Mexico Under Siege

CARTELS THRIVE DESPITE CALDERON'S CRACKDOWN

Drug Gangs Have Expanded Their Power and Reach in Both Mexico and the U.S.

Nearly four years after President Felipe Calderon launched a
military-led crackdown against drug traffickers, the cartels are
smuggling more narcotics into the United States, amassing bigger
fortunes and extending their dominion at home with such savagery that
swaths of Mexico are now in effect without authority.

The groups also are expanding their ambitions far beyond the drug
trade, transforming themselves into broad criminal empires deeply
involved in migrant smuggling, extortion, kidnapping and trafficking
in contraband such as pirated DVDs.

Undeterred by the 80,000 troops and federal police officers arrayed
against them, gunmen frequently take on Mexican forces in the open.
Operatives of one group, the Zetas, did so in northern Mexico this
spring when they blockaded army garrisons. In June a group believed
to be linked to another organization, La Familia, ambushed federal
police in the western state of Michoacan, killing 12 officers in
early morning light.

Since Calderon announced the offensive when he took office in
December 2006, more than 28,000 people have been killed. Most of them
have been traffickers, dealers and associates. But innocent civilians
account for a growing portion.

Billions of dollars have been spent on the anti-drug effort with the
enthusiastic backing of the George W. Bush and Obama administrations.
Calderon and his administration say one reason progress is proving so
difficult is that the problem festered far too long. They have
predicted that the violence will subside by the end of the year.

But statistics, intelligence reports and interviews with Mexican and
U.S. authorities over the last six months make it clear that the
effort has failed to dismantle the networks or significantly slow the
flow of drugs.

Scarcely a decade after Mexico took a giant step toward genuine
multiparty democracy, traffickers may now pose a long-term danger to
its stability. Rising chaos "requires us to change our view of the
problem, that it is no longer a matter of organized crime but rather
of the loss of the state," the leading newspaper El Universal said in
an editorial in June.

Calderon himself acknowledged the threat last week in comments at a
national security conference: "This criminal behavior is what has
changed, and become a challenge to the state, an attempt to replace the state."

Mexican traffickers have increased their shipments of several types
of narcotics north across the border, becoming titans of an industry
that by some estimates earns $39 billion a year, equivalent to almost
20% of the government's annual budget..

They have muscled aside competitors to gain control over shipments of
most types of illegal drugs in the hemisphere: marijuana, cocaine,
heroin and methamphetamine.

And they are becoming increasingly important producers, a shift from
an earlier age when Mexican gangs served chiefly as smugglers for
South American producers. Marijuana and poppy fields have flourished
for decades in the northwestern state of Sinaloa, but now production
has expanded into states from Chihuahua in the north to Oaxaca in the
south. Some of the world's largest meth labs have been uncovered in Michoacan.

The Zetas and La Familia have grown into trafficking powerhouses
since Calderon became president. They have altered the playing field
by employing methods once unthinkable, such as beheading or
dismembering rivals and then displaying the remains in squares, on
street corners and in other public places.

Trafficking groups flex their muscles by hanging threatening banners
from bridges, stringing up corpses or parking buses across key
streets to paralyze traffic, actions that appear increasingly aimed
at cowing the populace.

Drug gangs armed with military-class weapons smuggled from the United
States or, as The Times has reported, left over from U.S.-backed wars
in Central America now threaten or hold sway over vital industrial
cities such as Monterrey. On July 15, traffickers hit another
chilling milestone by detonating a car bomb in an attack on federal
police officers in Ciudad Juarez, Mexico's deadliest city.

The cartels have diversified, grafting human trafficking onto their
drug-smuggling routes, and padding their income with kidnapping,
extortion and the movement of a wide range of contraband, including
fake luxury products and exotic animals.

In large parts of Calderon's home state of Michoacan, criminal groups
charge businessmen to operate, essentially usurping the government's
role as tax collector. The same phenomenon occurs in states such as
Tamaulipas and Coahuila on the Texas border.

This year, traffickers succeeded for the first time in shutting down
major operations of Pemex, the state oil company and top source of
national income.

Juan Jose Suarez Coppel, Pemex's general director, acknowledged to a
congressional committee that rampant kidnapping of workers forced the
closing of oil and liquid gas plants in the Burgos Basin in
northeastern Mexico, among the company's most lucrative
installations. Traffickers have been stealing oil for years, but the
goal in this case was to halt production and control the region.

The kidnapped workers' families told The Times that state officials,
prosecutors and the army have proved unable or unwilling to help;
hope that their relatives will return alive diminishes daily.

The spread of drug-related chaos across Mexico can be roughly gauged
by the list of places the State Department says American citizens should avoid.

