLA/AGENCE FRANCE-PRESSE/GETTY IMAGES
Mr. López Obrador is the symbolic opposite. He put the country’s version of Air Force One, a Boeing 787, on the auction block and flies economy class, delighting fellow travelers. He disbanded the 8,000-strong elite presidential guard, saying the people would protect him. And he turned the sprawling and secretive presidential compound into a tourist attraction visited by millions. Rather than rest and play golf on the weekends, he visits the country’s poorest corners.

“This is one of the best things that has happened in all of my life,” said Omar Escovedo, 59, a retired state worker, during a recent visit by the president to the mostly indigenous hamlet of Amanalco near the capital. Over the past decade, the politician visited every county in Mexico—all 2,457.

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He has also proved adept at communication. In a country where presidents hardly ever held news conferences, he holds one nearly every morning that is carried live on radio, television and the internet to millions of his supporters.

There, Mr. López Obrador hammers home his vision of a country cleaved in two. His opponents are traitorous “conservatives”—a term from Mexico’s 19th century civil wars—and modern-day “neoliberals.” To him, these Mexicans are corrupt, beholden to foreign interests, and wealthy. Mr. López Obrador has even resurrected a 19th century word, “fifí,” meaning Frenchified and effete, to describe them.

On the other side are Mr. López Obrador and his supporters. These are the inheritors of Mexico’s 19th-century patriots and revolutionaries who seek to extinguish corruption and, through the hand of the state, produce well-being for all, especially the poor and the nation’s indigenous people.

“If you oppose López Obrador, then you are a traitor, corrupt, a coup monger,” says José Crespo, a political analyst at Mexico City’s CIDE university. “It’s a Manichaean use of history where on one side are the good Mexicans and on the other the very bad Mexicans.”

Crime is perhaps the president’s biggest vulnerability. A majority of Mexicans give him negative marks on crime, which they say is the country’s most pressing problem. A December poll by newspaper Reforma found 65% of Mexicans believe organized crime is stronger than the Mexican government. Just 29% said the government is stronger.


Soldiers stand guard in Villa Unión, a Mexican town near the border with the U.S., after a shootout with suspected cartel gunmen earlier this month. PHOTO: JULIO CESAR AGUILAR/AGENCE FRANCE-PRESSE/GETTY IMAGES
The crime wave has also hit Mexico City, which until recently had been relatively shielded from the carnage in the countryside. More than eight in 10 city residents say crime is their biggest problem, polls show. Just south of Mexico City, Catholic churches in parts of Morelos state have suspended Mass during evenings because parishioners are too frightened to attend, according to Ramón Castro, the bishop of Cuernavaca.

From the day he took power, the president declared an end to the country’s war on drugs, saying “you can’t fight fire with fire.” Mexico’s U.S.-trained Naval Marines, the force that killed or captured most top cartel leaders in the past decade, including Joaquín “El Chapo” Guzmán, has been sidelined, say Naval officers. No major cartel figure has been arrested or killed this year.

The president disbanded the 40,000 strong Federal Police, built up under the previous two administrations in a bid to create a capable police force to pursue organized crime. In its place is a new National Guard, drawn mostly from the ranks of army and naval police. The Guard has 70,000 members and will grow to 140,000, the government says.

Critics say the Guard is a work in progress with no clear mission. So far, it has been deployed to stop Central American migrants from reaching the U.S., patrol Mexico City’s subway system, fight gasoline theft and deal with high-profile incidents such as massacres by organized crime. “It’s been a very reactive force, scattered, without a clear vision,” says Eduardo Guerrero, a Mexico City-based security analyst.

Deadly Trend
Homicides in Mexico
Source: Mexico's National Statistics Institute
2010
’12
’14
’16
’18
0
10,000
20,000
30,000
40,000
Analysts say that while Mexico has mostly relied on the armed forces to control organized crime, it has for years neglected a long-term fix: building professional police forces, especially at state and local levels, that can actually solve crimes like murder. Less than 13% of violent crimes end up with a suspect appearing before a judge, compared with 80% in the U.S., according to Alejandro Hope, a security analyst and former member of Mexico’s intelligence agency.

