FOX CAUTIOUSLY STALKING MEXICO'S DRUG CARTELS

The New President Fears An Insurgency If He Presses Too Hard

MEXICO CITY -- Drug trafficking is among the major contributors to
Mexico's annual national income, rivaling top legal industries such as
oil and assembly-for-export and dwarfing more obvious money-makers like
tourism.

But with the accession to the presidency of Vicente Fox, an vowed ally
of the government of the United States where the drugs find their
market, Mexico's powerful drug cartels are facing new pressure from
investigators and prosecutors.

The cartels are responding by a text-book program of corporate
restructuring aimed at coordinating and simplifying their trafficking
and bribery operations while isolating regional "cells" to minimize the
danger of prying eyes.

The ending of bloody rivalry between the five main cartels, which has
seen hundreds killed in a 12-year turf war, may offer a significant
challenge to Fox.

The new president, who overturned 71 years of authoritarian and corrupt
one-party rule in elections last year, is known to fear the cartels will
launch a quasi-political violent campaign to undermine his
administration if they are too hard pressed.

Such a campaign by drug lords has been raging for years in Colombia, the
source of most of the drugs trafficked into the U.S. by Mexicans.

Even so, Fox, 58, has advanced with cautious boldness since he became
president on Dec. 1 last year.

On the regional front Fox has persuaded the U.S. to admit for the first
time that its addicts are a major component of the problem. In the past
U.S. legislators have preferred to exclusively blame the incompetence
and corruption of neighbouring governments for failure to curb the
trafficking.

U.S. congressional threats to impose economic sanctions on governments
it does not feel are "fully cooperating with the United States" has long
been a source of friction between Mexico City and Washington.

In the new climate of trust, the U.S. Senate foreign-relations committee
has even taken the unprecedented step of agreeing to hold joint meetings
here with its Mexican counterpart.

Last week Fox attempted to complete a circle of regional cooperation
against the traffickers when he signed an agreement with Colombian
President Andres Pastrana.

The agreement provides for intelligence-sharing and tighter bank control
laws to stem money laundering.

"Everyone knows that there is infiltration, corruption," Fox declared at
the signing, adding optimistically: "But with Colombia and Mexico
working together, we can win this battle and eliminate drug
trafficking."

Pastrana was more stern and more demanding that the U.S. play its part.

"The United States has to lower its consumption," Pastrana said. "We can
combat and attack trafficking rings in our countries, but if the demand
continues in the U.S. someone will always be willing to supply and
transport drugs to that market."

U.S. dealers buy about 80 per cent of the 520 tons of cocaine produced
each year in Colombia. More than half that product travels through
Mexico which is also a significant producer of marijuana and heroin for
the U.S. market.

Washington estimates that about half of the total $65 billion US a year
Americans spend on drugs come through, or from, Mexico.

With an annual cash turnover of over $32 billion US this makes Mexico's
drug cartels among the country's leading industries. It far outstrips,
for example, tourism which provides only 1.5 per cent of the country's
$500 billion US gross domestic product, or $7.5 billion US, despite the
resort trade's high profile.

The drug trade may be subterranean, but its leaders are well known and
survive through a vast protective network of suborned officials, police
and senior army officers.

The previous Mexican administration attempted to break the drug lords'
protective ring in 1996 by taking responsibility for enforcement from
the notoriously corrupt police and giving it to the army.

It hasn't worked. Since 1997 six army generals have been arrested for
aiding the traffickers.

The sixth arrest, of Brigadier-General Ricardo Martinez Perea, commander
of the 21st Motorized Cavalry Regiment, came last week while Fox was
signing his accord with Colombia.

The arrest partly reversed the embarrassment Fox felt when two convicted
drug lords escaped from high-security prisons during the early weeks of
the new presidency.

There was more good news for Fox on Monday when a top lieutenant in the
Gulf Cartel, Gilberto Garcia, was arrested.

Authorities raided Garcia's home in the Gulf Coast state of Tampaulipas
on March 30 and arrested 19 of his subordinates.

There was no sign of Garcia, however, until investigators spotted a
suspicious electrical wire. They tracked the wire into a secret room
where Garcia was hiding, complete with a supply of oxygen tanks and
enough food for several weeks.

The investigation of the Garcia's operation in the Gulf Cartel has led
prosecutors to believe the traffickers are attempting to increase their
security by insulating regional "cells" from one another.

At the same time officials have gathered a lot of information about a
meeting drug lords held outside the northern industrial city of
Monterrey late in January.

Present at the meeting were representatives of the Juarez Cartel, which
operates along the Caribbean coast, central Mexico and the Texas border;
the Gulf Cartel, whose leader Juan Garcia Abrego is serving 11 life
sentences in a U.S. prison; the Colima gang, which operates in the
Pacific coast state of that name and along the eastern border with
Texas; another Pacific coast cartel run by Joaquin Guzman who recently
escaped from maximum-security prison; and a representative of smugglers
from the southern state of Chiapas.

Apparently not at the meeting were representatives of the Tijuana-based
Arellano Felix brothers, who run one of the most murderous groups on the
U.S. border.

But at the meeting were a group of Colombians and two Mexican army
generals.

The main aim was to end bloody disputes over territory, though without
the presence of the Tijuana group there will be no peace.

Just as critical was to coordinate their bribery of officials, which was
why the generals were there.

After much discussion the generals agreed to a new payment system.
Instead of piecemeal graft payments by each cartel they now plan to pool
their bribes which will be given to major protectors, such as the
generals, for distribution.