NORTHERN MEXICO'S STATE OF ANARCHY

Residents Abandon a Border Town as Vicious Drug Cartels Go to War

Ciudad Mier, a picturesque colonial village on the Texas border, was
a sleepy tourist attraction until February, when two rival drug
cartels turned it into a slaughterhouse.

Caravans of armored SUVs crammed with gunmen firing automatic rifles
prowled the streets. Parents pulled terrified children from schools.
The town of 6,000 went dark every time the combatants shot out the
transformers. In May, a man was hung alive from a tree in the central
plaza and dismembered while town folk heard the screaming from behind
shuttered doors.

Then last week, after a new offensive by the Zetas, one of the two
groups that have turned the town into a no-man's land, hundreds of
residents packed what they could into their cars and fled, leaving
eerily empty streets with burned out shells of cars and bullet-pocked walls.

"It's like we're in the Wild West," says Santos Moreno Perez, a
Pentecostal minister who is among the refugees here in neighboring
Miguel Aleman. "We have no mayor, no police, no transit system. We
have been left to fend for ourselves."

Two years ago, the U.S. military warned that the Mexican government
was "weak and failing" and could lose control of the country to drug
traffickers. Mexican officials quickly rejected the assertion, and in
truth the most dire predictions now seem overblown. Mexico's economy
is rebounding from the aftershocks of the U.S. recession, with gross
domestic product growth expected to top 4% this year. Foreign
companies not only haven't fled, they continue to make some
investments along the country's northern manufacturing belt where
much of the drug war is playing out. Mexico City and large parts of
south so far have escaped the mayhem, and the country as a whole
remains stable.

Still, some parts of Mexico are caught in the grip of violence so
profound that government seems almost beside the point. This is
especially true in northern places like Ciudad Mier and surrounding
Tamaulipas state-a narrow, cleaver-shaped province that snakes along
the Texas border and hugs Mexico's Gulf Coast.

Across Tamaulipas, gunmen run their own checkpoints on highways. The
cartels have forced Mexico's national oil company to abandon several
gas fields. Many farmers have given up on tons of soybeans and
sorghum in fields controlled by criminals. Leading families, fleeing
extortion and threats of kidnapping, have escaped to Texas-as have
the mayors of the state's three largest cities.

Most of the brutality that takes place along this vast arid landscape
goes unrecorded. Newspapers as well as television broadcasters have
been silenced. Rumors have taken the place of news and circulate on
social networks like Twitter, which people check regularly to make
sure that no shootouts are taking place on the routes they take to
work or school.

"Public space has been taken over by criminals, and Tamaulipas
society is at their mercy," says Carlos Flores, a visiting professor
at the University of Connecticut who studies the state's crime groups.

As goes Tamaulipas also go a small but growing number of Mexico's 31
states, including Chihuahua and Michoacan-places where rival
organized crime groups either exert political and territorial control
or are in the midst of bloody battles to impose their hegemony. In
these states, despite four years of intense effort, the Mexican
government and its institutions hold little sway.

The failure of Tamaulipas carries consequences for the U.S. The state
shares roughly 230 miles of border with Texas and handles nearly 50%
of the merchandise moving between the U.S. and Mexico. Only a river
separates it from the U.S. cities of Laredo, McAllen and Brownsville.

Last month, an American riding a jet ski on Falcon Reservoir, a
border lake not far from Ciudad Mier, was shot dead by suspected
cartel gunmen, his body never recovered. Days later, the severed head
of the lead Mexican investigator on the case was dumped in a suitcase
in front of a Mexican army barracks.

In the state capital of Ciudad Victoria, the man poised to win the
state governor's election was ambushed and shot dead in broad
daylight this summer, along with his four bodyguards. Two months
later, Mexican marines arrived at a secluded ranch and found a
grotesque sight-the bodies of 72 would-be immigrants to the U.S who
had been lined up and executed. Authorities blamed the Zetas. The
investigator in the case was murdered two days later.

Despite such gruesome milestones, Alejandro Poire, President Felipe
Calderon's spokesman on security matters, disputes the notion that
Tamaulipas is falling into anarchy. "Tamaulipas is not a failed
state," he says. "Organized crime is being fought with strength and
determination." He says that Tamaulipas continues to provide public
services, collect taxes and organize elections. He notes that
violence is concentrated in eight out of the state's 43
municipalities, and that authorities have scored a number of
successes against drug lords.

Outgoing governor Eugenio Hernandez also said the state's troubles
have been exaggerated. "We are far from being a failed state," Mr.
Hernandez said in an interview in the capital city of Ciudad
Victoria. "We are working. We have order. There are some eye-catching
events, but most people have no problems."