By dismantling the Federal Police, the president went back to square one in creating a trained federal force. His government has also cut federal funding to train state and local police forces, according to government budget data.

Aside from the National Guard, the president is betting that reducing poverty will reduce crime. Some 800,000 youth have signed up to an apprentice program called “Youth Building a Future” that gives them a monthly stipend in exchange for learning a trade, a process that Mr. López Obrador hopes will keep them from becoming cannon fodder for gangs.

The president is also relying on the force of his personality to tamp down crime, calling on gang members to think of their mothers. “We’re calling on criminals to tone it down, that we all start to behave better. To hell with criminals. Fuchi, guácala,” he said, using colloquial terms that mean “gross, yuck.”

Last week, a small army of gunmen in a convoy of about 50 armored trucks, some mounted with .50 caliber rifles, attacked a small town in Coahuila, less than 40 miles from the Texas border, shooting up the town hall. At least 23 people, 17 of them presumed cartel members, were killed in a two-day running battle between security forces and gunmen, who wore helmets and military fatigues, and drove trucks emblazoned with the insignia of their self-styled “Northeast Cartel.”

On the economy, the outlook appears grim. Economists forecast just 1.2% growth next year—well below the president’s promises of 4% average annual growth and 6% growth by the end of his term.

Lack of Confidence
Mexico's gross fixed investment index
Source: Mexico's National Statistics Institute
Total
Construction
2016
’17
’18
’19
85
90
95
100
105
110
115
120
ConstructionxSept. 2019x93.4
Investment in machinery, equipment and construction fell 6.8% in September compared with a year ago, and is down 4.8% in the first nine months of this year, Mexico’s statistics agency said Friday.

Many blame the stagnation on the president’s decisions like canceling Mexico City’s partially built new airport, the country’s largest public-works project. Mr. López Obrador spiked the project after some $5 billion had already been spent, saying it was too extravagant. His finance minister later quit, saying economic decisions were being made on the basis of ideology.

The nationalist also reversed or suspended the economic overhauls—from ensuring public school teachers are tested for competence to opening the energy sector to private investment—carried out by Mr. Peña Nieto. Even auctions to attract private investment in renewable energies like wind farms have been scrapped.

Mexico’s stagnation marks the first time in two decades that Mexico’s economic cycle has diverged from the U.S., its northern neighbor and destination for 85% of its manufactured exports.

To spark economic growth, the president is betting on the resurrection of debt-ridden state oil firm Pemex, injecting it with new money and forcing it to build an $8 billion new refinery in his home state of Tabasco. But the oil industry accounts for under 4% of Mexico’s economic output.

His government closed down ProMexico, the country’s overseas investment offices. While he is supportive of the renegotiated free-trade deal with the U.S., he has yet to visit a single modern factory.


A refinery belonging to Pemex, the Mexican state oil firm. PHOTO: DANIEL BECERRIL/REUTERS
In July, on a visit to the countryside, he extolled the virtues of a primitive sugar-cane grinder powered by one mangy horse in a video he posted on his Twitter account which went viral. “This is an authentic people’s economy,” he said as the horse went around in a circle, grinding out the cane juice. “This is the economy we are promoting,” he said.

His austerity drive, while good for public finances, has forced thousands of top technocrats out of institutions like the central bank and finance ministry by slashing wages and cutting benefits like private health insurance.

“I’ve seen a year of destruction of institutions, of projects, of talents, of human capital,” says Valeria Moy, the director of “How are we doing, Mexico?” a Mexico City-based think tank. “This year, nothing has been built, and much has been destroyed.”

Write to David Luhnow at david.luhnow@wsj.com and José de Córdoba at jose.decordoba@wsj.com

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Stratfor: The Business Impact of Corruption and Impunity in Mexico
« Reply #628 on: December 29, 2019, 09:49:28 AM »


The Business Impact of Corruption and Impunity in Mexico
Scott Stewart
Scott Stewart
VP of Tactical Analysis, Stratfor
7 MINS READ
Dec 24, 2019 | 10:00 GMT

HIGHLIGHTS
Falling victim to crime can make business operations unprofitable, but cooperating with criminals can prove even more costly....

