How Legal Pot Could Harm the Cartels

So far, no modern country has ever legalized marijuana production—not even the Netherlands. Yet with heavy drug-related violence plaguing the U.S.-Mexican border, some analysts and policymakers now say that America should legalize weed in order to reduce the power of Mexico’s drug cartels. Marijuana carries the least amount of overhead cost for many of the cartels and provides some of their cash flow for buying guns and influence.

Estimates vary, but analysts say pot accounts for somewhere in the range of 20 to 50 percent of the cartels’ profits. But that could soon change with competition from El Norte: California has a proposition set for the November ballot—on which voters are roughly split—that would legalize the drug’s domestic production and sale. If the measure passes, says a recent analysis by the RAND Corporation, California could become a major supplier of the drug to the rest of the U.S. That, according to George W. Grayson, a professor of government at William & Mary, “would hurt the cartels badly.” RAND estimates that it could reduce the drug’s pretax price by more than 80 percent.

Of course, whether legalization has any real effect depends on the rate at which the drug is taxed. A tax rate of $50 per ounce, for example, would generally not make high-grade California cannabis cost-competitive with less potent Mexican imports. Yet a lower tax rate could significantly decrease the cartels’ market share. That wouldn’t put them out of business—they’d still be major players in the markets for cocaine, heroin, and meth—but it could reduce their power.

• "Assessing How Marijuana Legalization in California Could Influence Marijuana Consumption and Public Budgets", RAND, 7/7/10.
  

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Mexican drug gang uses car bomb for first time

A drug cartel has used a car bomb for the first time in Mexico's decades-long fight against traffickers, setting a deadly trap against federal police in a city across the border from Texas, the mayor of Ciudad Juarez said Friday. Mayor Jose Reyes said federal police have confirmed to him that a car bomb was used in the attack that killed three people Thursday. It was the first time a drug cartel has used a bomb to attack Mexican security forces, marking an escalation in the country's already raging drug war.

Federal police and paramedics were lured to the scene by a phone call reporting that shots were fired at a major intersection and a municipal police officer lay wounded at a major intersection. As the paramedics were working on the wounded man, a parked car exploded. Reyes said authorities later determined that the wounded man was not a policeman, although he was wearing a fake uniform. The man was among the three people who died in the attack. The others were a federal police officer and a medical technician. Brig. Gen. Eduardo Zarate, the commander of the regional military zone, told reporters that up to 22 pounds (10 kilograms) of explosives might have been used, although investigators were still trying to determine what type.

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Arizona is the frontline for illegal border activity

Terrorists crossing AZ border into U.S.?

On a single day in April, in a special cell block deep inside the Pinal County Jail, nearly 400 inmates sat awaiting trial or extradition after being detained trying to cross the Arizona border from Mexico. Only about half of them were actually from Mexico. The cell block, owned by Pinal County, but contracted with the Department of Homeland Security, is a way station in the immigration process, where inmates are held after they are detained by the Border Patrol or Immigration and Customs Enforcement. But it’s where the inmates are from that causes concern for some critics and lawmakers. On that one day in April, according to records obtained by ABC 15, Homeland Security officials were holding inmates from Iran, Iraq, Afghanistan, Pakistan, Egypt, Lebanon, and the Sudan. “They’re coming from all over,” Arizona Senator Jon Kyl said. “And one wonders whether some of them are coming in here to commit acts of terror.”

Cartels Threaten U.S. Law Enforcement in Arizona

In the first public incident of its kind, cartels are making direct death threats to U.S. law enforcement officials in Nogales, Arizona, the police chief there told CNN Monday. Speculation about death threats by cartels towards U.S. law enforcement has been widespread for some time, but this is the first time U.S. officials along the border confirmed a case. The threats began less than two weeks ago, after off-duty police officers from the Nogales police department seized several hundred pounds of marijuana from a drug smuggling operation they stumbled upon while horseback riding in the eastern fringes of Nogales, the chief said. The smugglers in the incident managed to flee into Mexico before they could be detained. It was unclear which cartel was making the threats against the Nogales police department, but there is a turf war on the other side of the border in Nogales Sonora, Mexico, between the Sinaloa cartel and the Juarez cartel.

