CARTELS IN TALKS TO SPLIT TURF

Violence Falls As Mexico Rivals Aim To Divide Drug Routes, Preserve Future

NUEVO LAREDO - Mexico's warring Sinaloa and Gulf drug cartels have
quietly declared a cease-fire in at least two states as they
negotiate a peace agreement that could divide the nation's lucrative
drug routes, U.S. and Mexican intelligence authorities said.

The surprising move could dramatically reduce violence across a
nation where more than 1,300 people have been killed this year. But
authorities caution that any agreement could easily be derailed like
similar past efforts. In contrast to the raging violence of the
recent past, drug-related killings have fallen dramatically in the
last two weeks, according to Mexico City newspapers that conduct
unofficial daily tallies.

Drug experts and senior law enforcement authorities on both sides of
the border, speaking on condition of anonymity, said the cease-fire
appears to be holding. "The fact that violence had erupted across the
country - from the Gulf Coast to the Pacific Coast - in such alarming
fashion, became an issue of serious concern for veteran cartel
leaders who fear for the demise of their overall business," said
Eduardo Valle, a former assistant to the Mexican attorney general who
now writes a column for El Universal newspaper in Mexico City and El
Manana in Nuevo Laredo.

"Cooler heads, for now, are prevailing," he said. "What we have is a
temporary, partial cease-fire as the two sides try to negotiate a
lasting pact. All this, however, remains tenuous at best and perhaps
not sustainable in the long run."

Said a U.S. intelligence official who asked not to be identified:
"The agreement is not solidified yet, but moves are under way."
Official cautious Over the weekend, Reforma newspaper listed 44
deaths between June 16 and 22, compared with an average week's toll
of 60, marking one of the lowest death rates in recent months.

No police officers were killed during that period. "You cannot
overlook the fact that executions have leveled off dramatically in
recent days," said a senior Mexican federal law enforcement official
on condition of anonymity. "But we're a long way from declaring
victory. Nothing is concrete as far as we're concerned.

One thing is sure: These people hate each other with a vengeance, and
the killings can resume at any moment, anywhere."

In the past six years, nearly 10,000 people have been killed in every
imaginable way - from beheadings to being tossed from planes -
according to Alejandro Gutierrez, author of Narcotraffickers:
[Mexican President Felipe] Calderon's Big Challenge.

The killings have come as the Gulf cartel battled the Sinaloa cartel
for control of key drug distribution routes, including Interstate 35,
which begins across the border from Nuevo Laredo. So far, most of
those killed have been drug traffickers, soldiers and law enforcement
officials. Leaders from the Sinaloa and Gulf cartels are negotiating
over carving up the critical northern states of Nuevo Leon and
Tamaulipas, both of which border Texas, intelligence officials said.

Meanwhile, according to these sources, the Zetas, a violent
enforcement group formed by highly trained military deserters, would
share the state of Tamaulipas with their old bosses, the Gulf cartel.

Negotiations over other states could follow, including Michoacan,
Guerrero and Veracruz, the officials said.

According to intelligence officials, the Zetas want control over
coveted Nuevo Laredo - site of some of the bloodiest battles - and
its port of entry onto I-35. The talks include some local, state and
federal officials in Mexico, Mr. Valle and authorities said.

"The realignment under way is not just within the cartels, but also
with some members of the government," said Mr. Valle. "That's the
only way any pact can work because of the vast corruption within
sectors of the government."

The apparent cease-fire is partly a response to the Calderon
government's current military campaign, which has disrupted some
operations, and the prospect of greater U.S. involvement - both in
increased funding and telecommunications assistance for Mexico's
anti-drug fight. Still, the main reasons for the cease-fire appear to
be more practical, authorities said.

"The cartels are losing too many lives and too much money," said the
senior Mexican law enforcement official. "Our actions have made their
lives more difficult, but not enough to force them to the negotiation table.

If anything, the cartels are proving that only they have the power to
halt the violence. But these people have taken stock of the dire
situation and said, 'Hey, this is not good for business.

Let's talk and divide up the pie.' " Adding to the pressure,
Colombian cocaine producers are increasingly reluctant about doing
business with Mexican cartel leaders, officials say. Because cocaine
purchases are usually paid for after the merchandise is sold, the
increased drug seizures and interceptions have meant less revenue for
the Colombian suppliers, who often walk away empty-handed and angry,
authorities say.

"The Colombians want their money up front," said the U.S.
intelligence official. "Not even the Colombians feel safe, which
tells you a lot about how bad things have become."

Trafficker, Peacemaker

Leading the negotiations, according to intelligence officials, is
Juan Jose Esparragoza Moreno, alias El Azul, a powerful drug
trafficker originally from Badiraguato, Sinaloa, and reputed leader
of the Federation, a cartel organization run much like the Mafia -
through extortion and family ties.

The Federation reportedly includes the Sinaloa, Juarez and Sonora
cartels. More than a drug trafficker, Mr. Esparragoza, whose face is
plastered on the FBI's most wanted list with a $5 million bounty, is
also known for his skills as a peacemaker.

Five years ago, authorities said, Mr. Esparragoza tried and failed to
forge an agreement with Osiel Cardenas, the former Gulf cartel leader
who was extradited to the U.S. in January. With Mr. Cardenas out of
the picture, the Federation, led by Mr. Esparragoza, is now talking
to Jorge Eduardo Costilla-Sanchez, known as El Coss, the reputed
leader of the Gulf cartel, and Heriberto Lazcano, known as El
Verdugo, "The Executioner," and head of the Zetas, officials said.

"El Azul is the only guy who can deal with both sides," said a U.S.
law enforcement official. "He's the peacemaker and has been a good
liaison who can communicate with both El Coss and Lazcano and the
Mexican military."

Calls to the military seeking comment were not returned. The
negotiations are strewn with roadblocks. While the talks are aimed
mainly at deciding on drug distribution routes across Mexico and
along the U.S.-Mexico border, deep rifts remain among the drug
traffickers. Ill feelings have been exacerbated by deeply personal
feuds among men reeling from the violent deaths of siblings and close friends.

"Too much blood has been spilled, too many grudges remain," said Mr. Valle.