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NAFTA – The other side of the U.S. Peso

2017/02/05

THE BORDER WALL: MAKING MEXICAN DRUG CARTELS GREAT AGAIN

After a campaign of “sending rapists,” “deportation force,” “whip out that Mexican thing again,” and “bad hombres,” the Trump administration has moved from the theatrical to the practical in its first steps to build a new wall along the U.S.-Mexican border. Prior to the inauguration, President Donald Trump’s transition team approached the U.S. Army Corps of Engineers and the Interior Department about a new physical border. In his first week in office, Trump signed an executive order instructing the Department of Homeland Security to repair existing portions of the border fence and to build new sections as authorized by Congress in 2006. Although the new administration is clearly moving to fulfill its campaign promises, the results of a new physical barrier will likely have a counter-intuitive effect: Mexican drug cartels will grow stronger.

Since 2006, when the Mexican government declared war on the drug cartels, the United States has increased its law enforcement, military, and intelligence cooperation with its southern neighbor. With U.S. support, Mexican authorities have been able to kill or capture 33 out of the 37 most dangerous cartel leaders. The recent extradition of Joaquin “El Chapo” Guzman to the United States is a testament to the value of high-level cooperation between the two countries. As a result of these notable successes, several larger cartels have fractured and have descended into in-fighting.

However, in the midst of the pressures leveled against them and despite the significant damage to their organizations, Mexican cartels have adapted and continue their trafficking enterprises. In the face of new border realities, they will adapt again based on the rules of the game that they follow.

Rule 1: A Cartel’s Business is Business

In many ways, drug cartels are similar to legitimate profit-making enterprises. They seek to fill market demand or stimulate new demand for their products. Mexican cartels profit by using their capabilities to expand into new drug markets and to smuggle drugs and other illicit commodities through innovative and secret means. Mexican cartels are “vicious firms,” earning money as organizations engaged in providing vice (primarily drugs, but also counterfeit consumer goods and human trafficking services) across a sovereign border.

The only law that cartels do not break is the law of supply and demand. Increased security along the border will not change demand for the goods and services that the cartels supply. In fact, as new barriers along the border increase risks for the cartels, they will innovate smuggling operations, raise their prices to keep profits flowing, and stimulate new domestic markets in Mexico and on the U.S. side of the border. These adaptations occurred after 9/11, the last time the United States seriously tightened its border security.

Rule 2: Borders are Opportunities, not Obstacles

Flowing from Rule 1, a new border is a boon for Mexican cartels because they provide incentives to generate profit. Thwarting border protections is an industry in its own right.  Whether it is developing tunnels under the border or providing false documentation to get through a border checkpoint, Mexican cartels will still own the market for the ways and means to move products to the United States. Paradoxically, cartel profits may increase if NAFTA is renegotiated in ways that raise costs to Mexican manufacturers. Some cartels are deeply embedded in legitimate parts of the Mexican economy and have logistics positioned along the border to assist in the movement of legal goods smuggled through ports of entry to avoid high tariffs. Although NAFTA greatly eased the ability of drug cartels to move their products through looser customs inspections, drastically curtailing many provisions of NAFTA provides increased opportunities for smuggling.

Cartel opportunities for southbound smuggling from the United States into Mexico may also increase if the Trump administration clamps down on remittances sent to Mexico from Mexicans in the United States as a way to pay for the border wall. Cartels are adept at moving large sums of money into Mexico. They have used “cloned” vehicles that resemble official cars to transport money close to the border where they can pass it to their associates on the other side. Cartel members have also routinely placed hundreds of thousands of dollars on vast numbers of gift cards to reduce bulky shipments of cash and thereby decreasing law enforcement’s ability to detect the movement of money. Cartels will likely continue to find ways to innovate such tactics in an environment where moving legitimate money southbound becomes more difficult.

