MEXICAN DRUG LORDS REPORTEDLY CONVENE TO FORM NEW ALLIANCE

APODACA, Mexico -- Wearing business suits and cowboy boots, they flew in on
private jets, landed at several airports and took a short drive to this
northern town in a fleet of brand-new Xterras.

They were Mexico's drug lords, who control most of the drugs smuggled to
the United States, along with their bodyguards, various associates and
their contacts in government. Sixty men in all, they gathered in a
restaurant, drawing the notice of local people as well as police in nearby
Monterrey.

A participant in the three-day meeting, as well as associates of the
smugglers, government officials and others familiar with the drug trade,
gave independent accounts of the summit, speaking on condition of
anonymity. Their descriptions differed slightly in detail but agreed on
what the central purpose of the meeting was: to join forces after 12 years
of bloody turf wars and form a new cartel that would unite operations and
cut costs.

The alliance has been in the works for three years but was made more urgent
by a tough line from Mexico's new president, Vicente Fox; by a court
decision making it easier to extradite drug smugglers to the United States;
and by a proposed U.S.-Mexican crackdown on money laundering, according to
government insiders as well as associates of the smugglers.

Although nobody has a good estimate of how much money Mexico makes from
drug smuggling, the White House estimates that about half of the $65
billion in drugs that Americans buy each year come through Mexico. By any
estimate, drug trafficking is one of Mexico's top sources of income,
rivaling the top legal industries of oil, tourism and assembly-for-export
plants.

The industry is so pervasive that it has corrupted law enforcement from top
to bottom. Police assigned to drug duty are routinely arrested for
collaborating with the smugglers, and in 1996 Mexico's newly appointed drug
czar was found to be on the payroll of Amado Carrillo Fuentes, aka "the
Lord of the Skies." Former Gen. Jesus Gutierrez Rebollo remains in jail.

The last major drug cartel in Mexico collapsed in 1989 when its longtime
boss, Miguel Angel Felix Gallardo, was arrested. The new alliance would end
the war of succession that has killed hundreds of people, and mean a major
shift in the drug trade in the Western Hemisphere, creating a syndicate
better equipped to evade law enforcement.

Rafael Macedo de la Concha, Fox's new attorney general, said his agents
investigated tips about such a meeting and found no evidence it had
occurred. The U.S. Drug Enforcement Administration refused to comment.

But the sources said the meeting took place Jan. 26-28 around a long wooden
table in a restaurant's back room, a picture window offering a garden view.
Screened off from the main dining area, they talked as waiters in tuxedos
served steaks, roast goat and dried-beef soup, a regional specialty.

According to the accounts, the guest list read like a who's who of Mexican
drug smugglers:

* Juan Esparragosa Moreno, who Mexican authorities say is a veteran drug
boss known as "El Azul" for his dark, almost blue-toned skin; other heirs
of the late Carrillo Fuentes, including Ramon Alcides Magana, a former
policeman known as "El Metro," who authorities say saved the life of
Carrillo Fuentes' son and became a close confidant. They represented the
Juarez drug-smuggling organization, which operates along Mexico's Caribbean
coast, in central Mexico and along the western Texas border.

* Humberto Garcia Abrego, accused by Mexican authorities of running the
Gulf drug gang of his brother Juan, who is serving 11 life sentences in a
U.S. prison for drug smuggling. The Gulf gang operates along Mexico's Gulf
of Mexico coast. Accompanying him was Jaime Gonzalez, who associates say
slipped out of the maximum-security Almoloya prison to attend the meeting.

* Ignacio "Nacho" Coronel, reputed leader of the Colima gang, which
operates in the Pacific Coast state of Colima and along the far eastern
border with Texas.

* Ismael "El Mayo" Zambada, wanted by Mexican authorities, and
representatives of Joaquin "El Chapo" Guzman, who recently escaped from a
Mexican maximum-security prison in a laundry bin. The two men work in a
semi-independent but coordinated manner along Mexico's Pacific Coast and
north to the Arizona border.

* Gilberto Valdes, a businessman who sources said represents smugglers in
the southern state of Chiapas.

* Two men in military uniforms with generals' stars, to whom the others
referred as "representatives of the attorney general's office," the
participant and associates said. And, they said, a group of Colombians was
present as consultants.

These five major drug-smuggling groups make up a new cartel, not yet named,
which encompasses many smaller gangs, the sources said. The only major
group to decline the invitation to the meeting was that of the
Tijuana-based Arellano Felix brothers, who run the bloodiest organization,
all sources said.

Macedo, the attorney general, said his office asked nearby residents about
any unusual movements at the time but was told nobody had seen anything
strange. "It's all speculation," he said.

However, Eduardo Valle, a former drug official at the attorney general's
office, said colleagues told him there was "a lot of movement" in the
agency's office in Monterrey, just a few miles from Apodaca, at the time of
the meeting. He said he didn't know why but added: "Certainly something
major was happening."

A prominent drug expert, Jorge Chabat of Mexico City's Center for
Investigation of Economic Development, said there are signs of a new union,
and that although he hadn't heard about the meeting, he thought it was
plausible.

"This seems like a normal process to me. This occurs in all legal
businesses, and there's no reason it shouldn't in the illegal ones, too,"
he said.

The associates said the smugglers opened their books to one another,
discussed how much each paid in bribes, and shared contacts, informants and
the names of corrupt officials. According to the insiders, the participants
agreed that members of the new cartel would -- for now at least -- respect
each other's territory.