DRUG-RELATED VIOLENCE MOVES INTO ACAPULCO

Area's $1.35b Tourist Industry May Be At Risk

ACAPULCO, Mexico -- The bloody drug violence that has long plagued
Mexico along the US border has washed up, literally, on the shores of
the country's most famous resort.

Last month, a severed head was carried in by a wave and deposited
next to a Mexican sunbather and her two horrified children. It was
one of six beheadings and scores of execution-style killings and
grenade attacks this year to sully the storied, golden-sands beach
resort that in its glamorous heyday hosted jet-set yachts and
celebrity honeymooners such as John and Jackie Kennedy.

Earlier this month, an omnipresent military helicopter scoured the
coastline daily following the kidnapping of a Navy intelligence
officer, skirting palm trees over luxury hotels and raising stares
from bathers. The Navy lieutenant was found beaten to death in the
back of a sport utility vehicle alongside the chief of security for
City Hall. They were the latest of more than a dozen law enforcement
officials in the region believed to be victims of drug cartel
assassinations in recent months.

Spiraling drug violence and the infiltration of police forces by
organized crime are perhaps the most dangerous of many critical
problems that the next president of Mexico will have to confront.
Nationwide, battles between cartels claimed 1,003 victims from
January through June this year, a body count up by nearly half over
the first half of last year, according to El Universal newspaper. An
escalating local turf war among cartels is earning this erstwhile
fairy tale resort unwanted infamy as "Narcopulco," a slur that could
imperil millions of dollars in tourist revenue and the image of a
favored holiday spot for hundreds of thousands of Americans each year.

Mexican authorities attribute the violence to a battle for control of
Pacific entry points for South American cocaine smuggled in by
speedboats and small planes. The city boasts a direct route to Mexico
City 180 miles to the northeast and on to the United States, and an
increasingly lucrative local market.

Retired General Juan Heriberto Salinas, the secretary for public
security for Acapulco's state of Guerrero, said the unrest is a
consequence of growing domestic drug consumption and the country's
fight between cartels for domination of routes and border access.

More cocaine is being smuggled from Colombia via the Pacific than
ever before, exploiting Mexico's long and lightly guarded Pacific
coast and Acapulco's hidden coves. Fifteen metric tons of cocaine
have been intercepted in Guerrero since September, the largest
seizures nationwide, Salinas said. The state has long been a producer
of high-quality marijuana and the nation's top producer of opium poppy.

The violence has not hit tourists, but at least three locals were
injured in the crossfire from two daytime shoot-outs this year at a
busy crossroads about a mile above the main beach strip, sowing fear
among year-round residents.

At the intersection known as La Garita, dozens of bullet holes
pockmark a church , and the spray-painted outlines of bodies from a
shoot-out between police and gunmen were visible until recently.

In April and June, four severed heads were left with warnings from
one cartel to another in front of a government building on the same
corner, including a head belonging to a police officer . Another head
was left a few blocks away at City Hall.

Delia Polanco, 51, who owns a corner snack shack, said she threw
herself to the ground during a January shoot-out that lasted nearly
an hour. While talking to a reporter, Polanco got a panicked phone
call from her husband who heard a false rumor there was a fresh
shoot-out underway at the intersection.

"Never in my life have I seen so many deaths. Acapulco was very
peaceful," she said, shaking her head.

For many years, authorities say, Acapulco's drug market was under the
control of the Sinaloa Cartel, named for the northern state where it
started. Narcotics trade bosses owned opulent waterfront mansions,
dined at expensive restaurants, vacationed in the region with their
wives and children, and avoided disturbing the peace.

But open violence surged last year, authorities say, when the rival
Gulf Cartel sent members of its brutal "Zetas" hit squad, assassins
formed by rogue former military special forces, to exact payback for
incursions by the Sinaloa Cartel onto the Gulf's turf in Nuevo
Laredo, along the Texas border.

At least two shootings -- the ambush of a policeman and a man from
Sinaloa -- have occurred on the main tourist strip known as La
Costera. But the violence has not visibly affected tourism, the $1.35
billion leading industry in the region.

Carlos Garcia Pelaez, 35, a bartender at Disco Beach, where the
floating head was found, said most people shrug off the bloodshed,
"because so far, it's been a war between police and narcos."

Teresa de Jesus Rivas, director of municipal tourism, said Acapulco
hosted 5.7 million visitors last year, up 400,000 from 2004, due to
growing domestic tourism.

Many share the view of housewife Gabriela Herrera Aleman, 38, who was
visiting with her family from Mexico City. "All over Mexico and the
world it's the same with crime. That won't stop me from coming to
sunbathe," she said with a shrug, "as long as something serious
doesn't happen to us."

The public's perception of authorities' role in the drug war has not
been so forgiving. State, federal, and local officers have been
implicated in collaborating with one cartel against another.
Acapulco's commander of the elite federal forces known as AFI and
seven colleagues were charged with drug trafficking, organized crime,
and the abduction of five Zeta hit men tortured and killed on video
by Sinaloa hit men last year. Five AFI officers were later freed for
lack of evidence.

"Mexico's drug war has become much more violent in the last year and
a half, in some ways because of the government's actions," said Jorge
Chabat, an investigator at the Center for Economic Research and
Teaching in Mexico City. "Before, the government didn't attack
cartels, so there was equilibrium. Once they started cracking down
and arresting leaders, there was a fight over turf among those who remained."

Chabat said the government needs to reform, unify, and
professionalize its disparate security forces, prisons, and judicial
system before taking on powerful drug cartels. He likened President
Vicente Fox's attack on the mob to hitting a beehive with a baseball
bat before putting on a protective suit and mask. "All the bees have
rushed out and are stinging everyone," he said.

Another factor in the escalating war is a rise in importance of
Mexico as a market, not just a transit point, for drugs. From 1998 to
2003, domestic consumption rose by some 40 percent, Chabat said.

And Colombian traffickers are increasingly paying Mexican
counterparts in drugs rather than cash, spurring the Mexicans to
offload excess quantities on local street dealers.

Acapulco has between 200 and 300 locations where illicit drugs are
sold -- up from no more than 50 a decade ago -- with an estimated
$227 million in business a year, according to a local newspaper, El Sur.

Hundreds of federal officers are now patrolling Acapulco with state
and local officers. The mayor's office, which led a march on July 22
to draw attention to their demands, says it needs investigations,
targeted raids, and prosecutions more than intimidating beach patrols
and low-flying choppers that could scare off tourists.

Guerrero state prosecutor Eduardo Murueta acknowledged there had been
no progress in solving 200 serious crimes last year.

Ernesto Mastache, vice mayor for justice and public security,
acknowledged that 84 out of Acapulco's 2,000 local officers recently
failed drug screenings.

But he dismissed reports of corruption and downplayed the violence,
asserting there was no proof it was drug-related. The head on the
beach, he asserted, could have been a shark victim.

Yet for some visitors, the glitter of Acapulco has irretrievably
faded, not just from crime, but from traffic, overcrowding, and
commercialization that have overrun the resort area made famous by
John Wayne and Frank Sinatra.

Tony Demello, 61, a seafood dealer from Middleborough, Mass., said it
was a melancholy moment when he recently sold his holiday villa after
coming to Acapulco since he was 14.

At home a few months ago, he saw a news item about a shooting in
Acapulco, and his wife advised, "You better get rid of that house,"
he recounted. With a lifetime of fond memories in Acapulco, he would
like to visit again, he said wistfully, "as long as the drug violence
doesn't hit tourists."