Mexican Gangs Maintain Permanent Lookout Bases in Hills of Arizona

Mexican drug cartels have set up shop on American soil, maintaining lookout bases in strategic locations in the hills of southern Arizona from which their scouts can monitor every move made by law enforcement officials, federal agents tell Fox News. The scouts are supplied by drivers who bring them food, water, batteries for radios -- all the items they need to stay in the wilderness for a long time. “To say that this area is out of control is an understatement," said an agent who patrols the area and asked not to be named. "We (federal border agents), as well as the Pima County Sheriff Office and the Bureau of Land Management, can attest to that.” Much of the drug traffic originates in the Menagers Dam area, the Vekol Valley, Stanfield and around the Tohono O’odham Indian Reservation. It even follows a natural gas pipeline that runs from Mexico into Arizona. In these areas, which are south and west of Tucson, sources said there are “cartel scouts galore” watching the movements of federal, state and local law enforcement, from the border all the way up to Interstate 8.

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2,200 arrested in U.S. crackdown on Mexican drug cartels

Federal authorities on Thursday announced the arrests of more than 2,200 people in 19 states on narcotics-related charges in the largest in a series of operations targeting violent Mexican drug cartels. The 2,266 arrests over the past 22 months were part of Project Deliverance, a joint effort with Mexican authorities that the Justice Department did not disclose until Thursday. Investigators from more than 300 federal, state, local and foreign law enforcement agencies seized 74 tons of drugs, 501 weapons and $154 million in cash, Attorney General Eric H. Holder Jr. announced.

The crackdown, which included more than 400 arrests on Wednesday, targeted the transportation networks of Mexican drug organizations in the United States, especially along the drug-ravaged southwest border. Among those arrested was Carlos Ramon Castro-Rocha, described as a major heroin trafficker, who was detained by Mexican authorities May 30 and has been charged in federal courts in Arizona and North Carolina. The arrests extended to the Washington area, where 15 people were indicted in U.S. District Court in Alexandria on charges of running a cocaine trafficking network that funneled drugs from Mexico to Virginia and three other states, said U.S. Attorney Neil H. MacBride.

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Mexican cartels cannot be defeated, drug lord says

Mexico's war on the drug trade is futile even if cartel bosses are caught or killed as millions of people are involved in the illicit business, a senior drug chief said in an interview published on Sunday. Ismael "el Mayo" Zambada, the right hand man of Mexico's most notorious drug lord, Sinaloa cartel boss Joaquin "Shorty" Guzman, blamed the government for surging drug violence and said President Felipe Calderon was being duped by his advisors into thinking he was making progress.

"One day I will decide to turn myself in to the government so they can shoot me. ... They will shoot me and euphoria will break out. But at the end of days we'll all know that nothing changed," Zambada told the investigative news magazine Proceso. "Millions of people are wrapped up in the narco problem. How can they be overcome? For all the bosses jailed, dead or extradited their replacements are already there." Mounting drug violence in Mexico has killed 19,500 people since Calderon launched an army-led attempt to crush the cartels after taking power in late 2006. Although financial markets take the daily reports of mayhem in stride, foreign companies are starting to think twice about new investments.

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Stratfor Annual Report: Mexican Drug Cartels - Two Wars and a Look Southward

In this report on Mexico’s drug cartels, we assess the most significant developments of 2009 and provide an updated description of the country’s powerful drug-trafficking organizations, as well as a forecast for 2010. This annual report is a product of the coverage we maintain on a weekly basis through our Mexico Security Memo as well as the other analyses we produce throughout the year.

Two cartel wars in Mexico combined to produce record levels of violence in 2009. The first war is the struggle between the government of Mexico and the drug cartels. In a parallel war, cartels compete with one another for control of lucrative supply routes. Shortly after his inauguration in 2006, President Felipe Calderon launched a major campaign targeting the cartels, which he viewed as a major threat to Mexico’s security and stability. Over the past three years, the government has weakened and fragmented some of the major cartels (namely the Gulf and Sinaloa cartels), but in the progress has upset the balance of cartel power. The result has been an increase in violence as formerly allied cartels have been pitted against each other in battles of attrition, as they fight for control of lucrative smuggling routes.

The turbulence within individual Mexican cartels that was seen in 2008 was absent in 2009, although the changes created by that turbulence have persisted, along with the divisions in previous alliances caused by Calderon’s 2008 campaign against the cartels. With these continued divisions came a continuation of Calderon’s strategy, and a continuation of high levels of violence. With the success experienced in 2008, Calderon continued to pursue his strategy of deploying Mexican military personnel and federal police against the cartels. Calderon has vowed to pursue this strategy into 2010 despite mounting public criticism and issues with rising violence.

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Mexican mafia type extortion crosses the border into USA

According to a DEA operative in the L.A. area who insists on remaining anonymous told the U.S. Border Fire Report that businesses along the dangerous U.S. Mexican border from Texas to California have been the victims of extortion attempts and threats. He further indicated that he believes that a good number of minority owned businesses in the Los Angeles area are also victims of extortion and that Mexican Drug Cartels and L.A. gangs and others are responsible. "He said that many of the victims especially those without papers are fearful of reporting the crime to authorities as they fear retaliation".