Days after the interview, the governor struck a less optimistic note,
telling journalists that "municipal and state forces, on their own,
can't do very much [against organized crime], which is why it's
urgent that the federal government send reinforcements to the border region."

The troubles in Tamaulipas stems from a turf war which broke out
early this year between the Gulf Cartel and the Zetas, two former
allies in drugs and organized crime, now fighting for control of the
state. More than 90% of Tamaulipas is in the hands of the crime
groups, says a newsman there.

The fighting has caused more than 1,300 deaths so far this year in
the state, or one in six drug-war killings nationwide, mostly members
of rival gangs, according to the federal government. Since President
Calderon took office in December 2006 and declared war on
traffickers, about 31,000 people have died.

For Mexico's armed forces, Tamaulipas and next-door Nuevo Leon, where
the fight between the Zetas and the Gulf Cartel has spilled over, are
Mexico's most dangerous states. So far this year, the army has been
attacked 128 times across Mexico; 91 of those attacks have taken
place in Tamaulipas and in Nuevo Leon, up from only three the previous year.

On a recent day, unknown assailants threw a grenade at an army base
in the border city of Matamoros, just across from Brownsville, while
cartel gunmen fought in broad daylight in Reynosa, the state's biggest city.

The armed forces have scored some successes. Earlier this month,
about 660 Mexican Navy special forces fought a 10-hour battle in the
streets of Matamoros with some 300 gunmen from the Gulf Cartel.
Fearing stray bullets, the University of Texas at Brownsville on the
other side of the Rio Grande suspended classes. The battle ended with
the death of one of the cartel's top leaders, Ezequiel Cardenas
Guillen, known as Tony Tormenta.

Ciudad Mier, Tamaulipas's abandoned town, could offer a glimpse of
where Mexico may head if the conflict remains unchecked. In 2007, the
government declared it a "Pueblo Magico," or Magic Village, a special
designation to attract tourists to the cobblestone streets and artisan markets.

"This was a town where we had outdoor dances, art fairs," recalls a
20-year-old school teacher who fled Ciudad Mier and declined to give
his name. People gathered freely for family baptisms or quincenera
celebrations, when girls turn 15. "You walked around at night in
Ciudad Mier," he says.

But trouble was brewing here and in the rest of the state. Since the
1980s, Tamaulipas had been home to the Gulf Cartel, which began as an
outfit that smuggled electric appliances into Mexico's closed economy
and turned into one of the country's largest drug-trafficking groups
as trade opened to the U.S. The Gulf Cartel's leader, Osiel Cardenas
Guillen, the younger brother of Ezequiel, planted the seeds for the
present bloodletting when he persuaded 31 highly trained Mexican army
special forces soldiers, called the Zetas, to defect and work as
enforcers for the cartel in the early 1990s, analysts and government
officials say.

Mr. Cardenas Guillen was arrested in 2003 and extradited to the U.S.
in 2007. He was sentenced to 25 years in prison this February in a
Texas court, although court transcripts say he is cooperating with
authorities, which could lead to a sentence reduction. Mr. Cardenas
Guillen's lawyer, Chip B. Lewis of Houston, declined to comment on
his client's purported cooperation.

As Mr. Cardenas Guillen's case was coming to a close, his former
allies the Zetas broke from the Gulf Cartel. Now believed to number
in the low thousands, they declared a war to grab control of illegal
markets, which spread throughout the state.

Though peaceful, Ciudad Mier, a short drive from Roma, Texas, was
ripe for conflict. The town and surrounding area had long been a Zeta
stronghold. This year, analysts say, the Gulf Cartel tried to oust the Zetas.

On Feb. 23, the city was plunged into chaos after several dozen SUVs
arrived at the municipal police station, sacked the facility and took
officers hostage. No one has seen them since. Not long afterward,
residents found a group of decapitated heads from unknown victims on
the outskirts of town.

Ciudad Mier began to collapse. After an attack on the water-treatment
facility this year, the town had no drinkable water as workers were
too frightened to begin repairs, residents say. For a week this fall,
parts of the city had no water at all. Electrical outages became
frequent after attacks on transformers. Finding gas became impossible
when the city's one gas station was shot up. Residents say they
headed to neighboring Miguel Aleman to fill up their cars.

While schools remained in session, parents often refused to send
their children, deeming it unsafe. "Every child I taught was
thinking: 'I'm next to be killed,'" says a town teacher, who recalled
that a theater class he taught suddenly sank from 20 students to just four.

