Separating the Facts From Fiction on Mexico's Drug Cartels Cory Siskind - World Politics Review
go to original October 2, 2012

The recent capture of several high-profile drug cartel capos has yet again propelled Mexico’s security situation into the spotlight. With last week’s arrest of important Zeta leader Ivan Velazquez Caballero, known as “Z-50” or “El Taliban,” the administration of President Felipe Calderón can now claim to have put 24 of the 37 most wanted drug cartel capos behind bars. While the reality of Mexico’s cartel-related violence is often shocking, much of the press coverage is more fiction than fact. In particular, three recurrent misconceptions surrounding Mexico’s security situation and drug cartels plague press coverage outside of Mexico and skew policymaking in Washington.

The first of these misconceptions is that drug cartels operate everywhere in Mexico, and that cartel-related violence impacts the entire country. The truth is that violence is concentrated in areas where cartels are fighting each other for dominance, and because the situation is dynamic, those territorial disputes shift. Tijuana and Ciudad Juárez, for example, were once violent hotspots that have since calmed considerably. Monterrey, on the other hand, used to be a safe haven for wealthy elites and international businessmen but is now overrun with cartel-related violence. Some areas, like the states of Michoacán and Tamaulipas, have been historically violent and will likely remain so because of their strategic locations - Michoacán as an entry point for Colombian cocaine and methamphetamine-related chemicals from China, and Tamaulipas as a smuggling route into the U.S. Other states, such as those on the Yucatan peninsula, have been virtually unaffected by the violence in other parts of the country.

Some tourist areas have been impacted by drug-related violence. The beach town of Acapulco, for instance, was once known for its nightlife, but after cartel thugs rolled five decapitated heads onto the floor of a disco and violent retaliation followed, the nightlife has all but disappeared. However, most tourist destinations, like Cabo San Lucas and Cancun, remain safe. Mexico City, the nation’s capital, has been largely untouched by drug-related violence and has actually become a much safer city in recent years.

The second misconception about cartel violence is that it is destroying Mexico’s economy, with foreign companies leaving in droves because of the security situation. It cannot be denied that cartel violence has impacted Mexico’s economy, particularly local economies in cities where residents now spend more time at home and less time shopping and patronizing restaurants, bars and clubs. Drug-related activity, particularly extortion, has caused the closure of some small, local businesses.

However, Mexico’s economy is more stable than it has ever been. While several problems persist - a lack of competition and slow growth, for example - they are not directly related to cartel violence. Mexico is Latin America’s second-largest economy, behind powerhouse Brazil but far ahead of third-place Colombia. As has been noted, and perhaps exaggerated, Mexico’s middle class continues to grow and is the largest in Latin America, according to studies conducted by the Brookings Institution and others. More Mexicans than ever now have access to education, earn more than the minimum wage, shop in department stores and use credit cards. A new government-sponsored public service ad campaign focuses not on the starving poor but on lowering obesity rates among the middle class.

Despite gruesome stories of decapitations and mass graves, the international business community has been undeterred from investing in Mexico. While a small number of companies have left, many more have arrived. Foreign direct investment (FDI) reached $20 billion in 2010, still below levels preceding the financial crisis in 2008, but a marked improvement from 2009. That figure is expected to remain the same for 2011. Mexico ranks a respectable fourth place out of Latin American countries in the World Bank’s 2011 report on the ease of doing business. Due to the low cost of labor and Mexico’s proximity to the U.S., multinational companies, particularly auto manufacturers, continue to conclude that the opportunities outweigh the risks of doing business there.

The third misconception about cartels is that they depend on drug-trafficking revenues for their survival, so legalizing drugs will put them out of business. In fact, cartels are not just drug-peddling operations: They are complex, diversified enterprises. Disregarding the moral component of the debate over legalization and looking only at the logistics, drug sales constitute just a portion of cartel income. As the trade is illegal, estimates of what percent that portion represents are little more than speculation. It is known, however, that cartels earn millions and perhaps even billions a year from kidnapping, extortion, human trafficking, oil theft, pirating DVDs and various other illicit activities. While drugs are surely a significant source of income, cartels’ operations are diversified and therefore resilient to crackdowns on one particular activity.

There is also a surplus of individuals, particularly young, disenfranchised men, willing to join the cartels. As mentioned above, Mexico’s middle class is growing. Nonetheless, the minimum wage remains less than $5 a day. Cartels offer new recruits significantly more than that to work as dealers, lookouts, drivers or low-level hit men, with opportunities for advancement, assuming they manage to stay alive. For many, the promise of fast money and a fast life outweighs the slow grind of trying to climb out of Mexico’s lower classes. With their diversified business operations and surplus of labor, cartels will persist as long as they can offer lucrative jobs to people with few viable alternatives.

While drug-related violence in Mexico is a grave problem, it is not plunging the country into failed statehood. Violence rages in some areas, while others remain calm. Some local economies have been damaged by cartel-related violence, but the overall economy remains stable, and FDI is on the rise. There are no easy solutions to cartel-related violence, and legalization in particular is not a panacea. Mexico’s security situation is complex, dynamic and shrouded in misinformation. A sustainable approach to its significant challenges will require looking beyond the startling but often misleading headlines.

Cory Siskind is a researcher for a global risk consultancy. She focuses on Latin America and is based in Mexico City.

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