Mexico’s Emerging Narco-State

The July 5 mid-term election in Mexico will continue narcotraffickers' creeping reach into all sectors of the country's political life. The army and police are already drenched in narco-scandals, while reports show that political campaigns and government offices have also been infiltrated or co-opted by traffickers. But Mexico is not a failed state, such extensive corruption and illicit wealth creation actually depends on the state.

July 1, 2009

In five minutes, without shooting a bullet, a 20-man armed commando unit burst into a prison in the Mexican state of Zacatecas and freed 53 prisoners – all of them connected with the Gulf Cartel. The lightning speed of the operation and the crisp Federal Police uniforms worn by the gunmen was the work of the Zetas, the Gulf Cartel’s armed wing.

The scene eerily reminded Mexicans that no one knows who is really working for whom. Happening less than two months before the July 5 mid-term elections, the prison break raised a central question underlying Mexico’s current political reality: How vast is official complicity with the very drug cartels that the Mexican government claims to be taking on with U.S. support?

Official complicity in the drug trade is not necessarily symptomatic of the “failed state” thesis so ardently debated by high officials in Washington and Mexico City. The thesis gained traction when a Pentagon report released in January said Mexico was at risk for a “rapid and sudden collapse.” The report exposed fears that Mexico was losing control of its territory to increasingly powerful organized crime cartels.

But the more worrisome reality is that moving massive amounts of drugs and money to and from the lucrative U.S. market requires not a collapsed state, but rather the protection and collusion of a somewhat "functional" one.1 The process is even more marked when that same semi- functional state is hard set on the deregulation of capital flows and the unrestrained mobility of goods. Throw in a dose of misguided U.S. military assistance ($1.12 billion to date) and the situation in Mexico begins to reveal itself.

Taking the State

John Gibler, in his new book Mexico Unconquered, unmasks the contradiction noting, "Government employees protect the most wanted criminals from the law while at the same time carrying out a war against these criminals." He describes a "deep and extensive network of government employees," including “elected politicians, army generals and commandos, police chiefs and patrol officers, prison guards, and local and federal judges." Gibler concludes that this network of corruption "aids and abets the greatest proclaimed threat to [Mexico’s] integrity" – i.e. drug trafficking.

The ironies of the drug war in Mexico are extreme. Los Zetas, for example, widely considered one of the most violent and dangerous factions of the Mexican drug trade, was founded by former members of an elite anti-drug squad of the Mexican Army. The efficient precision and stealth of the Zacatecas prison-break stems from the U.S. military training once received by the group's leadership.

It’s not only the military. Mexican government intelligence reports say that 62 percent of the police force is under the control of drug traffickers. The same reports reveal that 57 percent of the arms distributed to the police force have been used in illegal activities.

Federal prosecutors recently charged Federal Police commander Javier Herrera Valles with protecting criminal groups in the northern state of Tamaulipas. In exchange for this assistance, he was pocketing $35,000 every two weeks. With the illegal drug industry in Mexico valued at over $23 billion, traffickers can afford these hefty payoffs.

The July 5 Elections

Politicians have become another source of narco-scandals. Mexican Senator Ramon Galindo Noriega says municipal governments have been “captured or feudalized by drug traffickers" – in fact, as much as 60 percent of all of Mexico's municipalities, according to a UN investigation.

The elections next week could make things worse: One intelligence report suggests that drug traffickers are bankrolling politicians' campaigns in more than 10 percent of the country's municipalities, spanning 22 of the country's 31 states.

Instead of elected representatives addressing the daily economic hardships hammering the majority of Mexicans, the upcoming elections threaten to further entrench narco-power within the very architecture of the political system.

Meanwhile, Mexican President Felipe Calderón’s National Action Party (PAN) is trying to present itself as the law-and-order, anti-crime option, vowing to rout out corruption. Calderón recently said the future of Mexico's electoral democracy was at stake. Attacking the opposition he said, "To turn one's head, to act as if you don't see the crime in front of you, as some politicians want to do, is no option for Mexico."

