MEXICAN CARTELS EMERGE AS TOP SOURCE FOR U.S. METH

VERACRUZ, MEXICO - Exploiting loopholes in the global economy,
Mexican crime syndicates are importing mass quantities of the cold
medicines and common chemicals used to manufacture methamphetamine -
turning Mexico into the No. 1 source for all meth sold in the United
States, law enforcement agents say.

Nearly three years ago, the Mexican government appeared on the verge
of controlling the sale of chemicals used to make the drugs, but the
syndicates have since moved to the top of the drug trade.

Cartels have quickly learned to use dummy corporations and false
labeling and take advantage of lax customs enforcement in China,
India and Bangladesh to smuggle tons of the pills into Mexico for
conversion into methamphetamine. Ordinary cold, flu and allergy
medicine used to make methamphetamine - pills banned in Mexico and
restricted in the United States - are still widely available in many countries.

In the past 18 months, Mexican armed forces have raided more than 325
sophisticated factories capable of producing a million pounds of
potent methamphetamine a year. Seizures of Mexican methamphetamine
along the southwest border have doubled.

"As hard as everyone is working to stop it, the stuff is just going
to continue to flow in massive quantities," said Michael Braun,
former chief of operations for the Drug Enforcement Administration
and now with Spectre Group International, a security firm.

In a typical scenario, United Nations investigators say, a legitimate
pharmaceutical company in India exports cold pills to Dubai in the
United Arab Emirates, where they are falsely labeled as herbal
supplements and shipped to Belize, and then to Veracruz by cargo container.

"Mexico-based trafficking groups have shown tremendous resilience in
getting around the precursor chemical prohibitions and controls,"
said Special Agent Alex Dominguez in the DEA Office of Diversion
Control. "They are currently pursuing very sophisticated smuggling
techniques. They are trafficking ephedrine-type medicines, just like
you would smuggle any high-value contraband such as cocaine or heroin."

Legal Ingredients

Ever resourceful, Mexican cartels have begun to manufacture
methamphetamine using legally obtained ingredients - such as
phenylacetic acid, or PAA, a honey-smelling chemical used in
everything from perfumes, soaps and body lotions to food flavoring
and antibiotics.

Traffickers prefer methamphetamine made from cold tablets because it
is more potent, but they are increasingly relying on PAA, as
resilient Mexican cartels revert to old-school recipes developed by
U.S. motorcycle gangs in the 1970s that use phenylacetic acid and its
chemical cousins.

At least half of all the methamphetamine seized along the border in
the past year was made with precursor chemicals such as phenylacetic
acid, U.S. agents told The Washington Post.

"For the cartels, the great thing about meth is it is not bound by
geography," a senior U.S. law enforcement agent with direct knowledge
of the Mexican drug syndicates who spoke on the condition of
anonymity because of security concerns. "You can buy the precursor
chemicals off the shelf. You can order them on the telephone."

Mexican mafias have quickly replaced American mom-and-pop domestic
producers, who use soft drink bottles to "shake and bake" a few
ounces of meth in motel rooms and rural slums, according to DEA officials.

The Chinese government concedes that it has no idea how many cold
tablets its state-run companies sell each year. The Mexican
government is unsure how much phenylacetic acid is used by legitimate
manufacturers, such as Proctor & Gamble, and how much is diverted to
the meth labs.

Mexican cartels began to produce ever larger amounts of
methamphetamine over the past decade. But under heavy pressure from
the United States, Mexico three years ago banned the import and sale
of cold, flu and allergy medicines containing ephedrine and
pseudoephedrine, the most sought-after chemicals used to make
methamphetamine and ecstasy. Most Central American countries
implemented their own bans.

Meth production in Mexico plummeted. In 2007, the military busted 33
clandestine laboratories and 51 in 2008, compared with the 215 it
uncovered in 2009. Street prices spiked and purity dropped in the
United States, an indication of relative scarcity. U.S. diplomats and
law enforcement officials hailed Mexico's ephedrine ban as a major success.

But Mexican methamphetamine is surging again. After several years of
declining production, the 2010 threat assessment by the Justice
Department's National Drug Intelligence Center said Mexico was again
"the primary source of methamphetamine consumed in the United
States." A companion report was not released for fear of embarrassing
Mexican President Felipe Calderon on the eve of his trip to Washington in May.

A Tough Opponent

U.S. diplomats praise Mexico for its fight against methamphetamine.
At the port in Veracruz, where more than 1,700 ships arrive each
year, disgorging 720,000 containers on the docks, Mexican marines and
customs agents work side by side searching for contraband. The metal
boxes are scanned with gamma rays and X-rays and sniffed by dogs.
Suspicious cargo is unloaded, blue plastic drums opened and the
chemicals inside tested.

"But if there are 2,000 containers a day and you can manage to get in
just one or two containers with narcotics, that's a lot. That is
tons," said a Mexican navy captain at the port who spoke on the
condition his name not be used because of security concerns.

Masked men kidnapped the former director of customs in Veracruz,
Francisco Serrano, in June 2009 as he was implementing new scrutiny
measures. There have been no arrests, no ransom demands; Serrano vanished.

On the black market, a single allergy pill containing ephedrine can
sell for $2.50 in Guatemala. A kilogram of bulk ephedrine from China
- - about 2.2 pounds of powder - goes for $10,000 on the Mexican black market.

In January, Mexican authorities found three tons of ephedrine
concealed in fire extinguishers coming through the port of
Manzanilla. In February, agents stopped 120,000 pseudoephedrine pills
in Guatemala en route to Mexico City airport. In April, Mexican
marines in Veracruz found four tons of ephedrine in jute bags that
came from India by way of Europe.

According to investigators with the U.N. International Narcotics
Control Board, numerous African countries import quantities of cold
remedies that far exceed legitimate medical needs. In Ethiopia, for
example, Mexican traffickers and their middlemen used bogus documents
to import more than 12 tons of ephedrine. Similar diversions have
been uncovered in Argentina, where ephedrine cold pills are still
legal. U.N. investigators say most of the suspicious shipments have
Mexico as their final destination.

Local Victims

As Mexico fights the flow of methamphetamine to the United States,
the drug is ravaging citizens here.

At a rehab center in Apatzingan in the western state of Michoacan, a
meth-producing hub, two dozen men huddle in a converted garage,
sleeping on bunks, sharing meals, making furniture. They were all
addicted to drugs, most to methamphetamine.

Francisco Rodriguez is 53 years old but looks in his 70s. Meth almost
killed him. His decalcified bones are so brittle that he walks with a
cane. He has lost his teeth. He left his wife, his children, his law career.

"I came to Apatzingan on vacation and tried the local crystal meth. I
became an addict instantly," he said. "The streets here were filled
with people who looked crazy."

Rodriquez said the local mafia - La Familia de Michoacan - blocked
all street sales in the city a few years ago. The cartel said it was
protecting the people from a scourge. Mexican law enforcement agents
confirm that La Familia ordered a halt in local use, though they say
it was a cynical ploy, a bit of propaganda.

"Now if you use it, they'll kill you," Rodriguez said. "Now it is
just for the foreigners."