The detention in the United States of Mexico's former secretary of public security highlights how corruption reaches to the highest levels of Mexico's government. Former Secretary Genaro Garcia Luna was arrested Dec. 10 in Grapevine, Texas. He has been charged in the U.S. District Court for the Eastern District of New York with three counts of cocaine trafficking conspiracy and one count of making false statements related to bribes he allegedly received from the Sinaloa cartel to help facilitate its smuggling operations. Garcia Luna held the national security post in Mexico during the administration of former President Felipe Calderon from 2006 to 2012. Before then, he headed Mexico's Federal Investigations Agency (AFI) from 2001 to 2006.
 
Testimony from the Sinaloa cartel's former chief accountant during the trial of Sinaloa cartel leader Joaquin "El Chapo" Guzman Loera incriminated Garcia Luna. Jesus Zambada, the brother of Guzman Loera's business partner Ismael "El Mayo" Zambada, testified that on two occasions he delivered briefcases containing $3 million to Garcia Luna. According to Jesus Zambada, the first delivery occurred in 2005 while Garcia Luna was leading the AFI and the second transaction occurred while Garcia Luna was secretary of public security.

The Big Picture

There is no disputing that Mexico's proximity to illicit U.S. markets has resulted in the rapid growth of extremely violent criminal enterprises. Crime and violence take a huge toll on Mexico's citizens and economy. But geography alone is not responsible for the majority of Mexico's violence. Other factors, such as corruption and impunity, have permitted the cartels to become powerful and to operate brazenly. Until Mexico can address these issues, its government will be unable to kill its way out of the situation.

See Security Challenges in Latin America

For those who watch Mexico, the arrest of Garcia Luna — who has been dogged by accusations of corruption — comes as no surprise. Former high-ranking member of the Beltran Leyva organization Edgar Valdez Villarreal, aka La Barbie, wrote a letter in 2012 published in the Mexican newspaper Reforma claiming he had paid protection money to Garcia Luna beginning in 2002. Garcia Luna and the Calderon administration denied the accusation, claiming Valdez was lashing out at those who had arrested him. But rumors of Garcia Luna's corruption persisted, regularly appearing in major Mexican news outlets such as Proceso. In fact, the rumors were so widespread that Forbes magazine named Garcia Luna to its list of the 10 most corrupt Mexicans for 2013. When Mexican President Enrique Pena Nieto was elected in 2012, he subsequently abolished the Secretariat of Public Security that Garcia Luna had led; rumors of Garcia Luna's corruption likely played a role in Pena Nieto's decision.
 
Recent Mexican history is replete with law enforcement organizations being disbanded for corruption, and not just municipal police departments. For example, the administration of former Mexican President Vicente Fox created the AFI in 2001 to replace the Federal Judicial Police, an agency disbanded because of rampant corruption. Patterned after the FBI, the AFI was structured to block corruption spilling over into it from other agencies. Despite those safeguards, by late 2005 the Mexican Attorney General's Office reported that almost 1,500 of the AFI's 7,000 agents were under investigation for suspected criminal activity and 457 agents faced criminal charges. Because of this corruption, Calderon's 2008 police reforms disbanded the AFI and assigned its mission to the Federal Police in early 2009. Garcia Luna, however, managed to dodge a Mexican criminal probe into the AFI's corruption problem, and for that matter, any legal consequences in Mexico from the various allegations against him. This highlights another long-standing problem that has plagued Mexico: impunity.
 
While news reports following Garcia Luna's arrest have suggested the Mexican Attorney General's Office is planning to request his extradition from the United States for trial in Mexico, it is highly unlikely the U.S. government would comply. The history of prison escapes involving high-profile figures such as Joaquin Guzman Loera and of judicial malfeasance resulting in the release of prisoners such as Rafael Caro Quintero has made the United States wary of such requests.
 
