Image: Mexican police
Mexican federal police agents with detainees during an operation Monday in the war against drug cartels in Tijuana.
updated 3/10/2009 6:28:17 PM ET 2009-03-10T22:28:17

Headless bodies in Tijuana, kidnapped children in Phoenix and shootouts on the streets of Vancouver: These are the unwanted byproducts of progress in the Mexican drug war.

While the headline-grabbing chaos creates the appearance of a drug trade escalating out of control, evidence suggests Mexico's cartels are increasingly desperate due to a cross-border crackdown and a shift in the cocaine market from the U.S. to Europe.

Those pressures are forcing Mexico's criminal networks, once accustomed to shipping drugs quietly and with impunity, to wage ever more violent battles over scraps and diversify into other criminal enterprises, including extortion and kidnapping for ransom on both sides of the U.S. border.

"This is not reflecting the power of these groups," Attorney General Eduardo Medina Mora told The Associated Press in an interview. "This is reflecting how they are melting down in terms of capabilities, how they are losing the ability to produce income."

Reduced supply raising prices
As evidence of that pressure, the U.S. government says the amount of cocaine seized on U.S. soil dropped by 41 percent between early 2007 and mid-2008. Reduced supply is said to have raised street prices by nearly a third to about $125 a gram in the U.S. and lowered purity by more than 15 percent. Both the U.S. and Canadian governments report seeing prolonged shortages of cocaine.

"The reason you see the escalation in violence is because U.S. and Mexican law enforcement are winning," Garrison Courtney, spokesman for the Drug Enforcement Administration, said Tuesday. "You are going to see the drug traffickers push back because we are breaking their back. It's reasonable to assume they are going to try to fight to stay relevant."

Mexican cartels are being cut out of the U.S. methamphetamine market as well, the U.S. and Mexican governments say, though smuggling of marijuana from Mexico has increased steadily since 2005 as demand increases.

The trouble for Mexico's illicit trade began on Sept. 11, 2001, when terrorist attacks in the United States prompted heightened security at the border. President Felipe Calderon upped the ante by directly confronting the cartels on his first day in office two years ago, sending 45,000 soldiers and federal police to battle the cartels across the country.

Improved cooperation with the U.S. since then led to the recent arrests of 755 Sinaloa cartel suspects in U.S. cities and towns as small as Stowe, Iowa. Mexican authorities, meanwhile, rooted out more than two dozen high-level government security officials, including Mexico's former drug czar, who were allegedly paid to protect the same gang, Mexico's most powerful.

All-out war among cartels
The U.S. Embassy reported a record 85 extraditions from Mexico to the U.S. in 2008, contributing to a power vacuum that sparked an all-out war among the cartels as they battle for routes to the U.S. and control of Mexico's growing domestic drug market.

These successes, however, come with a brutal cost: skyrocketing violence in Mexico, with twice as many deaths last year and more than 1,000 people killed in the first eight weeks of this year; more than 560 kidnappings in Phoenix in 2007 and the first half of 2008, and more than two dozen shootings so far this year in Vancouver, British Columbia, where a shortage of cocaine from Mexico has pushed prices up from $23,300 to almost $39,000 a kilo.

The Mexican government estimates that 90 percent of those killed are linked to the drug trade, and many kidnappings in the U.S. are also drug related.

Mexico used to be a token player
Mexico was just a token player in the cocaine trade some two decades ago, when the U.S. cracked down on the Caribbean routes for Colombian cocaine.

Suddenly, Mexican cartels that already trafficked marijuana and heroin controlled the main routes to the coveted U.S. cocaine market.

Today, 90 percent of all cocaine that ends up in the U.S. moves through Mexico, according to the U.S. State Department, and the gangs make an estimated $10 billion in annual profits.

But the U.S. market is being eclipsed by booming demand for cocaine in Europe, where users now pay twice the going U.S. rate, and Colombian gangs don't need Mexican middlemen when shipping across the Atlantic.

Forging ties with the Italian Mafia
Mexican gangs have tried to develop their own routes into Europe, even forging ties to the Italian Mafia. But they have had limited success and Medina Mora predicts the Colombians will win out in the end.

"There is no sense to ship the product north, losing value, and then ship it to Europe, if it is possible to do it straight from South America to Europe," he said.

The Mexicans have also lost control of the vast U.S. meth market, the U.S. and Mexican governments say. In 2003, Mexico legally imported 235 metric tons of the key precursor chemical pseudoephedrine — about twice what was needed to supply its entire cold and allergy market.

But Mexico banned pseudoephedrine imports in 2007 after the spectacular discovery of $207 million in cash in a Chinese pharmaceutical businessman's Mexico City mansion. Medina Mora says Asian smugglers have responded by shipping such chemicals directly to the U.S., where small sales of legal medicine containing pseudoephedrine are another source of the drug.

While Mexican gangs may be on the defensive for the first time since their rise to power, they are far from dead.

A December report by the Justice Department says Mexican cartels already pose "the greatest organized crime threat to the United States," and the U.S. Joint Forces Command recently compared Mexico to Pakistan, saying both governments are at risk of "rapid and sudden collapse."

Violence could get worse
Many — even Calderon — believe the violence could get worse before it eases.

To make up for lost drug profits, the gangs are morphing into powerful organized crime syndicates that are terrorizing Mexicans through kidnapping and extortion, crimes that are spreading into the U.S.

Both Mexico and the U.S. are ramping up cooperation, using $400 million in new U.S. aid to further weed out corruption among Mexican security officials and better equip and train those that stay. The U.S. has also promised to crack down on the estimated 2,000 weapons smuggled into Mexico each day and then used in 95 percent of all killings here.

