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Capital Versus Peace in Mexico

The violence in Mexico isn't just fueled by megalomaniac drug lords as depicted in shows like Narcos. Transnational capital is also responsible for the bloodshed.

President of Mexico, Andres Manuel Lopez Obrador, speaks during a press conference on July 5, 2018 in Mexico City, Mexico. Manuel Velasquez / Getty Images

After twelve years of the “war on drugs” in Mexico, a period when almost 260,000 were murdered and at least 37,000 disappeared, a new government has arrived with refreshing ideas about drugs, peace, and security. The new president Andrés Manuel López Obrador has promised to promote a pacification policy including conversations on justice and reconciliation, amnesty for minor offenders, and the decriminalization of marijuana and poppy crops.

His program goes against the grain of mainstream narratives, which still depict an anachronistic image of 1980s-era drug cartels as the main source of violence in Mexico. Hit shows like Narcos portray megalomaniac narco-traffickers singlehandedly terrorizing whole countries, fueled by the North’s insatiable appetite for drugs.

AMLO recognizes that a policy of confrontation against organized crime is not enough to address the violence in the country and proposes to tackle its deep causes, promoting education and work alternatives to youth and rural communities depending on illicit activities.

Most researchers in Mexico argue that it is the state’s militarization that has escalated and preserved violence in Mexico. Researchers like Guadalupe Correa, Dawn Paley, and Oswaldo Zavala, point out that outbreaks of violence in a region tend to be triggered by the deployment of soldiers — tens of thousands of which have participated in Mexico’s internal security affairs since 2006. The US-funded drug war only encouraged cartels to buy more guns, recruit more soldiers, and fight dirtier.

But these researchers point out something else: that the cartels no longer rely primarily on the drug trade for profit. Mexico’s criminal syndicates grew into complex, militarized organizations just as the country’s economy was opened up to international capital in the 1990s and early 2000s. This revealed new, lucrative frontiers off which they could parasitize.

Today, the country’s heavily armed criminal networks don’t limit themselves to drug trafficking. They also profit from migrant smuggling, fuel theft, iron ore exports, extortion, illicit logging, or kidnapping for ransom in addition to drug trafficking.

But what they’ve come to specialize in beyond any one profit stream is territorial occupation, through which they attempt to control all economic activity, both legal and illegal, within a certain area. Under this model, it’s rational for them to battle for control over areas richest in profitable natural resources, and position themselves accordingly towards the international capital these areas have been opened to. This is evident in the fact that territories hit by crime and extreme violence, such as Juarez Valley or the Tamaulipas border state, are usually the ones richest in hydrocarbons and mineral resources.

Authors like Paley and Correa argue that, in light of these factors, the extreme violence in several Mexican regions actually benefits some actors in transnational capital, particularly the energy, hydrocarbons, mining, private security, finance, and arms trade sectors.

One reason is that forced displacement caused by conflicts enables the occupation and buying of lands — even communal ones or ejidos, a Mexican collective form of land ownership that does not allow selling terrains — at low prices and avoids local resistance to extractive developments. According to the last annual report of the Comisión Mexicana de Derechos Humanos — an independent Mexican NGO — the cumulative figures of internally displaced people were at least 329,917 by the end of 2017.

This is not to say that there was any planned, centralized effort to use the drug war to open up sections of Mexico to transnational extraction. The course of the war has been too chaotic, with too many shifting actors, to make this conclusion. However, that neoliberal restructuring occurred simultaneously with the increasing paramilitarization and sophistication of both “sides” of the drug war produced a dangerous outcome.

Now, sections of international capital are codependent with the violence of Mexico’s narco-state — and its ability to displace, terrorize, and monopolize territories — to achieve its agenda. And capital’s collaboration with criminal paramilitaries, who exist on a spectrum with the corrupt state, has increased their sophistication and entrenchment within the Mexican economy.

This means that to confront Mexico’s endemic violence and transform its security framework, AMLO will have to do more than reform drug policies. He will also have to take on international capital.

The War on Drugs

In December 2006, Felipe Calderón took office as the president of Mexico. Days later he announced the Joint Operation Michoacán, named after his home state. It was a coordinated effort of the army, the Mexican Naval Infantry, and the Federal Police to attack organized crime and drug trafficking. It was a move by a president with little legitimacy in the need of an internal enemy — he won office by only 0.62 percent, narrowly defeating the current president Andrés Manuel López Obrador, who claimed electoral fraud. According to many, it was the foundational event of Mexico’s “war on drugs.”

With that confrontation policy, Calderón intended to tackle the drug cartels and reestablish security in the country. Instead, the homicide rate doubled during his six-year tenure. Tens of thousands of soldiers were deployed over the country to perform internal security tasks. Other than the surge in troops, there was no significant strategic shift between Calderón’s and outgoing president Peña Nieto’s security policy.