Recently in the Los Angeles area grand jury indictments have come down charging hundreds of gang members of notorious L. A. street gangs with wide ranging criminal charges including extortion and 88 of those have been named in a wide-ranging federal RICO racketeering indictment.

According to a 222-page indictment returned by a federal grand jury recently, members and associates of the Avenues street gang are part of a criminal enterprise that engaged in a host of criminal acts, including murders, attempted murders, narcotics trafficking, robberies, extortions, money laundering and witness intimidation.

"No matter how many times gangs like the Mexican Mafia and the Avenues seek to reassert control through intimidation, we will do what it takes to combat that intimidation, and ensure that residents need not live their lives in fear," said Acting United States Attorney George S. Cardona.

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Mexico Nabs Suspected Killer Of 17 Rehab Patients

Troops captured the suspected killer of 17 patients at a rehabilitation clinic in northern Mexico, one of the deadliest attacks in President Felipe Calderon's three-year war against drug cartels. The suspect, Jose Rodolfo Escajeda, is considered one of the bloodiest hitmen in the crime-ridden state of Chihuahua and a leader of the powerful Juarez Cartel. He is on the U.S. Drug Enforcement Administration's most-wanted list for marijuana and cocaine smuggling into the United States.

About a dozen hooded men burst into a clinic in the violence-plagued industrial city of Ciudad Juarez, across from El Paso, Texas, on Wednesday, lined up patients and killed 17 of them. Turf wars and targeted attacks by drug trafficking gangs have killed more than 13,000 people across Mexico since Calderon took power in late 2006 and launched his drug war, a level of violence that has alarmed Washington and unnerved both tourists and investors.

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Mexican gun traffickers recruiting women as buyers

Ann Zarate was sentenced earlier this year to 10 months in federal prison as a buyer in a gun-trafficking ring that delivered 77 weapons to Mexico's warring drug cartels. She also represents one in a steady stream of women — grandmothers, single moms and expectant mothers — who cartels are regularly recruiting to keep weapons flowing from the U.S. to support their violent operations in Mexico.

Federal law enforcement officials don't track the numbers of women involved in gun-trafficking cases. But as the demand for weapons in Mexico has escalated in the past two years, trafficking rings have been increasingly recruiting women with clean criminal records to buy weapons for them, said J. Dewey Webb, chief of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives office in Houston.

At least a dozen women in the past two years have surfaced in federal gun-trafficking cases as suspects or cooperating witnesses in Houston and the South Texas region, the nation's busiest gun-trafficking corridor to Mexico, according to court records, federal law enforcement officials and defense attorneys.

Webb said the women are joining the armies of buyers eager to risk harsh criminal sanctions in the U.S. — and possible retaliation by the cartels if they fail — for a relatively small share in the lucrative arms trade.

Because convicted felons cannot legally buy weapons, women with no criminal history are seen as valuable "straw buyers" who transfer their purchases to smugglers through relatives, boyfriends and acquaintances. The women often are being paid as little as $100 per trip to buy high-powered weapons from legitimate U.S. gun dealers, from Houston to the Rio Grande Valley.

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Mexican Drug Gangs Diversify Into Oil

Smuggling billions of dollars worth of narcotics across the Rio Grande apparently isn't enough for Mexican cartels. In recent years, they have expanded their activities in kidnapping, extortion, people smuggling and, of all things, petroleum siphoning.

The Mexican state-owned oil monopoly Petróleos Mexicanos, or Pemex, estimates some $720 million worth of oil products were stolen from it in 2008, slightly higher than 2007. The robberies have sapped the oil behemoth--the second-largest exporter to the U.S.--for years. But the number of discovered clandestine taps into national pipelines has steadily climbed in recent years, adding to frustrations over falling production at its prize field Cantarell.

"We suspect that some of this could be involved with narcotics," Mexico City-based Pemex spokesman Carlos Ramirez says of the thefts. Police also recently raided Pemex's central offices looking for information involving in-house ties to the black-market trading.

President Felipe Calderón has been trying to crack down on organized crime since he took office in December 2006. His national housecleaning efforts have led drug gangs to hedge risks to their bread-and-butter business by going into other lucrative markets like oil products, says Stephen Meiners, Latin America analyst for Stratfor, a global intelligence firm in Austin, Texas.

"They can't make as much money as they used to make solely on drug trafficking, and it's not like these organizations are going away any time soon," Meiners says. "So in the meantime, they are going to take advantage of a lot of other opportunities that come up. They are really diversifying their business model right now."

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