In October, I wrote a column discussing how corruption and impunity were enabling Mexican cartel groups to behave far more brazenly and brutally on the south side of the U.S.-Mexico border than they do north of it. This case illustrates how corruption and impunity reach even the highest levels of the Mexican government. Corruption is even more pervasive at the state level and endemic at the municipal level. And Mexico is certainly not the only country in the region impacted by corruption and impunity: Neighboring Guatemala and Honduras suffer even more severely from these maladies — and even the United States is by no means immune to them. Among the dangers of corruption and impunity is the way they enable criminal enterprises.

Enabling Criminals

Corruption helps smugglers by allowing contraband (or people) to pass through ports, checkpoints or over borders when authorities accept payment to turn a blind eye. In several recent court cases, testimony emerged that high-ranking Honduran politicians and police officials took this a step further and accompanied high-value loads of cocaine to ensure the loads did not encounter any problems while passing through Honduras.
 
Corruption also helps criminals use the proceeds of their illegal activities, such as when officials allow bulk cash shipments to pass through checkpoints and when corrupt bank officials or businessmen permit money laundering through their organizations. The lure of huge amounts of criminal cash continues to be difficult for banks and businesses to resist despite the potential consequences, such as the $1.9 billion dollar fine HSBC paid in 2012 to avoid prosecution for laundering funds for Mexican and Colombian drug traffickers.

The freedom of operation that corruption and impunity allow criminal organizations to pursue lets them extort businesses, kidnap executives, steal cargo or hydrocarbons, or hide contraband within a company's products or shipments with little fear of legal repercussions.

Corruption also greatly facilitates criminal organizations' ability to acquire weapons, such as when corrupt officials look the other way when illegal shipments of guns and ammunition pass over borders. Many documented cases also exist of military or police officials selling guns to criminal groups, and in fact, the vast majority of the medium and heavy machine guns, hand grenades, 40 mm grenades, rocket-propelled grenades and other military ordnance Mexican cartels use is purchased from military sources in the region.
 
There have also been many well-documented cases in which police and military personnel have served as muscle for various criminal groups, in which police dispatchers have conducted records checks for criminals, and in which police command center personnel have even used government CCTV systems to serve as "halcones" (lookouts) for criminals.
 
Impunity follows corruption when law enforcement officials or judicial authorities are bribed or threatened into allowing criminals to avoid arrest, to be released without charges or to otherwise escape prosecution. Even when criminals are prosecuted, corruption often allows them to live like kings in their prison cells and to continue to operate their criminal enterprises from behind bars — or, as mentioned, to get out of prison through jailbreaks or legal shenanigans.

The Business Impact

All this corruption negatively impacts businesses by allowing criminals to operate brazenly and with impunity. The freedom of operation allows criminal organizations to extort businesses, kidnap executives, steal cargo or hydrocarbons, or hide contraband within a company's products or shipments with little fear of legal repercussions. We have seen companies shutter or suspend operations in parts of Mexico most affected by crime flowing from corruption and impunity, such as Guerrero and Guanajuato states.

Clearly, criminality can make business operations unprofitable. But cooperating with criminals as with money laundering can prove even more costly, as HSBC found. Paying bribes to corrupt officials can also create crushing liabilities: Companies have been forced to pay hundreds of millions of dollars in fines for violating the American Foreign Corrupt Practices Act or the U.K. Bribery Act. Until Mexico is able to come to grips with the situation, businesses will continue to suffer.

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Stratfor: Tracking Mexico's Cartels in 2020
« Reply #633 on: February 04, 2020, 03:11:06 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.

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WSJ: Mexico Slides towards one man rule
« Reply #635 on: February 25, 2020, 11:49:20 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.


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Re: Mexico
« Reply #642 on: April 07, 2020, 02:39:48 PM »
In Mexico, Lopez Obrador Takes a Timid Approach to COVID-19's Economic Battering
4 MINS READ
Apr 7, 2020 | 19:25 GMT
HIGHLIGHTS
The lack of significant stimulus measures could ultimately sap the Mexican president’s ability to govern....

The Big Picture
Mexico's GDP is expected to contract significantly due to the effects of the COVID-19 pandemic and the fall in international oil prices. The Mexican government announced its long-awaited fiscal stimulus on April 5, but the measures did not gain investors' confidence. A minimal response to economic headwinds could increase insecurity in Mexico, eroding a significant portion of Lopez Obrador's support.