Medical services were scant. "The pharmacies were closing down or
weren't open," recalls an 87-year-old man who fled the town last
week. Manuel Alejandro Pena, a general practitioner who heads a
branch of the state's health office in the village, recalled that he
was unable to get penicillin for two months this summer when drivers
couldn't safely make the journey from the city of Nuevo Laredo,
fearing they'd be attacked on the highway.

"We watched our medicine reserves begin to vanish," Dr. Pena recalled.

By last week, the city was ravaged again. Emboldened by the death of
Mr. Cardenas Guillen, the Gulf Cartel leader known as Tony Tormenta,
Zetas staged a counterattack, townspeople say. Signs leading into the
town were pocked with hundreds of bullet holes, along with nearly
every major building in town.

Except for a few holdouts, nearly all the former residents have fled.
Some moved in with family members elsewhere in Mexico or the U.S.
About 300 refugees now bunk on cots at a local Lion's Club in nearby
Miguel Aleman, a larger city down the road which is thought to be
less violent. On a recent day, an older deaf woman sat in a
wheelchair by herself as a dozen children watched morning cartoons.

Yet even this place offers limited sanctuary. During a visit by a
reporter, automatic-rifle shots broke out as drug gunmen and army
troops confronted each other a short distance from the shelter. The
refugees screamed and took cover on the floor.

"Don't worry, nothing will happen to us," a mother said to her crying son.

A short time later, the mayor's sister arrived. "Everything is all
right," she told the anxious crowd. "They wouldn't have sent me if I
were going to get killed here."

Outside experts and residents say the state is unable to defend
itself now partly because it failed to confront the cartels earlier.
Indeed, they say the Tamaulipas government kept close ties to the
Gulf Cartel, an arrangement that worked well until the Zetas
violently took on both the cartel and the state.

"The Gulf Cartel managed to co-exist with the state government for
decades," says George W. Grayson, a Mexico expert at the College of
William & Mary. "But the presence of the Zetas has thrown an electric
eel in a barrel of fish."

The governor says there has never been collusion between the
Tamaulipas government and drug traffickers. But like many other
Tamaulipas residents, he seems nostalgic for past days when drug
dealers in Mexico stuck to ferrying drugs to the U.S. and didn't
kidnap, extort and kill fellow Mexicans.

"There was no agreement, but they [the Gulf Cartel] stuck to their
business," he says. "They behaved differently. They didn't interfere
with normal citizens. There were no extortions or kidnappings."

Some local residents blame the federal government for provoking the
drug traffickers. "This is a war that was declared by the federal
government," says Oscar Luebbert, the outgoing mayor of Reynosa, the
state's biggest city and busiest border crossing. Mr. Luebbert
objected to military deployments by President Calderon, who belongs
to the rival National Action Party. "I don't want to live in a country in war."

While Ciudad Mier remains the only city to have emptied out so far,
the rule of law is breaking down elsewhere. In Reynosa, a taco stand
a short walk from the main plaza offers a typical encounter with
criminals who have no fear of authorities. Days ago, the owners say,
a group of men descended from sport-utility vehicles, AK-47 machine
guns slung to their belts. "They came for lunch. They didn't pay,"
says an employee at the stand.

To fend off the Zetas, the Gulf Cartel is tightening its grip on the
city's institutions-particularly news outlets. Reporters interviewed
said that many colleagues receive checks from the cartel for
favorable coverage. One referred to a "spokesman" for a drug cartel
who went to crime scenes after shootouts to dictate angles for news.

The Gulf Cartel even appears to be getting involved in
quasi-legitimate activities, such as the sale of alcohol. In a
cantina off one of the city's main thoroughfares, a restaurant
employee showed a reporter a whiskey bottle with a three-letter stamp
that he said is the mark of the Gulf Cartel, which has been selling
imports. "There's no choice but to buy from them now," he said. The
Zetas, meanwhile, have their own merchandise brands such as bootleg
CDs in areas they control.

In Tampico, a port city that bears a passing resemblance to a faded
New Orleans, the most important society dance was cancelled this year
for the first time in 70 years, says a cattle rancher. Kidnappings
have surged. Among the victims: two of the city's former mayors.
"Most owners of businesses have left and run their companies by
telephone from Texas," says a local resident.

The outgoing mayor, Oscar Perez, is rarely seen in town. Residents
believe he lives in Garland, Texas. The incoming mayor, former
schoolteacher Magdalena Peraza, says she plans to mobilize the
citizenry, awaken civic pride and create jobs when she takes office
in December.

Ms. Peraza's sister urged her not to take the high profile job. Ms.
Peraza replied that God would protect her, but her sister urged her
again to reconsider, saying that God was very busy.

"I'm worried," says the mayor elect. "But I have faith."