A new border wall will be accompanied by the hiring of 5,000 more Border Patrol officers and 10,000 immigration agents. However, more agents and officials equal more opportunities for profit and corruption. To move products through tightened security, cartels have routinely focused on penetrating Border Patrol and Immigration and Customs Enforcement. Since the Mexican drug wars began in earnest in 2006, almost 200 Department of Homeland Security employees and contractors took nearly $15 million in bribe money. “Owning” one of these officials allows the cartel to sell access to particular portions of the border to any paying customer.

Ironically, other potential money making opportunities for Mexican drug cartels are in the areas that will undergo new construction of the border wall. Many portions of the border exist in isolated regions. Construction crews living and working far from populated areas will be susceptible to illegal ways to fend off boredom. This is similar to what occurred in remote parts of the United States where fracking sites blossomed as well as incidents of prostitution and drug use. Along the southwest border, Mexican cartels could have a ready-made customer base.

Rule 3:  Cartels have their own STEM Programs

Similar to legitimate businesses, Mexican cartels seek to innovate by relying on core competencies of their employees. But a cartel’s science, technology, engineering, and mathematics competencies are directed towards their more important STEM programs — surveillance, trafficking, extortion, and murder. Tunnels with running electricity, HVAC systems, and rail lines are only small examples of the technical prowess of Mexican cartels.  They have used sophisticated methods to jam and “spoof” Border Patrol’s surveillance drones. Mexican cartels have even hired technical experts to develop custom made “narco drones” to deliver drug loads over the border.

Beyond technical achievements in trafficking, cartels have used extortion and murder to compensate for any curtailment of the drug trade. For example, in 2013, Monterrey, Mexico experienced a wave of kidnappings as violence among the cartels interfered with their ability to move drugs to the United States. Cartels have also extorted teachers, threatening them with death if they do not hand over large portions of their paychecks to local drug gangs. A new wall will also create jockeying for the control of new access points, which often turns violent. In previous periods of heightened violence, the ancillary market for murder created multiple opportunities for new hit men to enter the fray, which at one stage led to a glut in the market and a drop in the price of contracting a killing in Mexico.

Rule 4: Cartels are also Patriotic

While El Chapo was on the run after his second prison break, he took the time to Tweet a threat against candidate Donald Trump for insulting Mexicans. Members of Mexican cartels often view themselves as patriots, just like any other Mexican. They are not isolated from their communities, but are rather deeply embedded. As two scholars on gang violence described, “they spend more time hangin’ than bangin’.” The cartels have invested in the local communities by supporting soccer teams and throwing celebrations on important national holidays. If U.S.-Mexican relations sour, the cartels are well positioned to support, and benefit from, a new rise in Mexican nationalism. As they have in the past, cartels would use their local influence and their money to bolster political campaigns, but, this time, aimed at those campaigns touting Mexican sovereignty and anti-Americanism. Nationalism couched in anti-Americanism would help the cartels if Mexican political parties view standing against cooperating with the United States as an electoral advantage. Some of this political positioning was already occurring in Mexico even before Trump’s election. However, reducing or ending cooperation in areas like law enforcement, intelligence, and defense would be a gain for Mexican cartels. The threat of extradition to the United States would also likely begin to recede for cartel members as Mexican politicians refuse to undertake any actions that would look like a political gain for the Trump administration.

The Game may have Changed, but the Old Rules Still Apply

The rules that Mexican drug cartels have used successfully in the past demonstrate how the cartels can change their practices to thwart state actions which interfere with their ability to make money. These same rules mean that a new border wall will not end or significantly reduce the capabilities and power of Mexican drug cartels. From the days of tequila smuggling into the United States during Prohibition, illicit trafficking across the southwest border has remained a constant. Only with enhanced cooperation between the United States and Mexico in an atmosphere of trust can the Mexican drug cartels be tackled. A new border wall will only undermine these efforts, to the benefit of the criminal groups that have fueled much of the distrust along both sides of the border.

[Byline Borderland Beat Reporter Texcoco De Mora]

04 February 2017
Borderland Beat

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