Two years ago, Americans were cautioned about border cities such as
Tijuana and Ciudad Juarez. But a warning issued in May includes
highways around Monterrey, Mexico's third-largest city, as well as
the states of Coahuila, Chihuahua and Tamaulipas along the border,
Durango and Sinaloa in the northwest and Michoacan on the Pacific coast.

Gun battles have spilled into the famed resort of Acapulco. The mayor
of Cancun, Mexico's top tourist destination, was arrested in May on
drug-trafficking charges in the middle of his campaign for governor
of the state of Quintana Roo.

An assessment of the drug threat issued early this year by the U.S.
National Drug Intelligence Center said Mexican drug-trafficking
organizations, or DTOs, "continue to represent the single greatest
threat to the United States."

Mexican cartels, with operations in more than 2,500 U.S. cities, are
the only ones working in every part of the United States, it said.
They have largely displaced Colombian and Italian traffickers.

"The influence of Mexican DTOs, already the dominant wholesale drug
traffickers in the United States, is still expanding," said the
report, known formally as the National Drug Threat Assessment.

Cultivation and smuggling of Mexican marijuana had doubled since 2004
to an estimated 23,700 tons, it said. Production of heroin had more
than quadrupled by 2008, to an estimated 41.9 tons. A separate State
Department report said poppy cultivation doubled again between
September 2008 and September 2009 and that cannabis production had
reached its highest level since 1992.

Production of methamphetamine is also on the rise, despite the
Mexican government's efforts to crimp the flow of precursor
chemicals. Its availability in the United States has hit a five-year high.

The availability of cocaine north of the border has declined,
however. The U.S. drug assessment report cited several possible
explanations, including major seizures by Mexico. It also cited a
drop in production in Colombia and the increasing flow of cocaine to
other markets.

Calderon administration officials have cited the data on cocaine as a
sign they are winning the war against drug-trafficking groups.

Seizure rates for marijuana and heroin have often been higher under
Calderon than under his three predecessors, according to Mexican
government statistics. Yet in some cases, the Calderon record is no
better, and comparisons are even less favorable when adjusted for the
growth in the drug market.

Mexican forces seized 74.2 tons of cocaine during Calderon's first
two years in office. Without a record-setting 25.9-ton seizure in the
Pacific port of Manzanillo in November 2007, the total would be about
equal to the amount impounded in a similar period under Calderon's
predecessor, Vicente Fox, and under Ernesto Zedillo in the mid-1990s.
It is far short of the 98.6 tons seized under Carlos Salinas de
Gortari in 1989 and 1990.

Only two top-ranking cartel leaders have been killed, Arturo Beltran
Leyva and Ignacio "Nacho" Coronel Villarreal. But authorities are
arresting more suspects, nearly 78,000 from the start of Calderon's
term to January of this year. Of those, roughly 96% were street
dealers, lookouts and other low-level helpers. But only about 2% were
charged and convicted of a crime, according to official statistics.
The rest remained in jail or were released.

The arrests have been unevenly distributed. Fewer than 1,000 of the
53,000 drug-trafficking arrests studied in a report this year by
Edgardo Buscaglia, an international expert on organized crime and a
legal scholar at the Autonomous Technological Institute of Mexico,
involved people working for the Sinaloa cartel, the oldest and
mightiest of the narco-empires.

Those figures have led many in Mexico to conclude that Calderon's
government is going easy on the Sinaloa traffickers, whose leader is
the country's most wanted fugitive, billionaire Joaquin "Chapo"
Guzman. The motive, this argument goes, would be to reduce violence
by allowing one group to essentially win. Calderon has vehemently
denied favoritism.

"My government is absolutely determined to continue fighting against
criminality without quarter until we put a stop to this common enemy
and obtain the Mexico we want," Calderon said in a paid, two-page
message in Mexican newspapers in June.

More recently, officials have countered the idea of favoritism by
pointing to the killing July 29 of Coronel, a top figure in the
Sinaloa conglomerate.

For now, says Guillermo Valdes, head of the secretive national
intelligence agency, Mexicans will have to accept that increasing
violence is inevitable.

"We have made progress in deploying forces and in slowing down the
operational capacity of organized crime," he said in a rare public
appearance this month. "But we have not achieved the objective of
restoring normal living conditions in regions affected by organized crime."

Officials and institutions remain under threat, particularly poorly
protected small town mayors, city council members and police chiefs
in the provinces.

A day after Calderon published his defense of his crime strategy,
residents in the west-central state of Nayarit were in a near panic.
Recent gun battles had left more than 30 dead and rumors circulated
on the Internet that schools would be targeted.

It is a threat that would once have sounded preposterous.

No longer. The governor, Ney Gonzalez Sanchez, called an end to the
school year three weeks early to prevent what he called a public "psychosis."