It's a fight both countries say they have no choice but to wage. If Mexico gave up, then "the next president of the republic would be a drug dealer," Mexican Economy Secretary Gerardo Ruiz Mateos predicted last month.

Calderon says he won't back down until Mexico's drug cartels are a problem local police can handle — and no longer a national security threat. His goal is to attain that by the time he leaves office in 2012, but he admits that may be too optimistic.

"Yes, we will win," he said, "and of course there will be many problems meanwhile."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Photos: Mexico Under Siege

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  1. A tattooed man stands on a hill overlooking Ciudad Juarez, Mexico, one of the most dangerous cities in the world, on Dec. 20, 2008. Cartels have launched a wave of violence against the government of President Felipe Calderon since it began a crackdown on organized crime in 2006. According to the attorney general’s office there were 5,370 drug-related homicides in the year to Dec. 2, 2008. That is double the 2007 number. Juarez alone saw an estimated 1,600 such slayings. And the deaths can be horrific – victims have been tortured, beheaded or dissolved in acid. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  2. Inside the car where Marisela Granados de Molinar was killed on Dec. 3 alongside her boss, Jesus Martin Huerta Hiedra, a deputy prosecutor in the Mexican city of Juarez. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  3. Federal police search cars at an impromptu checkpoint near the U.S. border on Nov. 10, 2008. In the late 1980s the United States stemmed the flow of cocaine from South America through the traditional trade routes in the Caribbean. Looking for alternate ways into the U.S., South American cartels began to run drugs through Central America and Mexico, and now the vast majority of illegal drugs flow through this corridor. Facing the recent slew of deaths and corruption scandals among all levels of the police, the government has deployed 45,000 soldiers to fight the cartels as well. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  4. Missing person signs litter the walls of local police stations in Juarez. Kidnapping is integral to the drug-running business and the general lawlessness accompanying it. Before the latest surge in drug violence, Juarez was infamous for another gruesome string of crimes – the kidnapping and murder of young women. There have been 508 such incidents since 1993, according to the state government. When the bodies do show up, many have been raped and mutilated. Many believe that most of these deaths are related to gang initiation rituals. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  5. El Diario newspaper's Armando Rodriquez was murdered outside his home while warming up his car on Nov. 13, 2008. The 40-year-old crime reporter was killed in front of his 8-year-old daughter who he was about to drive to school. Mexico is one of the most dangerous places in the world for journalists, according to the Committee to Protect Journalists. Since 2000, 25 have been killed there. In addition, seven journalists have disappeared since 2005. Many reporters refuse to put their bylines on stories, and many newspapers have stopped covering the drug gangs altogether. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  6. The body of El Diario's Rodriquez -- killed in his car outside his house while his family watched in November 2008 -- is taken away in a body bag by an ambulance. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  7. A U.S. official stands beside a recently discovered cache of drugs on the El Paso-Ciudad Juarez border crossing. In December, the United States delivered $197 million to Mexico, the first stage of a $400-million package to buy high-tech surveillance aircraft, airport inspection equipment, and case-tracking software to help police share intelligence. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  8. Men and boys shoot heroin in a "picadero," or shooting gallery, in Ciudad Juarez on the banks of the Rio Grande, just across from the United States. Thousands of picaderos, some serving as many as 100 customers a day, are said to exist in Juarez alone. Drug use and addiction among Mexicans has exploded recently, with the number of known addicts almost doubling to 307,000 in six years. Most experts assume these numbers dramatically undercount the problem. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  9. Patrons and workers mingle at Hollywood strip club in downtown Juarez. With American sex tourism on the decline due to the dramatic increase in murder and violence, the few remaining strip clubs have become common hangouts for narcotics traffickers, or ‘narcos.’ (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  10. A man walks in front of 24-hour funeral parlor. The death industry is booming in Juarez where an estimated 1,600 people were murdered in 2008. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  11. Neighbors and family of slain Alberto Rodriquez, 28, watch and cry as the authorities descend on the crime scene. Rodriguez was killed in his car outside his house while his family watched. (Shaul Schwarz) Back to slideshow navigation
  12. A bus carrying women and children drives by the site where David Rodriguez Gardea, 42, and Antonio Bustillos Fierro, 38, were gunned down on Nov. 12, 2008. The agents had led an investigation resulting in the arrests of gang members suspected in dozens of murders. The cartels are killing police officers at an unprecedented rate, especially at the border. Gangs have been breaking into police radio frequencies to issue death threats. "You're next, bastard ... We're going to get you," an unidentified drug gang member said over the police radio in the city of Tijuana after naming a policeman, Reuters reported recently. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  13. A U.S. border patrol officer stands behind bullet-scared bullet-proof glass on the El Paso-Ciudad Juarez border. Although border agents do not get shot at often they are self-described "sitting ducks." The cartels and drug traffickers send messages of terror through such examples. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  14. The casket of David Miranda Ramirez, 36, is carried by fellow police at his funeral on Nov. 13, 2008. An estimated 50 of Ciudad Juarez’s police officers were killed in 2008 in incidents blamed on drug gangs. Many officers have quit out of fear for their lives, often after their names have appeared on hit lists left in public. While some police have been killed, others are being lured into cooperating with the cartels. Theses gangs have “enormous economic power, and behind that, enormous power to corrupt and intimidate,” says Attorney General Eduardo Medina-Mora. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
  15. Family of slain police officer Miranda Ramirez mourn his loss at his funeral. (Shaul Schwarz / Reportage by Getty Images) Back to slideshow navigation
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