In 2007, George Bush and Felipe Calderón signed the framework agreement for Mérida Initiative, named after the city where the meeting took place. Inspired by the Plan Colombia — a US aid package to fight both drug trafficking and left-wing guerrillas signed in 2000 — the Merida Initiative committed millions of US dollars towards counter-narcotics, counter-terrorism, and border security; public security and law enforcement, including technology and training; and institution building. The Department of State delivered $400 million in 2008 alone.

According to Dawn Paley and her book Drug War Capitalism, the US-Mexican cooperation on institution building under Mérida Initiative and other programs sponsored by USAID had a key role in boosting neoliberal and pro-business structural reforms in Mexico. During his tenure, the outgoing president Enrique Peña Nieto pursued structural reforms including constitutional changes in education, banking, the judiciary, energy, and the tax system.

Institutional changes run parallel to extreme violence in several territories of the country far beyond the traditional corridors of drug production and trafficking. The “drug war,” consisting in the military and other federal forces performing police tasks in urban environments, as well as controlling rural territory, failed to stop violence. The initial strategy of beheading criminal organizations contributed to their division and further diversification into more illegal activities, boosting conflicts among criminal syndicates and violence against the population. Military repression also triggered the adoption of military tactics and heavy weaponry among criminal organizations.

But as Paley writes, while military intervention was ineffective at stopping crime, it had side benefits for capital. Terror and violence, she explains, reduce workers’ mobility — both in their ordinary lives in the towns and in their ability to migrate. It also disciplines workforces, intimidates territory defenders, and displaces capital from small and medium-size companies to transnational ones, since the latter are less vulnerable to extortion.

In many territories, the military’s presence brought peaks in homicides and forced disappearances, often justified by officials as collateral in the battle to eliminate crime. For instance, it is well documented that the military had a strong presence in the deadliest area of Mexico under Calderón’s tenure, the Juarez Valley, a frontier corridor just east of Juarez City.

 

The Valley had an estimated murder rate of 1,600 per 100,000 inhabitants in 2009. Compare this to the rate nationwide, which reached a peak of 25 homicides per 100,000 inhabitants this year. Violence escalated after the military penetrated the area amid a conflict between two criminal syndicates. Mexican soldiers controlled all road accesses to the Valley during a period when scores of women, human rights activists, and other civilians were victims of murder, forced disappearances, and forced displacement. Many locals denounced the direct collusion of the soldiers in these crimes, as journalist Melissa del Bosque reported.

In addition to a drug-dealing corridor, the Juarez Valley happens to be part of the Chihuahua basin, which is believed to be a huge shale gas reservoir. This has led to speculation that the military’s presence had more to do with suppressing opposition to fracking than interrupting the drug trade.

There is no evidence of a reduction in drug trafficking to the United States, or of any success in defeating criminal organizations. At best, new ones flourished where some of the old ones declined. Instead, crime organization, security police, and institutional frameworks key to capitalistic development all became more sophisticated in this period.

The Transformation of Organized Crime

Up until the 1990s, drug trafficking in Mexico was relatively controlled by political elites, who decided who could operate in each territory and took their part of the revenues. Some researchers argue that the increasing political plurality of those years — culminating in Vicente Fox’s 2000 election as the first president from outside the Institutional Revolutionary Party (PRI) in seventy-one years — broke these clandestine state-cartel monopolies and established new corrupt regional agreements.

This brought about a transformation in organized crime that could be seen on the ground. Natalia Mendoza, an anthropologist who did ethnographic research in her town in frontier-state Sonora in 2005 and 2011, observed a huge change between those years, which were marked by an intensification of the drug war and militarization of the US border.

Drug trafficking transformed from a locally controlled activity, sporadic for many, into a heavily organized economy under the monopolistic rule of a regional organization. This process required at least three major changes: the privatization of the smuggling routes to the United States, the creation of a “bureaucracy” of armed people permanently employed by organized crime, and the full control of migrant smuggling by these organizations.

Mendoza, author of Conversaciones en el desierto (Conversations in the Desert, unpublished in English), called this process “cartelization.” Even if it had particular features and timing according to local particularities — such as proximity to the border — and previous development of organized crime in each territory, something similar would have happened almost nationwide.

The development of The Zetas, for instance, was a watershed even where the drug trade was already heavily organized and controlled. They were created in the late nineties as the paramilitary wing of the Gulf Cartel in northeast Mexico, and grew rapidly in size and independence starting in 2003. They pioneered a model based on controlling territory and populations through military tactics — the foundational group of the Zetas were elite army deserters — to extract rents from a set of illegal activities such as drug trafficking, fuel theft, extortion, kidnapping, DVD selling, and so on. Its model created an extremely violent environment that suppressed freedom of movement and speech in the region.

The Zetas, whose presence stretched over all the Atlantic coast and beyond, emerged as a transnational organization with strong political and police connections, a diversified business, and a useful brand based in terror. Even if they are now in decline, other groups adopted their way of doing things. And as Mexico sought to impose the new neoliberal order on its citizens, one based on the repression of labor and empowerment of international extractive capital, this new model of occupation and terror became useful to elites.