See COVID-19
What Happened

Mexican President Andres Manuel Lopez Obrador on April 5 outlined the steps his government will take to deal with the economic impact of the COVID-19 pandemic. With the prevailing consensus among analysts projecting Mexican GDP will contract 8 percent in 2020 (versus government estimates GDP will contract 4 percent), Lopez Obrador's government has come under criticism for not announcing fiscal stimulus sooner like the many other world governments that have announced aggressive fiscal and monetary responses over the past several weeks.

With an economy already in recession, the Mexican government was not expected to produce a plan on the order of those unveiled by most developed nations. It was not even expected to unveil a plan of the size announced by the Chilean government, which said it will spend an estimated 5 percent of GDP to boost the economy. Still, the lack of significant measures surprised even the most pessimistic analysts.

Expectations for a more robust announcement increased after Lopez Obrador met April 2 with business leaders, who asked him for tax and social security fees deferments in line with what the IRS has announced in the United States, deferments in utility services payments similar to those enacted in France, support for small businesses payroll payments, and reconsideration of controversial public investments.

But the president granted none of those requests in his April 5 address, much to the business community’s displeasure. Instead, Lopez Obrador said the government will modestly expand a direct-payment program for rural communities expected to suffer from a decline in remittances from the United States, create a limited small-business loan program and develop a new mortgage program for public employees. The message also included more support for Mexico's national oil company, Petroleos Mexicanos.

Previous massive contractions in Mexico's economy were followed by spikes in insecurity and violence.

A more aggressive recovery package could be partially financed by generous existing credit lines with the IMF of $61 billion, which the Mexican administration has so far been unwilling to use. Injecting liquidity into the market could be partially supported with a smaller credit line with the U.S. Federal Reserve, which Mexico's central bank has started to partially use. But the lack of a clear, coordinated response between Mexico's Finance Ministry and the Central Bank has hampered efforts to address the economic crisis.

Rating agencies had already downgraded Pemex's and Mexico's federal government debt, and follow-up downgrades are likely now that Lopez Obrador has unveiled his proposal — something that will hamper the public and private investment needed for a recovery.

Why It Matters

Previous massive contractions in Mexico's economy (-6.3 percent in 1995 and -5.3 percent in 2009) were followed by spikes in insecurity and violence. The number of homicides in Mexico has continued to increase in the first months of 2020, and a large economic contraction could be a fertile ground for increased criminal activity, organized or otherwise.

Lopez Obrador's popularity was already declining during the first quarter of 2020 because of his administration's failure to address crime and for mismanaging the public health sector even before COVID-19. While his approval rating is still high compared to most other leaders in the region, the downward trend is clear, potentially diminishing his party's fortunes in midterm congressional elections in 2021. Up to now, Lopez Obrador has managed to pass a good portion of the legal reforms he had promised. But if he loses his majority, Mexico might move toward a more investor-friendly environment.

Lopez Obrador's administration had been able to maintain a tense and cordial equilibrium with Mexico's private sector despite their disapproval of the government's pursuit of various projects it objected to, including the Santa Lucia Airport, Dos Bocas refinery and the Maya Train infrastructure projects. The president gave the go-ahead for the continuation of all of these projects during his April 5 message — he even designated all activities surrounding their constructions as "essential." Existing displeasure with Lopez Obrador plus his unwillingness to give the private sector the COVID-19 relief it wanted could fracture the relationship between government and business community.

A less popular and more isolated president could lead to more uncertainty regarding the economic direction of the country and less trust in the ability of the federal government to conduct policy. As in the United States, the absence of clear direction from the top could see various state governors start playing more important policy roles.

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Re: Mexico
« Reply #643 on: April 11, 2020, 11:01:36 AM »

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GPF: Mexico's Three Economic Fronts
« Reply #644 on: April 23, 2020, 12:40:35 PM »
April 22, 2020   View On Website
Open as PDF



    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
« Reply #648 on: May 06, 2020, 07:21:53 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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