DRUG WAR OR DRUG DEAL?

Mexico's Biggest Cartel Banks on Powerful Friends

Like most cops in the Mexican border city of Ciudad Juarez, Jesus
Manuel Fierro-Mendez was dirty.

In fact, soon after being promoted to the position of captain, he was
smuggling enormous quantities of cocaine into the United States. And
when Fierro-Mendez quit his job in the spring of 2007, after someone
tried to kill him, he went to work for the Sinaloa drug cartel,
Mexico's most powerful drug-trafficking organization, run by Joaquin
(El Chapo) Guzman, the richest drug lord in North America and the
second most wanted man in the world after Osama bin Laden.

Juarez is a city of 1.3 million people that sprawls across the border
from El Paso, Tex., and is a key entry point for narcotics shipped
from Mexico into the lucrative American and Canadian black markets.
It's also a wild west killing field, the most dangerous metropolis in
the world, where on average seven people are now murdered every day
and 5,300 have been gunned down since January 2008 - the result of a
vicious war between the Sinaloa and Juarez drug cartels, who are
fighting for control of this prized gateway.

Fierro-Mendez's career as a drug smuggler was short but spectacular:
He was arrested in El Paso in 2008 for transporting 50 kilos of
cocaine a week across the border. Earlier this year, his audacity
cost him a 27-year prison sentence.

But that's not really what's interesting about the former Mexican
police captain. This winter, the 47-year-old Fierro-Mendez testified
in an El Paso court against Fernando Ontiveros-Arambula, his former
boss in the Sinaloa cartel in Juarez - and one of Chapo Guzman's top
lieutenants. And Fierro-Mendez's testimony contained some unexpected
bombshells.

When asked about his own role in the Sinaloa cartel, Fierro-Mendez
replied: "I took control over one part of the Mexican army through an
inactive captain, a member of the army."

He said he contacted this captain through another army source, a man
nicknamed El Pantera. Fierro-Mendez's cellphone even contained
Pantera's number. The prosecutor asked why it was necessary for the
Sinaloa cartel to control the army?

"The basic objective was to try to terminate, eliminate (the Juarez
cartel)," answered Fierro-Mendez. "So that (the Juarez cartel) would
disappear, so that its strength would be reduced, and Chapo's cartel
could take control."

To this end, Fierro-Mendez fed sensitive information to the army
whose soldiers, in turn, would apprehend Juarez cartel members. "When
I had control of the army, of part of the army, I was known as the
leader of (the Juarez region)," he declared.

The drug dealer also noted that Chapo Guzman favoured those who could
transport the most drugs across the border into the U.S. "And was
influence with the military an important factor (in moving drugs)?"
the prosecutor asked him.

"Very important."

"And what efforts, if any, were being made to get control of the military?"

"Well, I already had it," boasted Fierro-Mendez. "I had it, for free,
I had it."

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To put Fierro-Mendez's remarks in context, consider the following:
Most of the cocaine, marijuana, heroin and crystal meth entering the
U.S. and Canada - a trade valued at up to $50 billion a year -
transits through the hands of Mexico's seven drug cartels. In 2007,
Felipe Calderon, the newly-elected president of Mexico, announced he
was setting the Mexican army loose against the cartels, sending
45,000 Mexican soldiers into the cities and towns to wipe out these
criminal gangs.

The U.S. government liked this strategy so much that it's been
spending $1.4 billion U.S., through something called the Merida
Initiative, to help arm and train the Mexican military in its fight
with the cartels - making Mexico the largest recipient of U.S.
security aid in the Americas.

Yet an investigation conducted by The Gazette, CBC Radio and
America's National Public Radio (NPR) has found that powerful
elements within both the Mexican government and army have no
intention of ending the narcotics trade. Instead, these senior
government and military officials are assisting the Sinaloa cartel
and its leader, Chapo Guzman, become the dominant drug trafficking
organization in Mexico. They are helping the Sinaloa cartel take out
its rival cartels. Which would mean it will likely become the most
powerful organized crime group on the continent.

"The (Mexican) government went from being a controller of
narco-trafficking - to the armed wing of the cartels," declares
Anabel Hernandez, one of Mexico's leading investigative reporters who
has spent five years researching a book about the Sinaloa cartel and
Chapo Guzman. "This is what's happening here. Portions or sectors of
the military, the Federal Investigations Agency, the federal police,
and Secretariat of Public Security, are at the service of the cartel
of Sinaloa. ... Guzman and the Sinaloans have been protected for the
past nine years by the federal government."

