And so the curtain falls on the career of a criminal mastermind. On July 17, Sinaloa cartel leader Joaquin "El Chapo" Guzman Loera was sentenced to serve life plus 30 years in prison following a February conviction on 10 counts, including engaging in a continuing criminal enterprise, drug trafficking and firearms charges. Shortly after the sentencing hearing, Guzman was sent to the U.S. administrative maximum (ADX) penitentiary in Florence, Colorado. Guzman has a long history of shenanigans in — and escapes from — Mexican penitentiaries, but the book is now officially closed on him. Guzman has never been incarcerated in a facility like the ADX in Florence, which is home to some of the most dangerous criminals and terrorists in the world, meaning he has zero chance of either continuing to run his criminal enterprise from the prison or escaping from it.
The end to Guzman's illicit activities, however, does not portend an end to Mexico's cartel violence. As criminal organizations there continue to go through bloody splits and President Andres Manuel Lopez Obrador struggles to clamp down on such groups, there will be little respite from the violence — something that will continue to give companies and organizations operating in the country cause for concern.
The same factors that allow legitimate businesses to make billions of dollars manufacturing goods for sale in the giant U.S. consumer market also make it an ideal place for those wishing to traffic illicit goods into the United States. Factors like corruption and impunity that weaken the rule of law make Mexico an even more ideal environment for organized crime. Ultimately, the intersection of legal and illicit economies in Mexico presents significant risks for businesses and organizations operating in the country.
Debunking Some Myths
In the wake of Guzman's sentencing, I saw an article suggesting that Mexico would be better off if the U.S. court had released Guzman instead of incarcerating him for life, arguing that he was somehow less brutal than the current crop of cartel leaders in Mexico and that he could calm the violence afflicting his country if only he could walk free. This belief is based on the longstanding and pervasive myth that Guzman is a "gentleman smuggler" or a Robinhood figure who is somehow above the violence and criminality of other organized crime figures.
But testimony at Guzman's trial revealed that he ordered the murders of hundreds of people and tortured and killed some of them personally. As I've previously written, beneath the false veneer of this legend, Guzman was among the most aggressive organized crime leaders in Mexican history — and perhaps even globally.
Guzman began a war against the Arellano Felix Organization (AFO, or Tijuana cartel) in 1989, igniting a wave of violence along Mexico's Pacific coast that resulted in many deaths, including the accidental killing of a Mexican archbishop. The AFO threat led Guzman to flee to Guatemala, where authorities arrested him in 1993. Guatemala extradited Guzman back to Mexico, where he was sentenced to 20 years in prison — although he continued to operate his criminal enterprises from the safety of a comfortable jail cell until he escaped in January 2001.
Following the arrest of Gulf cartel leader Osiel Cardenas Guillen in 2003, Guzman made a push to capture the lucrative Nuevo Laredo smuggling corridor (such corridors are often known as "plazas" in Mexico). Guzman dispatched the Beltran Leyva brothers to lead the charge, precipitating a bloody fight between the group and the Gulf Cartel's Los Zetas enforcer group. The violence killed hundreds, ultimately forcing then-President Vicente Fox to send Mexican troops and federal police to attempt to secure Nuevo Laredo in 2005. While Guzman failed to wrest the city from the Gulf Cartel and Los Zetas, he succeeded in his later quests to conquer border plazas further west. From 2007 to 2010, he fought to secure control of the Tijuana plaza, while from 2008 to 2012, his forces fought to conquer Juarez.
After a nasty split between the Los Zetas and the Gulf Cartel in 2011, Guzman sensed a new opportunity to expand his empire, as he sent a large group of Cartel de Jalisco Nueva Generacion (CJNG) gunmen to Veracruz. Dubbing themselves the "Mata Zetas" (Zeta Killers), the group launched an offensive to wrest control of the important port city from Los Zetas.
Far from being a romantic, altruistic figure, Guzman bears great responsibility for igniting many of the cartel wars that have wracked Mexico for the past three decades, resulting in thousands of deaths.
I have also seen some argue that the practice of arresting or killing cartel leaders — the decapitation strategy — is responsible for much of the violence in Mexico today. These people believe that if figures like Guzman remained in place, they would be able to counter the Balkanization that has fractured Mexico's cartel landscape. But this belief is also based on myth and a poor understanding of the history of such fractures. Even while Guzman was free to run his enterprise, the Sinaloa cartel experienced several significant schisms. The first occurred in 2008, when the powerful Beltran Leyva Organization (BLO) split off. Then, following the death of Ignacio Coronel in 2010, the Milenio cartel severed links with Sinaloa. One faction of the Milenio cartel became the CJNG and briefly reunited with Sinaloa — during which it chased down Zetas in Veracruz for Guzman — before breaking off for good in late 2012 or early 2013. Taken together, the fact that these fractures occurred on Guzman's watch puts paid to the notion that he could have halted the Balkanization trend.