Critics of the President point out that his administration has resorted to more brazen tactics to discredit opposition parties. In late May Calderón engineered federal police operations against municipal presidents and municipal police in Michoacán and Nuevo León, states run by opposition governors. While these “selective operations” indeed nabbed dozens of low-level authorities and hundreds of police, writer Carlos Fazio echoed the speculation about the raids' political motives.

About Calderón's move Fazio wrote: "The media dirty war is an attempt to convince Mexicans that all politicians are corrupt (which is in large part true) and that his party, the PAN, is the only electoral option. False. The PAN forms part of the corruption-simulation-impunity chain." The PAN's rise in the pre-election polls after the operation would seem to confirm Fazio's thesis.

Mexico-based UN advisor Edgardo Buscaglia contends that without "dismantling the criminal-asset networks supporting criminal enterprises, and without attacking high-level corruption … criminal groups will act rationally by re-assigning more financial and economic resources to protecting themselves through added corruption and by increasing the levels and scale of 'organized violence'."

Narco-Bankers, Drug Summits and Presidents

Few events are more emblematic of the fusion of high-level government officials, corporate finance, and drug trafficking than a meeting in Mérida between then-President George W. Bush and Calderón in March 2007. The meeting hatched the initial plans of the Mérida Initiative, or Plan Mexico, which has made Mexico the number one recipient of U.S. military aid in Latin America, surpassing Colombia. Narco News reported the Mérida summit was being hosted at the property of accused narcotrafficker and money launderer Roberto Hernández Ramírez. The narco-estate had also been the site of a 1999 anti-drug summit between President Bill Clinton and his Mexican counterpart Ernesto Zedillo.

At the time of the 1999 meeting, Hernández was the owner of Mexico's national bank, Banamex. By the time of the following presidential summit in 2007, Hernández had become a board member of Citigroup, which had bought Banamex. (Mexican daily Por Esto! and Narco News broke the story about the narco-banker and defeated Citigroup's libel and slander suit against their reporters; for a full account, see The Narco News Bulletin.)

As Clinton's Treasury Secretary, Robert Rubin led a money laundering investigation against Banamex in 1998. But according to a former U.S. customs agent, Rubin helped shutdown the Banamex investigation once customs agents began implicating top-level officials in the Mexican government. By 2001, Rubin had joined Citigroup and led the financial firm's buyout of Hernández's Banamex. Considering the financial company's established links with drug money laundering in Mexico, the purchase of Banamex put Citigroup in a position to bank millions of dollars in illegal drug profits.

Around We Go

Rubin, Hernández and Citigroup are all part of a system, rarely punished beyond a fine, with privileged access to power. The message could not be clearer: Those in the top echelons of the drug trade – and their necessary politico-banker allies – will continue to profit from the trade in illicit drugs, while the artillery of Plan Mexico is directed at the replaceable pawns of the lucrative business. Washington is funding both sides of the drug war. U.S. military aid to this corrupt system has flowed rapidly under the Obama administration.

Meanwhile, Mexicans are left to ponder the violent and corrupt political system they are left with ahead of the July elections. Election polls project that 60 percent of all eligible voters will simply stay home, while a campaign for a blank vote of protest gains momentum.

Most Mexicans clearly understand the post-NAFTA reality: As the economy rots in joblessness, their politicians court powerful moneyed interests; whether from the drug trade, multinational corporations, or both at the same time. The supposed “failed state” looks a lot more like a corporate-backed narco-state.

1. This premise is borrowed from Teo Ballvé's unpublished May 2009 manuscript: "Territories of Partition: Warlord Governance and the Predatory State." The paper details a similar process underway in Colombia, which dynamics in Mexico increasingly resemble.

Todd Miller is a NACLA Research Associate.

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