This contention is given weight by Manuel Clouthier Carrillo, a
senator in the ruling National Action Party (PAN), who triggered an
uproar this winter when he gave an interview to a Mexican newsweekly
accusing his own president and party leader, Felipe Calderon, of not
going after the Sinaloa cartel. The magazine's cover had a picture of
Chapo Guzman with the headline "The Untouchable." And Clouthier
should know: He represents the state of Sinaloa, where Guzman and his
cartel are based.

"It's inconceivable that organized crime has the power that it has in
Mexico without support from our legal institutions," Clouthier said
in an interview with NPR. "The Calderon government, which has been
fighting organized crime in many parts of the republic, has not
touched Sinaloa. I know this. I'm Sinaloan. My family lives in
Sinaloa. Every weekend I'm in Sinaloa, and I can say it as a Sinaloan
that Sinaloa is not being touched."

When NPR crunched the numbers from Mexico's attorney-general's
office, they showed that of 2,604 cartel members prosecuted since
Calderon became president in 2006, less than 12 per cent were from
the Sinaloa cartel - despite it being the largest and most powerful
cartel in Mexico. And Edgardo Buscaglia, an internationally-renowned
law professor, economist and UN adviser who teaches at the Mexico
City-based university, Instituto Tecnologico Autonomo de Mexico, says
he's been leaked government statistics on charges laid against cartel
members that reveal the same pattern. Buscaglia believes the
Sinaloans have corrupted Mexico's political system.

"They have been able to infiltrate the higher levels of the state,
and have been able to bribe and distort their way through the higher
levels of decision-making," he maintains. "The money the politicians
get for political campaigns comes from organized crime, which is why
they are not touched."

Evidence of such corruption is mounting:

n Earlier this month, internal cartel documents obtained by Mexican
authorities from a suspected associate of Guzman, and leaked to a
Mexican newspaper, showed that Guzman has a sophisticated
counterintelligence operation and is a master at buying off top
police officers and soldiers; he has detailed information of those
pursuing him, and has police officers on his payroll protecting
members of the cartel.

n Last summer, 10 Mexican army officers were arrested, including a
captain and seven lieutenants, who were working for the Sinaloa cartel.

n Then there is Jose Gomez Llanos, who is on the U.S. Treasury's list
of Foreign Narcotics Kingpins and is suspected of being a money
launderer for Guzman. He's currently the top federal prosecutor in
the state of Tamaulipas.

n And in 2008, the Mexican government arrested, among others, the
chief of the federal police, the representative to Interpol, an
officer in the Presidential Guard, an army captain accused of selling
military weapons to the Sinaloans, and Noe Ramirez Mandujano - the
former drug czar who allegedly pocketed $450,000 U.S. for passing
information to the cartel.

Yet Buscaglia believes there's method to the government's apparent
madness in favouring the Sinaloa cartel. Given that narcotics might
well be Mexico's second-biggest export after oil, and an estimated 78
per cent of the legitimate economy is infiltrated by organized crime,
Buscaglia says the country's weak government is finding it difficult
to crush the drug traffickers. Instead, he feels they've embraced a
strategy used by governments in Colombia and Russia: encouraging the
emergence of one dominant criminal group.

"They are hoping, behind closed doors, that one organized crime group
will consolidate itself nationally," says the law professor. "By
having a national organized crime consolidation, you will see less
violence taking place. You will see less competition among the
organized crime groups. Instead of fighting seven or eight organized
crime groups they will be fighting one or two. That's the hope they have."

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The ties linking the Mexican state, army and cartels are visible in
places like Juarez.

Once heralded as a model of neo-liberal globalization, with its
low-wage, union-free factories pumping out goods for the American
market, today Juarez is a frayed shell of this dream, a municipality
of broad avenues and ubiquitous fast food joints and chain stores,
where heavily-armed soldiers and federal police roam the streets in
pickup trucks.

It's a dying city: 100,000 people have fled, 25 per cent of houses
stand abandoned and 40 per cent of businesses have closed, and where
the murder rate keeps going up and up. In 2007, there were 300
murders, before it shot to 1,600 in 2008, and 2,650 last year.

Juarez, and the outlying regions, have long been controlled by the
Juarez drug cartel, currently led by Vicente Carrillo Fuentes. This
gang once ran the local and state police and city government, and
permitted drugs from other cartels to pass through the city into the
U.S. for a fee.