The forces that are driving Mexico's violence are larger and more powerful than any individual, and there is very little that any one person can do to counter or control them.
The Dynamics That Outweigh Even Cartel Leaders
In the end, the forces that are driving these trends in Mexico are larger and more powerful than any individual, and there is very little that any one person can do to counter or control them. It is true that individuals such as Gulf cartel founder Juan Garcia Abrego and Miguel Angel Felix Gallardo, the "godfather" of the Guadalajara cartel, were instrumental in altering the relationship between Mexican cartels and their Colombian counterparts. They succeeded in boosting the role of Mexican cartels from mere errand boys, who received a small cut of the Colombian cartels' profits on cocaine smuggled through Mexico, to full partners that received an equal share of the profits. The vast profits that the cocaine trade brought to the Mexican cartels was a game changer. They provided the Mexican groups with vast quantities of cash to hire armies of hit men, arm them with military-grade weapons and bribe officials at every level of government. This vast wealth also allowed them to challenge — and in some places usurp — the government's monopoly on force and governance as they pursued their campaign of "plata o plomo" (silver or lead) to either bribe or kill people in authority.
Mexican cartels multiplied their profits by embracing the heroin trade, eventually coming to dominate the North American heroin market. They also ventured into the synthetic drug trade, as drugs like methamphetamine and fentanyl brought them even larger profits than cocaine or heroin. Literally awash in money, many Mexican cartels struggled to launder and spend all the money they were making.
Naturally, however, this vast fortune has come with consequences beyond just coming to the attention of authorities. Given the huge sums at stake, business partners and even family members have turned into sworn enemies as they fight over a greater share of the profits. And in addition to fighting over smuggling routes to external markets — which have grown to include Australia and Europe, in addition to the United States — they are also fighting bitterly for control of the sizable domestic Mexican retail drug market in places like Mexico City, Cancun, Tijuana and Juarez. Moreover, they are struggling to grab control of the lucrative petroleum theft racket, while also engaging in extortion, kidnapping, prostitution, human smuggling and other criminal activities.
In the end, I believe that Balkanization will continue to impact even the larger and stronger cartels such as Sinaloa and the CJNG. I anticipate additional rounds of Sinaloa infighting and while the CJNG had been largely immune from the trend, the emergence of the Nueva Plaza cartel, which is composed mostly of former CJNG members under the direction of Carlos "El Cholo" Enrique Sanchez Martinez and Erick "El 85" Valencia Salazar, has showed that it, too, is vulnerable to greed and infighting.
Indeed, Gulf cartel leader Cardenas Guillen earned the nickname "El Mata Amigos" (the friend killer) for, unsurprisingly, turning on those close to him amid the greed-driven infighting. The amount of internecine conflict, however, has only grown since Cardenas Guillen's 2003 arrest, as evidenced by recent murder trends, much of which stems from intracartel fighting, as well as battles among different groups.
Kingpins and organizations will rise and fall, but someone will always step in to fill in any gaps left by the fallen, as there is simply too much money to make by feeding the insatiable appetite for illicit drugs.
What It Means for Businesses in Mexico
Due to the economic forces at play, kingpins and organizations can and will rise and fall, but someone will always step in to fill in any gaps left by the fallen, as there is simply too much money to make by feeding the insatiable appetite for illicit drugs. This reality, in turn, presents several implications for businesses and organizations that operate in Mexico.
First, these conditions ensure that corruption will continue to pose a challenge to those concerned about the Foreign Corrupt Practices Act in the United States and the Bribery Act in the United Kingdom; the violation of either law could cost a company far more than any losses they may experience from criminals. Even so, Mexican government officials — particularly municipal authorities among both police and civilians — are likely to inundate companies and organizations that require government approval as part of their procedures as Lopez Obrador has so far failed to make much headway in addressing the endemic graft that pervades the government.
Second, there is a high risk that company personnel or assets could suffer collateral damage during cartel-on-cartel or cartel-on-government battles, particularly as criminal organizations and the government both use military-grade weaponry. And then there's the threat of extortion, especially in cases in which more than one cartel levies demands on a company or one cartel attacks a business for making extortion payments to a rival.
Third, the heavy cartel violence will continue to distract the security forces from other tasks, thereby providing other criminal groups with greater room to operate. Indeed, Lopez Obrador vowed to demilitarize the anti-cartel fight on last year's campaign trail, but his program to roll military units into the Mexican National Guard — rebranding them, in essence — shows that his goals are simply unattainable. With security forces focused on the greater threat, cargo theft, extortion, kidnapping and street crime at the hands of other criminals will be a persistent, serious concern for those living in or visiting Mexico.
Sadly, I can't envision a scenario in which Mexico's violence will significantly decline in the immediate future. The global demand for drugs shows no sign of abating, meaning the money will continue to flow into the cartels' coffers, allowing their leaders to finance their armies and pay bribes. That spells trouble for companies and organizations operating in Mexico — to say nothing for the country and its inhabitants themselves.