Natural Resources and Paramilitarization

What seems remarkable is that some of the hot spots of the war, such as Tamaulipas, Juarez Valley, or Michoacán state, also boasted rich hydrocarbon reserves and mineral resources. Contrary to the common-sense idea that war is “bad for business,” private investments in mining projects in these areas never stopped. Nor did public investment for infrastructure development or bids for shale gas fields and other hydrocarbon resources.

In her book Los Zetas Inc., Correa describes the conflict in Mexico as a war for its territory, particularly in areas rich in hydrocarbons or home to key infrastructure such as exporting ports. As she puts it,

Dominating these regions would assure the domination of most of the supply chains in Mexico’s energy sector. Mexican TCOs [Transnational Crime Organizations], such as the Zetas, the Knights Templar, and CJNG, began establishing control over many of these zones. But in the end the resulting violence and government responses to it might bolster the participation of (and control by) new actors: transnational energy firms.

Extreme violence in the state of Michoacán can also be explained according to key infrastructure and mineral resources. Aside from producing synthetic drugs, organized crime there has a very lucrative business in iron ore extraction and export to Asia through Lázaro Cárdenas, one of the main Pacific ports of Mexico.

Forced displacement by organized crime has been repeatedly reported from communal lands and ejidos in areas where mining companies are establishing. As Paley writes, population displacement is useful to eliminate potential opposition to extractive projects. Moreover, military control of the territory guarantees that private investors are not disturbed.

The same thing goes for North Tamaulipas — home to the shale-rich Burgos Basin — where 41 percent of land is communal or ejidos, as Correa notes in her book. Population displacement and a terror regime would have eased the buying and occupation of Tamaulipas lands and weakened the eventual resistance against fracking or land occupation by private companies.

At the same time, the fuel theft business — believed to cost the Mexican state $1 billion in revenue per year — has become increasingly active. It’s especially affected the state-run oil company Pemex, who sued twenty-three US companies for buying stolen fuel from organized crime through three different lawsuits between 2010 and 2012 (they lost).

This is bad for Pemex, which reported a $17 billion loss in 2017, but probably good for the private and transnational capital now dramatically increasing its participation in the sector.

In this context, it’s not useful to look at the violence in Mexico through the lens of a narrow “drug war” focused on traditional South-North narco-trafficking routes. With the entrance of extractive development, much more powerful incentives have come to shape the activities of organized crime. For some competing state and corporate elites, maintaining this status quo is key to their political and economic agenda.

Towards a Peace Policy?

The incoming government has made promising gestures towards restructuring the military command and, even if AMLO is not retiring the army from public security tasks as initially promised in his campaign, at least the new administration will reorganize the police roles assumed by the army, the Marines, and the Federal Police under a unique force of military police called the National Guard. This move, criticized by many security experts, would give a legal framework to the use of the military in internal security that the “war on drugs” had not in previous years.

Moreover, major changes in drug policy are expected. AMLO’s designated interior minister, Olga Sánchez Cordero, has proposed the decriminalization of marijuana production, distribution, and consumption, and the regulation of legal poppy crops for pharmaceutical use.

Many poor farmers were forced to work those illicit crops due to lack of profitable alternatives — especially since NAFTA eased the entrance of more competitive US agricultural products — or under violent threats. Those farmers, as well as nonviolent offenders with drug charges, should be the main beneficiaries of the amnesty policy announced by López Obrador before the elections.

The amnesty proposal was controversial during the campaign and most details remain unclear. But AMLO has pitched it as “a process of peace and reconciliation” that would incorporate transitional justice mechanisms. It would facilitate dialogues on peace with victims, human rights organizations, and religious leaders, but not the military or the police command.

But for the incoming president to truly challenge the status quo, he also needs to confront the transnational energy sector.

This will be difficult thanks to the efforts of the previous government. In 2013, it passed landmark energy reformopening Mexico’s oil fields up to private and international bidding. In so doing, it chipped away at PEMEX’s monopoly position in the oil and gas sector.

AMLO initially opposed the energy reform and promised to repeal it. But he’s since backed down, saying that the new government will review the contracts and only revoke them if there were irregularities indicating corruption. Thanks to the new legal frame, more than one hundred contracts for exploration and extraction of hydrocarbons were signed with both international and local companies and Pemex and its subsidiaries under Peña Nieto’s tenure. A new round of bidding for the shale gas Burgos Basin resources is scheduled for February, with an estimated $2,343 million investment.

But the extent to which the new government, in the framework of “anticorruption,” can separate the opening of these lands to neoliberal extraction from corporations’ ties to and dependence on organized crime is dubious. From the start of neoliberal restructuring, sections of the state and capital have relied on outsourcing violence to paramilitarized factions in order to open Mexican regions up to development and intimidate labor. Breaking this relationship will require confronting the power of international capital in the Mexican economy.

The new approach on drugs and security is good news, but the extent of an overhaul of the energy reform will indicate how much the new government is ready to confront transnational capital and domestic elites. After twelve years of massive violence and neoliberal reforms, much damage is done. But some things can change.