But its fortunes are now on the wane. Why? Up until 10 years ago,
Mexico was ruled for seven decades by the Institutional Revolutionary
Party (PRI), which kept a firm hand on the cartels in return for
graft. The PRI, police forces, army and cartels all worked closely
together in a tango of corruption.

This was underlined in 1997 when an army general, Jesus Gutierrez
Rebollo, Mexico's top drug czar under president Ernesto Zedillo, was
arrested for protecting and taking money from Juarez cartel kingpin
Amado Carrillo who earned his nickname - Lord of the Skies - for
flying DC-6s loaded with Colombian cocaine into the country under the
nose of the Mexican military. "Organized crime groups in Mexico were
up until 10, 15 years ago managed by the state," explains Buscaglia.
"The groups couldn't compete with one another."

In 2000, however, the PRI's long reign ended and Vicente Fox and his
PAN party swept to power. PAN was unwilling to continue the corrupt
relationship with the cartels, allowing a vacuum to emerge. Soon the
cartels began vying with one another for the growing profits of the
drug trade and violence among them flared into warfare.

One of the enduring mysteries of this period is how Chapo Guzman, the
head of the Sinaloa cartel, escaped from a maximum-security prison a
few months after Vicente Fox's election. He'd been jailed in 1993.
"After five years of investigation," says investigative reporter
Hernandez, "I have the journalistic conviction that Chapo didn't
escape from Puente Grande prison. He was released by the authorities
to be reinserted into cartel life in Mexico."

Whatever the case, Guzman's reputation as a Robin Hood folk hero has
only grown. Now listed on the Forbes list of billionaires and as the
41st most powerful person in the world, Guzman is the informal CEO of
one of the world's biggest drug-trafficking organizations, which
smuggles a big part of the marijuana, heroin, cocaine and meth that
ends up on U.S. and Canadian streets and has links to organized crime
in 23 countries. He's feted on YouTube videos and by musicians and
lives with a $7-million U.S. bounty on his head somewhere in the
mountains of Sinaloa, a central state that hugs the Pacific Ocean.

The collapse of the old order and rise of Guzman was bad news for the
Juarez cartel. Now its territory is up for grabs. Indeed, according
to a former Juarez police commander, who fled the city more than a
year ago and now lives in El Paso, Tex., the Sinaloans were invited
into Juarez by a group of smaller drug trafficking organizations in 2007.

The commander, who spoke to The Gazette in his lawyer's office on
condition of anonymity, says these smaller gangs once worked with the
Juarez cartel to smuggle drugs through the city into the U.S. But
three years ago, the Juarez cartel ended this arrangement. So, says
the former cop, the smaller groups appealed to the Sinaloans for
help. "They went to Chapo and united forces with Chapo and that's how
he got involved in this," says the former commander.

With the Sinaloans' backing, these gangs, which go by names like the
Mexicles and Artist Assassins, begin killing members of the Juarez
cartel. And vice versa. Soon the violence in the city spun out of control.

In turn, the murders spurred the Mexican government to send in 7,000
troops, ostensibly to end the violence. The military occupied the
city in March 2008. Yet the killings only got much worse. (In fact,
nearly 24,000 Mexicans have died in cartel-related violence since
Calderon was elected four years ago.)

When the former police commander is asked about the Mexican army's
role in Juarez, he replies: "The military came here and is protecting
Chapo. ... They are here to get rid of the Juarez cartel and put in Chapo."

Moreover, says the commander, the decision to help the Sinaloa cartel
"was the policy of the military zone because the officers would
change but the policy would remain in place."

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Is the army protecting and helping the Sinaloan cartel in Juarez? "I
would characterize the Mexican military as a kind of protection
racket," says Howard Campbell, an anthropologist at the University of
Texas El Paso who's studied the drug cartels. "That is, the Mexican
military is not a cartel per se, sui generis, and it's not strictly
on the payroll of the Chapo Guzman cartel directly. But they allow
the Guzman cartel to bring drugs through Juarez in order to extract
their cut and their percentage by performing their role, which is to
protect the routes of smuggling for the Guzman cartel and attack
their opponents, the Juarez cartel."

In fact, even before the current war between the Juarez and Sinaloa
cartels erupted, there was evidence the Mexican army was assisting
drug smugglers. In January 2006, the sheriff's department in Hudspeth
County, a region that runs east of El Paso along the U.S.-Mexico
border and is a main drug smuggling corridor, heard that three SUVs
filled with marijuana were crossing the border. After the trucks
passed into Texas, the sheriff's deputies gave chase. One of the
trucks was captured while the other two dashed back into Mexico. But
one of those vehicles got stuck in the Rio Grande river.

Mexican soldiers driving a Humvee materialized on their side of the
border to rescue the marijuana. "The Mexican military flanked the
deputies in order to protect the load of marijuana that was stuck in
the river," Arvin West, sheriff of Hudspeth County, testified in
Washington during a hearing into the incident. "The Mexican military
spread themselves out to the east and to the west on either side of
the vehicle in the river, concealing themselves in the foliage on the
Mexico side of the river. The deputies on the scene observed as the
marijuana was unloaded onto another vehicle. Once the marijuana was
unloaded, the vehicle was set on fire."

Moreover, according to a 2008 Mexican intelligence document obtained
by the Wall Street Journal and shared with The Gazette and NPR, over
the past few years, Guzman has regularly visited a ranch in the
mountains of Chihuahua to check on his marijuana crop. "On at least
three visits, he has arrived with a caravan of at least six vehicles,
under the protection of some authorities in the Mexican army," the
document says.

In Juarez, meanwhile, people who follow the battle between the
cartels say the army is arresting primarily the foot soldiers and
leaders of the Juarez cartel. "There are certain aspects that point
to that direction, when most of the people that are being arrested
belong to one of the cartels," says Edgar Roman, the news director of
an independent TV station, Canal 44, whose crews cover the daily
murders in Juarez.

"The army lacks the will to end violence, they don't do what you
expect, they don't arrive and pursue and do investigations," observes
Gustavo de la Rosa Hickerson, a lawyer who runs the Juarez office of
the Chihuahua State Human Rights Commission, "and their role is being
spectators and permitting the cartels to kill each other off. I
believe this is an act of omission ordered by president of the
republic and the office of the attorney-general."

At the same time, human-rights complaints against the army have
skyrocketed. Amnesty International, Human Rights Watch and
Hickerson's organization have documented hundreds of cases of
torture, disappearances and human-rights activists being killed at
the hands of the military. After Hickerson brought 170 cases of
alleged abuse to the army's attention, he received a death threat
last fall and fled to the U.S. seeking political asylum. Today, he
lives in El Paso but goes into Juarez most days to continue to run the office.

How does the Mexican army respond to the allegation it's favouring
the Sinaloa cartel and is committing human-rights abuses? "The army
is fighting all of the criminal organizations and if you see more
arrests from (the Juarez cartel), it's because they are from the city
but we have struck all of them in important ways," says army
spokesperson Enrique Torres. "The army has no predilections to any of
the groups. . We are suggesting to people who have suffered abuses by
the army to file their complaints with the proper authorities so they
can be investigated."

The Mexican government also denies it is showing favouritism to Chapo
Guzman. "By God's sake, never in this country have we made such
efforts," says Francisco Barrio Terrazas, Mexico's ambassador to
Canada and a former mayor of Juarez. "We are really trying to stop
this problem (of the cartels). I have talked with President Calderon
with this issue and I can tell you he will never, never be in deals
with those criminals! Never, ever!"

And the U.S. government? Does it know that it might be giving money
and training to a foreign military that's working, in part, for North
America's most powerful drug lord? The U.S. State Department and Drug
Enforcement Administration dismiss this notion and express qualified
confidence in the Calderon government.

Nevertheless, when drug dealer and former police captain
Fierro-Mendez testified in an El Paso court this winter, he explained
that when he was smuggling kilos of cocaine into the U.S., he was
also working as an informant for the U.S. Immigration and Customs
Enforcement (ICE) service - which investigates drug smuggling.

"And was Chapo Guzman aware that you and others were giving
information to ICE?" he was asked by the prosecutor.

"Yes."

"And what information did he authorize you and the others to share with ICE?"

"Unlimited, as long as it didn't affect him."

And why, Fierro-Mendez was asked, would Guzman want his people to
feed information to the American authorities?

"The objective was to eliminate (the Juarez cartel) in any possible
way, whether legally or not. So it was - whether through the army or
by providing information to ICE, that was the legal way."

"So was the Sinaloa cartel trying to use ICE to eliminate its rivals
in the Juarez cartel?"

"That's right."